AT&T Trying Its Best to Make Sure Incentive Auction Fails, T-Mobile Says

The FCC is expected to release a sunshine notice on both the auction and spectrum aggregation orders Thursday, one week before the May 15 open meeting, cutting off further lobbying at the agency.

"AT&T has ... done everything they could to really undermine this auction and they're continuing to do that,” Ham said. “They've pushed for less spectrum in the auction. They have opposed any kind of reasonable competitive limits. ... AT&T would really like to see this auction fail. We're up here saying, ‘No, we don’t want it to fail.'” Low-band spectrum is unique, Ham said. “This is the last opportunity for this type of spectrum to be rolled out that any of us are aware of,” she said. “It’s easy for AT&T when they're sitting on so much low-band spectrum to sit there and say, ‘No problem, don’t need it.'” AT&T has plenty of opportunities like the AWS-3 auction to buy coverage spectrum, without similar aggregation limits, she said.

AT&T and Verizon “are not pleased” that spectrum aggregation rules will prevent them from “completely foreclosing additional facilities-based competition,” said Michael Calabrese, an NAF senior researcher. “They're throwing every argument against the wall, from threats not to participate to claims that winning anything less than 20 MHz isn’t worth the cost of deployment. Nothing they've thrown has stuck.” Calabrese said AT&T and Verizon should be allowed to buy no more than a combined 30 MHz of incentive auction spectrum in any market.

"At least one of the large carriers has cried wolf on more than one occasion,” said Steve Berry, president of the Competitive Carriers Association.

Sprint Vice President Larry Krevor said his company sees real value in the 600 MHz spectrum the FCC will offer in the incentive auction. “Whether you're doing voice or data ... low-band spectrum goes further and it goes into buildings better,” he said. “Everyone knows that. It’s a well-established fact of physics.” All carriers “need low-band spectrum,” he said. Carriers also must worry about coverage and low-band spectrum travels farther, Krevor said. A single low-band site can cover as much territory as eight sites using 1.9 GHz spectrum or as many as 15 using 2.5 GHz spectrum, he said.

Berry predicted all competitive carriers will look closely at bidding in the incentive auction. “It’s not just about spectrum, it’s about getting into an ecosystem that allows you to compete in this new generation of services,” he said. “I think competitive carriers are going to show up.”

Broadcasters and the two biggest carriers should understand that the incentive auction is likely the “high watermark for them,” said Mark Cooper, research director of the Consumer Federation of America. “If this doesn’t go because [AT&T and Verizon] don’t come to play or the broadcasters don’t come to play, I suggest that the next statute is going to be a lot less friendly to the incumbents because the world outside the incumbents is growing fast. They need spectrum.” The way the auction is set up, broadcasters can “take the money and run,” sell some spectrum while they stay in the business, Cooper said. “How is it going to get better for you? Why should [broadcasters] not commit? They may think they can get more money next time. ... This is the best it will get in my opinion.”

Cooper said other panelists were being “too polite” in their comments on AT&T. “Let’s be clear,” he said. “AT&T always does things on the cheap until either competition or regulators force them to make the investment in infrastructure.”

Comptel CEO Chip Pickering said the FCC’s original spectrum auction 20 years ago was a turning point for competition. “No policy has generated as much economic growth, investment, innovation,” he said. “No policy has transformed our economy, our way of life, our culture ... as much as competitive auction policy.”

Mobile Future released a statement criticizing comments made at the New America briefing. “Every time government regulators have tried to genetically engineer spectrum auctions to achieve a certain outcome, or to favor one competitor over another, the results have been disastrous,” the group said. “Despite the pleadings we heard today for special treatment and special favors from companies like T-Mobile and Sprint, the stakes for our mobile economy are simply too high to risk turning the important upcoming 600 MHz auction into yet another science experiment. The fact is that all American mobile customers -- not just a select few -- need more spectrum.” A successful auction relies on supply and demand, Mobile Future said. “Artificially limiting either via regulatory fiat would be a grave mistake."

Meanwhile, Rick Boucher, a former Democratic member of the House who once chaired the Communications Subcommittee, said in a blog post that spectrum aggregation rules will do little to promote competition in rural America. Unlike AT&T and Verizon, Sprint and T-Mobile have not said they will use the 600 MHz spectrum to broaden their coverage to serve the entire U.S., Boucher wrote. “Excluding certain companies from the auction in an attempt to engineer greater ‘competition’ isn’t going to work,” he said (http://bit.ly/1iY2VVy). “Modern broadband networks require significant capital investment to build out these new services to difficult-to-reach populations. The companies that are most likely to make that capital investment are the ones who currently serve rural America and have announced their intention to expand rural access with newly acquired spectrum."

Verizon said in a Tuesday filing at the FCC that neither Sprint nor T-Mobile was foreclosed from participating in the 2008 700 MHz auction. Both made “conscious business choices” not to buy low-band spectrum in that auction, Verizon said.