T-Mobile, CCA tangle with AT&T over 700 MHz purchase as AT&T pushes for deal to go through

AT&T Mobility (NYSE: T) said that T-Mobile US (NYSE:TMUS) and the Competitive Carriers Association (CCA) are opposing its purchase of a small amount of Lower 700 MHz spectrum without any real arguments for why the FCC should block the transaction and just want to stop it from getting more low-band airwaves. CCA and T-Mobile counter that AT&T has not demonstrated the deal is in the public interest and just wants to gobble up more low-band spectrum.  

In a company blog post, Joan Marsh, AT&T's vice president of federal regulatory, noted that in September 2014 AT&T filed an application seeking FCC approval to acquire two Lower 700 MHz B Block licenses from Club 42 CM Limited Partnership. "AT&T's ownership of 700 MHz B Block licenses is wholly uncontroversial -- we purchased many in the 700 MHz auction and have been enhancing our B block footprint through small deals for some time," Marsh said.

Marsh said the deal should sail through because the spectrum being acquired is not being used and will provide AT&T with a sufficient position to support a 10 x 10 MHz LTE deployment in 700 MHz in the relevant markets. A contiguous 10 x 10 MHz configuration is more spectrally efficient and has a greater throughput than a 5 x 5 MHz deployment. "The more robust LTE network made possible by this transaction will improve spectral efficiency, increase network capacity and enable us to offer faster, higher quality services to our customers."

Marsh said that the FCC has endorsed this logic and "has repeatedly found that transactions that enable 10 x 10 MHz LTE deployments serve the public interest and has approved them."

However, Marsh said that "without offering any cogent argument or justification, CCA and T-Mobile have opposed the deal, arguing that the Commission should simply prohibit any incremental low-band spectrum aggregation by AT&T and Verizon. Period. They essentially assert that low band spectrum transactions should be deemed presumptively unlawful for any company named AT&T or Verizon."

In May 2014 the FCC approved new rules that said transactions resulting in a carrier gaining control of one-third of the spectrum below 1 GHz in a given market -- which equates to roughly 45 MHz of low-band spectrum -- "will be subject to enhanced review" in the FCC's case-by-case competitive evaluation of spectrum deals.

"With this argument, CCA and T-Mobile fundamentally misconstrue the FCC's new enhanced factor analysis," Marsh said. "Far from any presumptive standard, the Commission has retained its fact-based, case-by-case approach to transaction reviews, an approach that has worked well for many years in that it balances public interest benefits against concrete competitive harms. In the enhanced review, the Commission now considers low band aggregation as an enhanced factor that warrants heightened scrutiny. And given the detailed information the Commission has sought on this transaction, it is clear the Commission is taking the heightened scrutiny standard very seriously."

Marsh said "CCA's bald insistence that the transaction is bad simply because it involves low band spectrum is not only wrong on the law, but it's bad policy," adding that the FCC has said that just because a deal triggers the enhanced review does not mean it cannot be found to be in the public interest and approved.

"Despite being given every opportunity imaginable, AT&T has yet to meet its burden of proving why it needs so much low-band spectrum in rural markets and how this transaction significantly benefits the public interest," CCA President Steve Berry said in a statement to FierceWireless in response. 

Berry said the FCC's enhanced factor standard "has not yet lived up to the FCC's intention to help prevent further consolidation of low-band spectrum" and that AT&T "has entered into roughly a dozen transactions involving countless low-band spectrum licenses covering 328 MHz of low-band spectrum since the enhanced factor standards have been in place." 

"These transactions, in addition to AT&T's buying spree before the enhanced factor analysis was created, make for a dangerous case of further spectrum aggregation into the hands of one of the largest national carriers," Berry added. "AT&T's latest missive fails to address the Commission's recent finding in its Order on Reconsideration of its Mobile Spectrum Holdings Report and Order that '10x10 MHz blocks of [low-band spectrum are] not required for effective mobile deployment,' and also fails to explain why it must further aggregate low-band spectrum to meet its claimed need to 'increase network capacity.'" 

Berry said AT&T "has not complied with the standards of review and has presented no real evidence of increased public interest" and that Marsh's blog post "conveniently ignores the more rigorous standard of review that applies to this transaction where AT&T already holds more than 45 MHz of low-band spectrum even before approval of the proposed transaction. Accordingly, the FCC should deny the Club 42 transaction." 

Berry said the "transaction is a case of first impression and will set the tone for all other similar transactions."

T-Mobile agreed with CCA's counter-arguments. "AT&T simply wants to grab more low-band spectrum to depress competition, reduce investment and stifle innovation," Kathleen Ham, T-Mobile's senior vice president for government affairs, said in a statement to FierceWireless. "Consistent with the enhanced factor analysis it adopted last year, the FCC can set a strong precedent by denying this transaction and preventing further low-band spectrum concentration by dominant carriers."

For more:
- see this AT&T blog post

Related articles:
AT&T: Competition in U.S. wireless 'has gone into overdrive;' CCA says not so fast
AT&T knocks down T-Mobile's arguments against its 700 MHz deal with Appalachian Wireless
T-Mobile wants FCC to block AT&T's 700 MHz purchases as 600 MHz auction looms
AT&T hunts for 700 MHz spectrum in Kentucky, Ohio and West Virginia
AT&T: T-Mobile's 600 MHz reserve strategy is about protecting urban markets, not expanding rural coverage

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