Next year’s major 600MHz auction has cropped up many times as a subject of discussion online this past 12 months. And it’s no surprise, it’s billed as the biggest spectrum auction the U.S. has seen since 2008. Earlier this year, Sprint and T-Mobile (plus some smaller carriers) got their wish when the FCC pushed through new auction rules. These rules would stop Verizon and AT&T from using their superior buying power to consume all the spectrum. Under these rules a portion of the spectrum is reserved for the smaller carriers. Or – technically – reserved for carriers who don’t already own substantial amounts of low-band spectrum. But T-Mobile’s latest move suggests that’s not enough.
Setting aside up to 30MHz of the low-band spectrum for the smaller carriers is “insufficient to protect competition or meaningfully advance the stated goal of ensuring four robustly competitive nationwide carriers.” At least, it is according to T-Mobile.
The language within the filing suggests that T-Mo is using the FCC’s own strongly held belief in the 4-carrier US market against it. And there are two possible reasons why. Firstly, there’s the fact that SoftBank/Sprint backed out of plans to merge with T-Mobile to form a much bigger, 3rd carrier because the regulators weren’t going to be convinced it was good for consumers. Secondly, there’s news that the FCC has sought to stop carriers from clubbing together to purchase spectrum as a joint venture. In short: If you want a competitive 4-carrier market, at least give us a chance of competing!
According to T-Mobile: “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.”
Instead, T-Mobile wants the FCC to reserve up to half of the available spectrum for smaller carriers to make it a level playing field. The prime motivation is to protect itself in markets where the TV broadcasters have only given up 50MHz or 60MHz blocks of spectrum. In these situations, smaller carriers would only have 10MHz or 20MHz respectively, and that – according to T-Mobile – isn’t enough to build out a fast, robust and reliable network.
Within the current rules, T-Mo argues, that AT&T and Verizon still have free access to unreserved spectrum and can acquire 20MHz each, while other, smaller carriers are blocked or forced to make away with the scraps. In markets where AT&T and VZW are blocked from bidding on the reserved spectrum, they generally already own 20MHz blocks, and still have access to the unreserved spectrum.
As reported by FierceWireless:
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.
It’s certainly an interesting argument. And it’s unclear if the FCC plans on changing the auction rules again. But it’s not doom and gloom if T-Mobile only manages to get hold of 20MHz or less. In virtually every market where T-Mobile currently owns 700MHz band 12 spectrum (or is in the process of acquiring), it’s in 12MHz blocks. Which clearly, is less than the 20MHz the carrier would like to own. Still, you can’t blame T-Mo for attempting to get its hands on as much spectrum as possible. Because what will undoubtedly happen in the auction is that AT&T and Verizon will be able to take as much unreserved spectrum as they can afford. And their superior buying power will surely push smaller carriers aside.