Small mobile carriers lost a battle Thursday when the U.S. Federal Communications Commission declined to make it easier for them to get access to a reserved slice of spectrum during a 2016 auction of television spectrum.
The FCC, in a 3-2 vote, approved a wide-ranging set of rules for the upcoming incentive auction in which U.S. TV stations have the option of giving up their current spectrum and moving to other channels or stop broadcasting over the air in exchange for a piece of the auction proceeds. The world's first, two-way spectrum auction, with TV stations selling spectrum and mobile carriers buying, will begin March 29, 2016, the FCC announced.
The FCC decided to leave in place a condition needed to trigger a 30MHz spectrum block that locks out the nation's two largest carriers from bidding, handing a defeat to T-Mobile USA, Sprint and smaller mobile carriers. Even though it declined to change the conditions triggering the reserve, the FCC did vote to keep the controversial reserve provision intended to increase bidding from smaller carriers.
The full spectrum reserve will be triggered if TV stations give up 84MHz of spectrum to be auctioned, giving Verizon and AT&T the opportunity to still bid on about five 10MHz blocks of spectrum.
T-Mobile had called for the FCC to trigger the so-called spectrum reserve for small carriers if a minimum spectrum price was met, or if the auction raises enough money to reimburse TV stations for their spectrum and pay for moving them to new channels, whichever condition happens first. The FCC rejected the T-Mobile proposal, instead requiring that both conditions be met.
T-Mobile, however, applauded the FCC for keeping the spectrum reserve for smaller carriers, even after the FCC rejected its calls to limit the conditions and increase the size of the reserved spectrum to 40MHz.
The carrier "is committed to showing up, playing hard and being successful at the auction," T-Mobile CEO John Legere tweeted. The spectrum reserve is "unprecedented, will benefit consumers & encourage competition," he said in another tweet. "This is a victory."
T-Mobile and its allies argued that the TV relocation condition will allow Verizon and AT&T to game the auction by cherry-picking spectrum in select cities. In that scenario, the two large carriers would target spectrum in the most desirable U.S. cities and drive off competing bidders before the total bids reach the TV relocation trigger.
Smaller carriers and consumer groups argued for a spectrum reserve because the two largest carriers control more than 70 percent of the desirable low-band spectrum in the U.S.
AT&T and Verizon had argued against any spectrum set-aside for small carriers, saying the spectrum reserve gives special treatment to their competitors. Reserving 30MHz of spectrum for other bidders could also drive down the revenues from the auction, they argued.
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