T-Mobile Pushing Grassroots Strategy To Win Changes It Seeks on Incentive Auction Rules

T-Mobile released a comic-book style video, which portrays AT&T and Verizon as the forces of darkness, sending an army of lobbyists to convince the “FCC Five” to bend to their will. “There’s a dark force plotting in the shadows, AT&T and Verizon, the duopoly,” the video warns. “Their evil plan is to seize control of a powerful, precious resource called spectrum, so they can eliminate competition and continue to feed off consumers like leeches.”

T-Mobile US CEO John Legere shows up at the end of the video. “It’s time for all of us to make some noise,” Legere said: “Your actions can make a difference. The FCC is still deciding what to do. Let them know you’re paying attention.” Legere shared the video via Twitter. “KA-POW!!” he tweeted. “That is the sound of us saving wireless competition! We need your help to #DefeatDuopoly!” Legere shows up in the cartoon segment as a kind of uncarrier caped crusader.

Industry officials told us Tuesday that T-Mobile likely faces a real uphill fight. Before the spectrum holdings order was approved in May 2014, Commissioner Jessica Rosenworcel successfully sought a change that allows carriers with more than 45 MHz of spectrum in a market to buy as much as 40 MHz of 600 MHz spectrum, even if the auction recovers as little as 50 or 60 MHz from broadcasters (see 1405160059). With Rosenworcel on record as opposing a larger reserve and Wheeler having circulated the order, industry officials said they don’t see how T-Mobile can succeed in winning the fight for a larger reserve set aside.

“I don't rule it out, but this is a much harder issue for public pressure to affect than something like net neutrality,” said Paul Gallant, analyst at Guggenheim Partners. For example, the FCC changed course on net neutrality, adopting tougher rules and reclassifying broadband as a common carrier service, after the HBO weekly program, Last Week Tonight with John Oliver, ran a 13-minute segment on net neutrality and the initial NPRM (see 1406040046).

“While consistent with the self image of T-Mobile as the $30 billion revenue underdog and the Batman attire of its CEO, the real world story is a lot more nuanced and complicated than what is presented in the movies,” said Roger Entner, analyst at Recon Analytics. “The FCC under Chairman Wheeler vowed to be a fact-based decision making agency and this is another opportunity to demonstrate it.”

“It’s appropriate that T-Mo used a comic book theme to communicate a narrative that simply doesn’t fly in the face of facts," a Verizon spokesman said. "T-Mobile has more spectrum per customer than just about any other carrier, and if it leveraged such spectrum to meet the needs of customers by investing in its network, it wouldn’t need to stoop to special effects for special favors."

But Public Knowledge Senior Vice President Harold Feld said it makes sense for T-Mobile to get the public involved. “T-Mobile's best chance at expanding the reserve is to generate popular support for such a move,” Feld said. “Given the grassroots opposition to mergers such as Comcast, and the general popularity of T-Mobile as the ‘uncarrrier,’ it's entirely possible that T-Mo will be able to translate the combination of their customer loyalty and general resentment about the lack of competition into a change in the political environment.”

“There are no new facts or circumstances since the FCC issued its incentive auction order that weigh in favor of reconsidering the spectrum reserve, and I’d be shocked if the FCC reversed course after T-Mobile publicized a juvenile video calculated to mislead consumers on a complex topic within the agency’s expertise,” said Fred Campbell, former chief of the Wireless Bureau, now executive director of the Center for Boundless Innovation in Technology. “The precedent set by condoning T-Mobile’s tactics would encourage unhappy parties to file baseless reconsideration petitions, foster uncertainty about the finality of FCC decisions and call the agency's decision making process into question.”

Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation, said the T-Mobile campaign is a “long shot” at best. The FCC already took a close look at the issue a year ago “and decided 30 MHz is a reasonable compromise to ensure access for those with less low-band spectrum while maintaining auction competition, at least among those qualifying for the reserve,” Brake said. T-Mobile and the Save Wireless Choice campaign funded by competitive carriers “appear not to have presented any new facts, arguments or claimed any changed circumstances but instead are attempting to channel John Oliver’s masses into giving them an even larger leg up in the auction. I don’t think the FCC will be fooled.”

"Why pay high-priced lobbyists when social media allows firms looking for government giveaways to apply pressure for free?” said Richard Bennett, network engineer and visiting fellow at the American Enterprise Institute. The strategy worked for Cogent and Netflix on net neutrality and for Google and Reddit on the open Internet proceeding and on the Stop Online Piracy Act, he said: “The Internet makes saber-rattling easier than ever, so well-meaning but poorly informed pressure is the new normal.”

The Competitive Carriers Association, meanwhile, made the case for limiting spectrum buys by AT&T. AT&T’s focus has been on attacking T-Mobile “which ignores the more than 100 competitive wireless providers that operate today throughout the United States,” said CCA President Steve Berry in a blog post. Numerous smaller carriers and potential new market entrants favor adoption of pro-competitive rules for the incentive auction. “The fact is CCA expects robust participation in the forward auction, and if AT&T is permitted to bid on reserve spectrum in large parts of rural America, this makes increasing the size of the reserve all the more important,” he said.