NAB endorses T-Mobile/MetroPCS deal, points to healthy market for spectrum

The National Association of Broadcasters is backing the merger of T-Mobile USA with MetroPCS (NYSE:PCS), arguing that it is indicative of a robust market for wireless spectrum and that carriers are remaking themselves to get the airwaves they need.

The endorsement, which was delivered in a letter from NAB President Gordon Smith to FCC Chairman Julius Genachowski, might mark a thawing of relations between broadcasters and the wireless industry. However, Smith used the letter to underscore his view that carriers seem to be making significant progress in addressing their need for more spectrum in the face of higher demand for mobile data.

NAB and many broadcasters are wary of the FCC's efforts to reclaim TV broadcast spectrum and then auction the airwaves to carriers to use for mobile broadband. Smith wrote in his letter that the T-Mobile//MetroPCS deal "further demonstrates that the free market remains the most dynamic means to address the purported spectrum challenges faced by wireless carriers today."

Indeed, T-Mobile and MetroPCS have said that the deal will greatly improve T-Mobile's spectrum position, especially as it deploys LTE. Smith pointed to other deals carriers have engaged in during the past year to further illustrate his point. He noted that Verizon Wireless (NYSE:VZ) purchased $3.9 billion of nationwide AWS spectrum from a group of cable companies; that AT&T Mobility (NYSE:T) bought chunks of 2.3 GHz WCS spectrum for LTE and wants to buy a large swatch of Verizon's Lower 700 MHZ B Block spectrum; that Sprint Nextel (NYSE:S) wants to acquire Clearwire (NASDAQ:CLWR) for its vast spectrum reserves; and that Dish Network (NASDAQ: DISH) now controls 40 MHz of AWS-4 spectrum.

"Rhetoric surrounding the spectrum debate has focused largely on repurposing to the wireless industry spectrum currently used by others," Smith wrote. "Yet it is increasingly apparent that the remarkable power of the free market is enabling wireless companies to address many of their spectrum concerns."

Incentive auctions for broadcast TV spectrum are expected to start in 2014. Under the FCC's proposed rules, broadcasters will submit bids to relinquish their 6 MHz pieces of spectrum in a reverse auction where the FCC will pay them. The process is voluntary for broadcasters, but many worry that broadcasters might not give up their spectrum based to their previous resistance to the auctions.

After broadcasters give up their spectrum, it will be "repacked" so that broadcasters that do not give up their spectrum can stay on the air. Then the FCC will conduct a traditional "forward" auction in which wireless carriers will bid for the freed spectrum. 

The FCC anticipates that there will be 6 MHz guardbands to separate spectrum blocks used by carriers, and that the "white space" between the blocks will be open for unlicensed use.

For more:
- see this NAB letter (PDF)
- see this Broadcasting & Cable article

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