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FCC proposal would limit AT&T, Verizon in spectrum auction

Grant Gross | May 14, 2014

The U.S. Federal Communications Commission has not one, but two, controversial items on its Thursday meeting agenda, with a vote on rules limiting the amount of spectrum the nation's two largest mobile carriers could buy in an upcoming auction in addition to the potential release of a net neutrality proposal.

FCC Chairman Tom Wheeler's net neutrality proposal has been grabbing headlines and generating social-media protests in recent weeks. But his plan to set limits on how much spectrum AT&T and Verizon Wireless can buy in 2015 auctions now controlled by U.S. television stations has generated a heated, behind-the-scenes debate about the authority of the agency.

The spectrum rules could have a major impact on mobile competition across the U.S., with implications for the quality of service customers receive, the mobile broadband speeds available, and the prices they pay.

The FCC is scheduled to vote Thursday on whether to approve Wheeler's spectrum proposal, which would limit the participation of AT&T and Verizon in the so-called incentive auction after bids reach a threshold partly based on auction prices. After bidding reaches a trigger point, the FCC would set aside a portion of spectrum that AT&T and Verizon could not bid on, Wheeler said in a blog post last month. The amount of reserved spectrum in any one area would be less than half of the spectrum available.

The two largest mobile carriers in the U.S. own most of the low-band spectrum, where wireless signals are able to travel farther and penetrate buildings easier that signals in higher bands, Wheeler wrote. That makes it difficult for other mobile carriers to compete with Verizon and AT&T in rural areas and in dense urban areas, he said.

The goal of his plan, he wrote, "is to promote a robustly competitive auction with all parties vying to establish a fair market price. As a result of this design, it will not be possible for one or two bidders to sweep the auction."

With the incentive auction covering highly coveted spectrum in the 600 MHz band, Wheeler's proposal set off a heated debate about the agency's role in setting spectrum auction rules. As the FCC was putting together Wheeler's proposal, AT&T threatened to sit out the 600MHz auction if the FCC puts too many bidding restrictions in place.

"The proposed restrictions are complicated and unnecessary," Joan Marsh, AT&T's vice president for federal regulatory affairs, wrote in an April letter to the FCC. "Such restrictions would put AT&T in an untenable position, forcing AT&T to re-evaluate its potential participation in the auction."

The proposal would set up rules in which AT&T and Verizon would be "walled off" into a separate auction for a limited amount of spectrum, a lawyer for AT&T wrote in comments to the FCC this month.


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