Report: T-Mobile, Sprint won't get extra 600 MHz reserve in FCC auction

The FCC is leaning toward rejecting a push from T-Mobile US (NYSE:TMUS), Sprint (NYSE: S) and others to increase the amount of spectrum set aside for smaller carriers to bid on in next year's incentive auction of 600 MHz broadcast TV spectrum, according to a Reuters report.

Since August 2014, T-Mobile has been calling for the FCC to increase the size of the spectrum reserve for smaller carrier from 30 MHz of spectrum to at least 40 MHz of spectrum in a given market. Last month, T-Mobile, Sprint, Dish Network (NASDAQ: DISH), C Spire Wireless and a group of policy and public interest groups forged a new alliance intended to pressure the FCC to craft 600 MHz auction rules that would increase the size of the reserve to 40 MHz or at least half of the spectrum available in the auction.

A decision has been hanging in the air for months but could be resolved in the next few weeks the report said, citing unnamed sources familiar with the matter. The report said no recommendation has yet been prepared and the deliberations could still shift, but that FCC staff's current thinking is that an adequate amount of spectrum has already been set aside for smaller carriers. Democratic Commissioner Jessica Rosenworcel is the swing vote on the issue, and is unlikely to vote for changes, the report added.

FCC spokesman Neil Grace told Reuters that the commission's staff members are working on various auction-related matters. "At this time, that preparatory work is active, remains ongoing, and no decisions have been made," he said.

Andy Levin, T-Mobile's senior vice president of government affairs, said in a statement that the carrier is confident the FCC "will do the right thing by consumers in this auction and make sure AT&T and Verizon don't further consolidate their control over wireless access to the Internet."   

The spectrum reserve, which was crafted as a compromise last year among the FCC's three Democratic commissioners, is designed to let carriers with less than 45 MHz of spectrum below 1 GHz in a given market bid on the spectrum in that market. The move essentially prevents Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T) from bidding on reserved 600 MHz spectrum in most markets.

Sprint and T-Mobile have argued that if the reserve is not increased to at least 40 MHz, then only one small carrier will be able to secure a 10x10 MHz block in the reserve, potentially letting AT&T and Verizon get another 10 MHz or more. T-Mobile also wrote in a recent FCC filing that the commission should "also limit reserve spectrum purchases to 20 MHz to prevent any one reserve-eligible bidder from acquiring all of the resources available in the spectrum reserve."

The counter-argument from AT&T, Verizon and others is that limiting Verizon and AT&T's participation in the auction will depress auction revenues and will scare broadcasters away, since broadcasters will think they will not get as much money as they otherwise might be able to for their spectrum. Broadcaster participation is crucial for the incentive auction, since broadcasters need to sell their spectrum to the FCC so that carriers can bid on it.

T-Mobile and Dish executives have indicated the companies plan to participate in the incentive auction. AT&T has committed at least $9 billion to incentive auction bidding. Sprint has said it might bid in the incentive auction, but has not committed to it.

For more:
- see this Reuters article

Related Articles:
Sprint's Euteneuer: We're looking at 600 MHz auction, but don't need to participate
FCC moving forward with basic 600 MHz auction framework, but spectrum reserve remains unclear
Sprint, T-Mobile, Dish join forces with others to press FCC on incentive auction rules
Analysts: Deutsche Telekom won't support T-Mobile financially in 600 MHz incentive auction
Sprint's Claure suggests bidding coalition with CCA members for 600 MHz spectrum
T-Mobile, Sprint and Dish push for 40 MHz spectrum reserve in 600 MHz auction

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