"In essence, AT&T and Verizon would be forced to compete for a single [LTE-capable] block, with the virtual certainty that both companies would end up with fragmented and inefficient 600 MHz footprints," AT&T lawyer Peter Keisler wrote.
The proposed rules would "tilt the playing field" to smaller carriers, Keisler added. "The clear purpose of the bidding exclusions is to allow 'favored' competitors to buy more low-frequency spectrum, and to buy it more cheaply, than AT&T and Verizon," he wrote.
Congress has prohibited the FCC from adopting auctions-specific rules that would prevent carriers from participating in the incentive auction, Keisler added.
Supporters of Wheeler's proposal say the FCC has always had broad authority to create auction rules. Wheeler's proposal does not prevent any carrier from bidding in the auction, supporters have said.
The Spectrum Act, the section of the Middle Class Tax Relief and Job Creation Act of 2012 that establishes the incentive auction, requires the FCC to allow all qualified companies to bid in the auction. But the legislation also gives the agency wide latitude to set spectrum aggregation rules that "promote competition," said Steve Berry, president and CEO of the Competitive Carriers Association, a trade group for small mobile carriers.
With that language, Congress gave the FCC more authority to limit large carriers from amassing too much spectrum, Berry said in a panel discussion on the spectrum proposal at the New America Foundation last week.
Wheeler's proposal would leave about 40MHz in each region available for open bidding, added Michael Calabrese, director of the Wireless Future Project at the Open Technology Institute at the New America Foundation.
The rules are "by no means a radical or exclusionary set-aside," he said at the same spectrum briefing. "This is hardly a very severe limit on any participant in the auction."
While rural carrier groups like Berry's have applauded Wheeler's plan, critics have questioned whether it would benefit rural areas as much as the FCC chairman has suggested.
Sprint and T-Mobile USA, the third and fourth largest carriers in the U.S., appear to be more focused on serving urban areas than rural areas, said Rick Boucher, a former Democratic U.S. representative from southwestern Virginia.
"If satisfying Wall Street's demands for Sprint and T-Mobile to use newly acquired spectrum only to serve revenue-rich urban and suburban broadband customers is the nation's primary goal, the FCC may be on the right track," Boucher wrote in a blog post for the Internet Innovation Alliance. "On the other hand, if expanding mobile broadband deployment to rural Americans everywhere, from the mountains of western Virginia to the open ranges of the West, best serves the public interest, the FCC may want to choose a different path."
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