T-Mobile US (NYSE:TMUS) thinks the FCC's decision to reserve up to 30 MHz of spectrum for smaller carriers in next year's incentive auction of 600 MHz broadcast TV spectrum is not sufficient. The carrier wants the FCC to set aside at least half of all of the spectrum that is cleared in a given market for smaller carriers, and argues setting aside just 30 MHz of the low-band airwaves for smaller carriers is "insufficient to protect competition or meaningfully advance the stated goal of ensuring four robustly competitive nationwide carriers."
T-Mobile's petition to the FCC is notable in light of Sprint's (NYSE: S) reported decision to drop its bid to merge with T-Mobile, largely because of expected regulatory opposition from the FCC and Department of Justice. It also comes shortly after the FCC signaled it would block joint bidding arrangements for the auction, like the one that was rumored to be proposed between Sprint and T-Mobile before Sprint dropped its efforts to merge with T-Mobile.
In essence, T-Mobile is arguing that 20 MHz blocks of spectrum are the ideal amount for LTE deployments. And the carrier said that reserving only 30 MHz total for smaller carriers isn't enough to maintain competition, given the FCC's preference for four national wireless carriers.
Depending on how much spectrum the FCC gets broadcasters to give up, T-Mobile noted, "the current reserve policy deprives all--or, at best, all but one--of the non-dominant carriers of the ability to acquire the amount of contiguous low-band spectrum resources needed for an efficient nationwide broadband deployment without exposure to the foreclosure risk posed by the two dominant incumbents."
Under the current 600 MHz auction plan, broadcasters will give up their spectrum in the "reverse" part of the auction. Then the FCC will conduct a more traditional "forward" auction in which wireless carriers will bid for the freed spectrum.
In May, the FCC approved 600 MHz auction rules designed to prevent Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T) from acquiring all the available spectrum up for grabs. The rules reserve up to 30 MHz of spectrum for smaller carriers like Sprint, T-Mobile and others.
Crucially, however, in situations where broadcasters have given up only 60 MHz of spectrum, only 20 MHz can be reserved, and where broadcasters have given up 50 MHz of spectrum, only 10 MHz can be reserved.
It is that last element of the rules that T-Mobile is objecting to most strenuously now. T-Mobile said the current system "preserves the right of AT&T and Verizon to divide the unreserved spectrum and acquire 20 MHz each" while blocking smaller carriers.
T-Mobile notes in that in markets where AT&T and Verizon would be unable to bid on reserved spectrum, "they generally already own two contiguous 20 MHz blocks of low-band spectrum (and, of course, would have access to all the unreserved spectrum, so would face no real constraints). By comparison, few competitive carriers--and neither of the two other national providers--have more than 14 MHz of low-band spectrum available for broadband use" in most markets.
To remedy this, T-Mobile wants the FCC to "reserve at least half of the available 600 MHz spectrum under different clearing scenarios instead," because doing so "would promote robust competition among service providers and ensure the continued vitality of four nationwide providers."
Under T-Mobile's plan, if broadcasters give up 100 MHz or 90 MHz of spectrum, 50 MHz would be reserved; if 80 or 70 MHz is given, 40 MHz would be reserved; if 60 or 50 MHz is given, 30 MHz would be reserved; and if 40 MHz is given, 20 MHz would be reserved.
"The smaller the reserve, the greater the disparity in access to 600 MHz spectrum becomes, and moving below a 30 MHz reserve would deprive all other carriers of a meaningful opportunity to increase their low-band spectrum holdings," T-Mobile wrote.
- see this FCC filing (PDF)
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