Unsurprisingly, Verizon’s unhappy with FCC’s plans to make spectrum auctions more competitive

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Sprint and T-Mobile are doing the best they can to push the FCC in to making a decision on airwave auctions that would see the system changed to be more favorable to the smaller guys. Both carriers have increased lobbying budgets and contacted regulators over 24 times this year. Putting as much time and money in as possible because the upcoming spectrum auction could be the largest we’ve seen in the U.S. since a $19 billion sale in 2008.

Tom Wheeler, Chairman of the FCC is in agreement and wants to limit the amount purchasable by Verizon and AT&T. A move which has seen strong reaction from both the bigger two carriers. Originally, the AT&T had rather childishly stated that it would pull out entirely. Which it won’t. And Verizon is next. It’s not threatening to pull out, but it’s not best impressed by the proposed changes to the auction rules, calling it “perverse and unjust.”

It stated that: “bidding restrictions proposed by competitors would reduce the amount of spectrum made available in the auction and would add to its complexity. Set-asides in general can reduce auction revenues by limiting competition in the auction, and harm consumer welfare.”

As cleverly and “matter-of-fact” as Verizon might try to word this in its attempt to change the FCC’s plans, the fact is that it stands to lose control it once had. Traditionally, the way spectrum auctions were run made it much easier for bigger carriers with bigger cash reserves to gain lots of spectrum. VZW might like to pretend that T-Mobile is on a level playing field, and it isn’t. It has less than half the subscriber base, a lot less cash, and needs to buy spectrum in smaller chunks, covering smaller areas to give it more flexibility.

Verizon and AT&T are used to a system where they can simply gobble up a large percentage of available airwaves leaving little for everyone else to share. When their coverage is already wider-reaching than smaller carriers, that’s about as anti-competitive as you can get.

To me, and I guess anyone with a Magenta-persuasion, it’s an attempt to stop T-Mo and others from competing in an area where VZW and AT&T are used to dominating: Coverage. T-Mobile has proven that it has what it takes to attract new subscribers. By having access to low-frequency spectrum, it could also start to hurt the big two in terms of coverage too, by offering a faster, stronger and more reliable network.

No final decision has been made on this yet. But each carrier is attempting to make sure the auctions leave them in a healthy position to be the best. And you can’t really argue with that. If T-Mobile was the largest carrier and capable of buying up large chunks of spectrum, it’d probably be doing exactly what Verizon is doing now.

For detailed analysis and reports read: Bloomberg, Fierce Wireless, Reuters, FCC Filing

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  • George

    Limiting competition, my ass! Verizon and AT&T can go to hell

  • KlausWillSeeYouNow

    I’m for giving T-Mo a fighting chance, but I’m very wary of letting the hand of government drastically shape industry (even though I do like Wheeler). The market tends to work best when left alone (in most cases), so while I embrace the short-term appeal of knocking down Verizon, I can’t help but wonder what long-term ramifications it may carry.

    Also… what will we think when T-Mo is someday #1? Bet we won’t want VZW to get a boost then!

    • TechHog

      Wow, you’re a really hardcore capitalist, huh?

      • KlausWillSeeYouNow

        Without making this a blown-up conversation about economic theory or political preference, I will say that I do happen to generally like capitalism. “Hardcore” really isn’t an appropriate descriptor, though.

    • bob90210

      The FCC auctions spectrum licenses that are owned by the public, i.e., the American people. Since the people own the airwaves, then the goal of the auction is to benefit the people. Simply selling the license to the highest bidder does not benefit the people if the largest carriers buy all the spectrum and have a monopoly.

      • KlausWillSeeYouNow

        Very good point!

  • DeceptiveSmiles

    VZW and ATT buy spectrum and sit on it so noone else can. Where’s the spirit of competition?

  • Eric

    They better be. T-Mobile will eventually cover every square mile of the United States and 600 MHz will lead them closer to that goal.

  • TMOEngineer

    John Legere is smiling right now.

  • Alaska

    I hope they buy spectrum in Alaska. I use to live up there. The only carriers are AT&T and ACS who have their own monopoly going on up there. Verizon is slowly coming in. There is no unlimited data option up there. I know Alaska doesn’t have a big population, but Anchorage has over 260,000 people and both Juneau and Fairbanks have over 30,000 people. If a lower priced carrier with unlimited data built a network up there everybody would leave ACS & AT&T. The Alaskan wireless market is in despret need for a shake-up and UNCARRIER would be the purfect thing for it.

    • steveb944

      Last time I was in Alaska I was told I would be roaming and would be charged as such. To my surprise I had no increase in my bill due to calls and texts. I shut off data roaming so I don’t know if data would charge.

      I don’t think they should bother building up there just yet, most of their customers are in the major metropolitan continental US areas.

      But there should be roaming agreements, it’s pretty bad we can use our phones overseas but not in Alaska.

      • Alaska

        Ya, I agree. They should build out more in the lower 48 first. But I hope they eventually expand to AK. Does anyone know if the 600mhz auction includes Puerto Rico?

        • dd23

          I hope it does because tmobile network aint the great in PR I dont want to go to at&t because att is the only one that has the whole island covered in 3G and lte,i know many places in PR tmobile is still edge only..

  • Alex Zapata

    I just want a single band class this time.

    • TheFurer1eleven

      Señor Zapato, please explain and elaborate. What does that mean, why does it matter, and why should we care? I’m very intrigued by your comment. Thank you sir!

      • Alex Zapata

        To put it in simple terms: interoperability. All devices running on the 600MHz band would be able to work on any network deploying those waves. When the 700MHz auction toom place it ended up being split into 4 band classes. Bands 12, 13, 14 and 17 effectively lack interoperability. A single band class would make it much easier for manufacturers as well.

        • monkeybutts

          I believe 12 is reverse compatible with 17, but 17 cannot use all the spectrum 12 can.

  • S. Ali

    Sprint released a counter-statement that the FCC should measure “relative value” of spectrum. They have a point, and it counters Verizon’s complains. You can’t simply compare the carrier by total spectrum ownership. Fact is, Sprint’s 2.5Ghz spectrum costs 4x as much to deploy as VZW/ATT 700mhz spectrum. Grabbing more 600mhz spectrum only helps to reduce Verizon’s cost structure making it more difficult for smaller carriers to deploy nationwide footprints. Verizon doesn’t need more spectrum in the sub-ghz range, its the exact opposite, they need more high-bandwidth spectrum to carry their increased customer load.

    • superg05

      exactly they only want it so the competition can’t have it

    • monkeybutts

      Sprint does have 800 mhz which is way better than T-mobiles spectrum being used at the moment, they just chose to use it poorly

  • Fr0stTr0n

    Booo farking hoo Verizon

  • Jay Holm

    Smaller chunks of spectrum is one thing, but I think what T-Mobile really needs to get is spectrum that is truly nationwide.

  • superg05

    we all need to write the fcc and tell them what a great competitive plan there doing and as a consumer your very happy to know there looking out for every day people

  • Cam Fas

    verizon go cry me a river you wouldn’t give me unlimited data or a reasonable upgrade plan so I left you and att.

  • Bud

    fu verizon! one of the most evil company’s on the planet.

    • notyourbusiness

      Right alongside AT&T.

      • Bud

        Yes, them too.

  • J-Hop2o6

    How much TOTAL spectrum (in MHz) will be available in the 600MHz auction? Hopefully a good amount to where each of the Big 4 can get ATLEAST 20MHz each nationwide.

  • Trevnerdio

    “Mooommm, daaaddd, I win every single thing I compete in and if I don’t get my way this time, I’m going to scream!” -Verizon, AT&T, aged 12

    • guitarthrower

      I agree, but you could saw the same thing about Tmo

      i.e. “they bought all the spectrum and they won’t let me play with theirs…”