FCC's Wheeler reaffirms that incentive auction will take place in Q1 2016

FCC Chairman Tom Wheeler reaffirmed his commitment to starting the incentive auction of 600 MHz broadcast TV spectrum in the first quarter of next year, and his vow to spark competition in the wider broadband market. Yet smaller carriers say the rules being crafted for the auction will not do enough to foster competition in wireless broadband.  

In a speech on Friday at the Brookings Institution in Washington, D.C., Wheeler said that he spoke recently with Rep. Greg Walden (R-Ore.), the chairman of the House Energy and Commerce Committee's subcommittee on communications and technology. Walden was a key player in drafting the legislation that authorized the incentive auction. "We are of one mind on this: There will be an Incentive Auction in the first quarter of 2016," Wheeler said.

"It's pedal to the metal on broadband policy--for both consumers and competitors," Wheeler added. The FCC has already overcome a lawsuit over technical rules governing how TV stations' broadcast coverage is calculated, and the agency's staff has been working to woo broadcasters to give up their spectrum rights.

"When I came on board at the agency the question of whether broadcasters would show up for the Incentive Auction was a matter of debate," Wheeler said. "While, of course, this is a voluntary decision by each broadcaster governed by the ultimate free market--an auction--I am quite encouraged by what we have been hearing from broadcasters."

"We're not going to let up on protecting and promoting broadband competition," Wheeler said in the speech. "As I have made plain on innumerable occasions, competition is paramount. It is the best assurance of industry dynamism, that opportunities for improvements in quality and reductions in cost will be pursued assiduously, and that the benefits will be shared with consumers."

The day before his speech Wheeler publicly disclosed in a blog post that he is recommending to his fellow commissioners that the FCC reject T-Mobile US' (NYSE:TMUS) petition to increase the amount of spectrum set aside for smaller carriers to bid on in the incentive auction. If that policy is approved it would be a victory for AT&T (NYSE: T) and Verizon Wireless (NYSE: VZ) and a major blow to T-Mobile, which has argued since last summer that the size of the reserve should be increased from 30 MHz of spectrum in a given market to 40 MHz. T-Mobile is not giving up on the issue ahead of the FCC's July 16 vote on the matter.

"From the day you took office you have repeated a mantra of competition, competition, competition," T-Mobile CEO John Legere wrote in a letter to Wheeler on Friday. "However, your recent blog proposes a low-band spectrum reserve that is too small to support a robustly competitive market and is really frustrating. The amount of low-band spectrum you have proposed reserving for competitive carriers is just not enough to support more than one rival to the two dominant players: AT&T and Verizon."

Last week the Department of Justice urged the FCC to give "considerable weight" to how large the reserve should be but did not take a stand on how large it should be. Nevertheless, T-Mobile has taken the DoJ's letter to the FCC as an endorsement of its position since the letter said the commission should "give considerable weight in determining the amount of spectrum included in the reserve to protecting and promoting competition and the well-established competition principle that those with market power may be willing to pay the most to reinforce a leading position."

Legere wrote: "The Department of Justice has written you three times in three years, most recently on Wednesday of this week. Their letter urged you to do all you can to avoid excessive concentration of licenses, as the Communications Act requires. It urged you to foster more competition for consumers. The Department of Justice is right, AT&T and Verizon are not. The reality is that a spectrum reserve that is too small to support competition would mean that Verizon and AT&T will win and consumers will lose."

Legere urged Wheeler to "revisit your position and reconsider the reserve allocation for the Incentive Auction."     

While Competitive Carriers Association (CCA) President Steve Berry said in a statement that he commended Wheeler's reaffirmation that the incentive auction will take place in the first quarter of 2016, he said that "competitive carriers need access to additional spectrum resources, and low band spectrum in particular, and we must continue to move towards the incentive auction as expeditiously as we can."

"Nevertheless, we must do more to promote mobile competition," he said. "While work continues on the auction design, CCA encourages the FCC to follow the Department of Justice's guidance to give 'considerable weight' to CCA's call to support vigorous competition."

For more:
- see this FCC page
- see this Washington Post article
- see this IDG News Service article
- see this CNET article

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