T-Mobile assails Georgetown study on 600 MHz auction, calls for spectrum aggregation limits

T-Mobile US (NYSE:TMUS) blasted a recent study on the potential revenue that would be lost by limiting participation of AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ) in the upcoming 600 MHz broadcast incentive auctions, arguing that the study actually affirms T-Mobile's own positions on the highly charged topic.

In a filing with the FCC, T-Mobile took issue with several core aspects of the study, which was released in late April by the Center for Business and Public Policy at Georgetown University's McDonough School of Business. In the filing, Kathleen O'Brien Ham, T-Mobile's vice president of federal regulatory affairs, argued that the study assumes AT&T and Verizon would be prohibited from participating completely, which she wrote is a position that T-Mobile and its allies have not taken. She noted that T-Mobile and others have argued that AT&T and Verizon's participation in the auction is needed to get attention from network and device makers and drive down costs for 600 MHz equipment and devices through economies of scale.

"Yet strikingly, even under the extreme straw man of a complete ban on AT&T and Verizon participating in the 600 MHz auction, the authors conclude that the auction would still generate $19 billion in revenues, which is more than one-third of the revenue of all other spectrum auctions combined," she wrote. (The italic emphasis is in Ham's original text.) "As Holtz-Eakin and Bazelon concede, this 'worst case' $19 billion revenue projection is more than sufficient to cover the nearly $2 billion to reimburse broadcasters for relocation costs and the $7 billion for purposes of funding the nationwide 'First Responder Network Authority,' while still leaving $10 billion to compensate broadcasters for relinquishing their spectrum."

Smaller carriers have pushed for auction rules that would cap the amount of spectrum AT&T and Verizon can acquire, effectively ensuring that smaller carriers can get some of the spectrum that the wireless industry hopes will be made available through the auctions, which are tentatively scheduled to start next year. AT&T and Verizon have argued that such rules would amount to picking winners and losers in the auction.

Ham argued that tilting the rules toward AT&T ad Verizon could actually limit the amount of revenue the auction generates.

"Allowing the two largest carriers to acquire all or nearly all of the available 600 MHz spectrum perversely threatens to lower auction revenues by robbing the auction of the large number of participants and unpredictable types of bidding that increase spectrum prices and raise auction revenues," she wrote.

The filing from T-Mobile comes days after AT&T argued that T-Mobile's approach would curtail auction proceeds earmarked for public-safety communications and thus deprive first responders of the modern communications tools they need.

Ham argued that if AT&T and Verizon get most of the 600 MHz spectrum it will lead to more spectrum concentration and the need for further regulation of the industry. She wrote that the Georgetown study does not change what the FCC "already well knows: stimulating robust wireless broadband competition during and after the auction can encourage vigorous bidding, increase auction revenues, strengthen broadband reliability, inspire wireless innovation, and accelerate broadband deployment. To the extent this study contributes anything to the record, it reaffirms that reasonable, pro-competitive spectrum caps remain fully consistent with the considerable auction revenues predicted for the highly prized, low- frequency spectrum found in the 600 MHz band." (The italic emphasis is in Ham's original text.)

For more:
- see this FCC filing

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