Sprint, T-Mobile, Dish join forces with others to press FCC on incentive auction rules

T-Mobile US (NYSE:TMUS), Sprint (NYSE: S), Dish Network (NASDAQ: DISH), C Spire Wireless and a group of policy and public interest groups have forged a new alliance intended to pressure the FCC to craft 600 MHz auction rules that they say will benefit smaller carriers and increase wireless competition.

The group, called SaveWirelessChoice.com, also includes the Competitive Carriers Association, COMPTEL, Computer & Communications Industry Association, Consumer Federation of America, Engine, NTCA-The Rural Broadband Association, Public Knowledge, the Rural Wireless Association and Writers Guild of America West.

The coalition has two main goals. It wants the FCC to hold the incentive auction of 600 MHz broadcast TV spectrum in early 2016 as planned. Secondly, it wants a bigger chunk of spectrum reserved in the auction for smaller carriers--to 40 MHz, or at least half of the spectrum available in the auction.

"Creating an adequate reserve of quality spectrum for companies who don't already own more than 1/3 of the low-band spectrum in any given market will go a long way toward leveling the playing field for a competitive market that will benefit consumers for decades to come," the coalition said in a statement.

For months, T-Mobile, Sprint and smaller carriers have been urging the FCC to increase the size of the spectrum "reserve," or the licenses set aside for smaller carriers. The FCC's current rules limit the maximum size of the reserve to 30 MHz. The reserve 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, which in many markets will exclude Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T) from bidding.

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 those that do not want to see the reserve increased is that by limiting Verizon and AT&T's participation, the FCC 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. 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.

"In particular, the Commission seems intent on setting aside some spectrum--in other words, reserving licenses--for select companies," FCC Commissioner Michael O'Rielly said earlier this month at the National Association of Broadcasters convention. "The practical effect of this policy is obvious: these licenses will go for far less, because the country's largest providers will only be able to win the unreserved spectrum. To see an example of this policy in action, we only have to look to the recent Canadian AWS-3 auction where the reserved spectrum winners paid 4.68 percent of the total auction receipts, less than what was paid for unreserved spectrum by a factor of 20."

Meanwhile, T-Mobile has engaged in a war of words with Mobile Future, a wireless public policy group that it has accused of being a mouthpiece for Verizon and AT&T. "Mobile Future and American Rural falsely represent themselves as populist entities. They are not," Trey Hanbury, an attorney for T-Mobile at Washington law firm Hogan Lovells, wrote in an FCC filing in which he took aim at several claims made by Mobile Future regarding T-Mobile's spectrum holdings. "AT&T and Verizon fund Mobile Future's operations and largely shape its advocacy. The American Rural organization, meanwhile, has never before filed in these proceedings and that organization's chief executive officer is also employed by Mobile Future, which, in turn, receives the majority of its financing from AT&T and Verizon. Any claim to impartiality or objectivity made by Mobile Future or the American Rural entity is highly suspect."

Mobile Future has nearly 70 members, including some major wireless firms like Alcatel-Lucent (NYSE: ALU), Cisco Systems, Ericsson (NASDAQ: ERIC), Qualcomm (NASDAQ:QCOM) and Samsung Electronics. The group also includes many smaller members like the Mobile Giving Foundation, the National Association of Neighborhoods and the United States Hispanic Chamber of Commerce. However, Verizon and AT&T are the only two carriers that are members. The group says it is focused on "working to support an environment which encourages investment and innovation in the dynamic wireless sector."

In a statement, Mobile Future defended its stance. "Yet again, T-Mobile distorts facts in an effort to skew competition in the upcoming incentive auction. With countless analyst reports touting T-Mobile's spectrum holdings and marketplace success, T-Mobile continues to hold much more spectrum per subscriber than any other major player," a Mobile Future spokesperson said in a statement to FierceWireless. "T-Mobile clearly has one message for Wall Street and another for the FCC. Competition is hard but shooting at the messenger doesn't change the facts. Mobile Future is extremely proud to have the two wireless providers serving the most rural customers among our members and we will continue to advocate to ensure American rural customers are connected. Rather than relying on Washington and American taxpayers to pay their bills, it's time for T-Mobile to step up to the plate and put its significant financial resources in play to invest in rural America, rather than more DC lawyers." 

For more:
- see this release
- see this Save Wireless Choice site
- see this FCC filing
- see this separate FCC filing

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