Sprint: FCC's spectrum screen proposal will give advantage to AT&T, Verizon

Sprint (NYSE: S) argues that including the vast majority of its 2.5 GHz spectrum in the FCC's spectrum screen without distinguishing between low-band and high-band spectrum will put it at a competitive disadvantage to Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T).

In a recent filing to the FCC detailing a recent meeting between Sprint and Louis Peraertz, legal advisor to Commissioner Mignon Clyburn, Sprint stressed the "necessity of distinguishing among bands contained in the screen."

The FCC is poised to add around 101 MHz of Sprint's 2.5 GHz spectrum to the screen. Sprint controls around 120 MHz of 2.5 GHz spectrum in 90 percent of the top 100 U.S. markets and is using the spectrum to deploy TD-LTE service and increase speed and capacity on its network.

By adding Sprint's spectrum to the screen, Sprint argued the FCC could give AT&T and Verizon more leeway in making spectrum deals in the future after the upcoming AWS-3 and 600 MHZ incentive auctions. Sprint wrote that the proposed rules "would provide AT&T on average with nearly three times the spectrum screen headroom it enjoys today and would almost double Verizon's average headroom."

Analysts have noted that the new screen would cause Sprint to hit or exceed the one-third threshold in most major markets. Indeed, Sprint noted that, based on the new rules, even its "routine" spectrum transactions would be subject to detailed competitive analysis. "Accordingly, Sprint expressed concern that Commission adoption of the staff proposal, after reviewing the voluminous record in this proceeding, would signal that the Commission has concluded that the only carrier with dominant national market power is Sprint. This, of course, is preposterous," Sprint wrote.

The FCC currently uses the screen as a factor when reviewing spectrum transactions to determine whether they are in the public interest. If a carrier acquires too much spectrum and violates the screen, the deal is more closely scrutinized. Currently, the screen is different for each proposed transaction, and is triggered when a wireless provider holds one-third or more of the available spectrum in a given market.

Sprint also referenced the upcoming 600 MHz spectrum auction in its argument against the spectrum screen. The carrier noted that "low-band spectrum is so competitively important that it warrants a 600 MHz reserve for carriers with limited low-band spectrum, yet the staff recommends that all spectrum (including low-band) count equally in a revised spectrum screen."

Instead, Sprint wants the FCC to use a "three-tiered weighted screen" that would take into account the different propagation characteristics of low-band, mid-band and high-band spectrum.

The FCC will vote on the new spectrum screen at its May 15 meeting. However, the rules could change before then.

For more:
- see this Sprint filing (PDF)

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