AT&T Says Rules on Impaired Spectrum Will Mean Lower Prices in TV Incentive Auction

Verizon and AT&T face what they see as a kind of double whammy in the FCC’s proposed competitive bidding rules for the TV incentive auction. Rules approved by the FCC last May limit the two companies to buying only part of the spectrum sold, with the amount dependent on how much spectrum is recovered from broadcasters (see 1405160030). Then the FCC proposed in its Oct. 1 competitive bidding NPRM that the “unreserved” blocks open to AT&T and Verizon be those that are more subject to interference (see 1412080075).

The FCC proposed to put all of the relatively unimpaired spectrum, Category 1 spectrum, in the pool of licenses reserved for competitors, AT&T said in its comments. “All of the worst spectrum,” the Category 2 spectrum that may be up to 49 percent impaired, would be sold in the unreserved auction, the carrier said: “This is not only entirely unjustified, it is a surefire recipe for further depressing auction revenues in both the reserved and unreserved auctions.”

AT&T also objected to the way the proposed rules would treat impairment, arguing that bidders wouldn't have a clear idea of what challenges they would face if they buy an impaired license. Under the FCC’s proposal “TV stations would dot the 600 MHz LTE band plan all over the nation, because the Commission’s proposed assignment methodology would allow impaired spectrum in up to 20 percent of the national spectrum-value-weighted population (and actually much more because the Commission proposes to ‘discount’ uplink impairment by half),” AT&T said.

The FCC’s May mobile spectrum holdings order “already prohibits AT&T and Verizon from bidding on spectrum that is set aside for all other bidders,” Verizon said. “There is no basis to amplify that restriction.” Verizon also sought simplicity in auction design. The proposed market variation proposal is overly complex and “would create a nationwide patchwork of high- and low-clearing markets” that “would impair markets that cover up to 20 percent of the country’s entire population,” the carrier said.

But T-Mobile said it supports the “vast majority” of proposals from the FCC on the auction rules. The carrier sought additional tweaks, asking the FCC to limit the amount of spectrum available to AT&T and Verizon in any market to 40 MHz and limiting reserve block purchases to 20 MHz. “The 600 MHz incentive auction represents the last, best chance for effective facilities-based competition in the United States in a market that policymakers have expressed a preference for four carriers to compete,” T-Mobile said. “A timely auction that incorporates meaningful competitive safeguards will encourage investment, accelerate innovation, and increase the speed, reach and function of wireless broadband services.”

Sprint said the auction rules must provide more clarity to bidders on the extent to which a license is impaired before the auction starts. Bidders also should be able to enter bids for specific spectrum blocks, as had been the case in other FCC auctions, Sprint said. “The competitive operators with the greatest dearth of low-band spectrum -- and thus the greatest need for access to high-utility 600 MHz spectrum -- are also the operators least able to shoulder the risk of a competitively-harmful auction outcome,” Sprint said.

The FCC should keep things simple, to the extent possible, as it finalizes competitive bidding rules for the TV incentive auction, CTIA said. “Specifically, the Commission should keep license impairments and market variation to the minimum amount necessary to achieve a significant degree of spectrum clearing,” the association said. Bidders should have the information they need to decide whether to bid in the auction and the FCC shouldn't sacrifice “important auction goals” in favor of speed, CTIA said. The FCC should provide “at least two weeks” between the reverse and forward auctions “to permit parties sufficient time to evaluate their bidding strategies and other next steps,” the group said.

The Competitive Carriers Association also called for rules aimed at promoting competition. Two carriers dominate the wireless industry, said President Steve Berry in a news release. “A strong, competitive wireless industry requires multiple players, and the FCC should continue to use properly structured bidding credits to enhance opportunities for competitive carriers to acquire much-needed low band spectrum.”

Wireless mic maker Shure said the FCC should drop any proposal to put TV stations in the duplex gap between broadcast and carrier operations. ”Assigning a broadcast television station to the duplex gap offers no meaningful benefit to any party while stripping wireless microphone users and unlicensed interests of desperately needed known spectrum,” Shure said.