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Huge stakes involved in FCC's spectrum auction rules

Grant Gross | Aug. 6, 2015
The U.S. Federal Communications Commission will decide this week which mobile carriers will control billions of dollars worth of prime wireless spectrum scheduled to be auctioned next year.

The U.S. Federal Communications Commission will decide this week which mobile carriers will control billions of dollars worth of prime wireless spectrum scheduled to be auctioned next year.

The FCC, in a vote scheduled for Thursday, plans to approve a set of rules in the 2016 auction of radio spectrum now controlled by U.S. television stations. One of the big debates is over a proposal that would likely prevent the two largest mobile carriers in the U.S. from bidding on a large chuck of spectrum available.

The conditions under which the FCC will set aside 30MHz of spectrum for bidding by smaller carriers have been the subject of an intense lobbying effort in recent months. The debate over the conditions that trigger the so-called spectrum reserve have pitted the nation's two largest mobile carriers, AT&T and Verizon Wireless, against several consumer groups and dozens of smaller carriers, including the not-so-small, foreign-backed Sprint and T-Mobile USA.

Consumer groups and smaller carriers have argued that the spectrum reserve is an important way to promote competition in the U.S. mobile industry. The 600MHz band TV spectrum is in a low band optimal for sending mobile broadband signals over long distances, meaning fewer expensive cell towers are needed, and Verizon and AT&T together control more than 70 percent of the low-band spectrum now available.

The stakes are huge. The FCC's most recent auction, of 65MHz in the less desirable AWS-3 1700MHz and 2100MHz bands, raised US$44.9 billion earlier this year.

The spectrum reserve is "incredibly important," said Evan Engstrom, policy director of Engine, an advocacy group for startups that has supported a spectrum set-aside for smaller bidders. "There aren't a lot of opportunities to increase broadband competition in either the wireless or wireline space, so it will be really concerning if the FCC fails to design the incentive auction in a manner that boosts competition."

Much of the U.S. tech industry's startup activity is focused on mobile products, and "virtually all startup growth depends on access to affordable, fast broadband," Engstrom added by email. "It's difficult to put a precise number on how much the tech sector will suffer if we don't start working on improving mobile broadband competition, but I'm confident that the value of the innovation we will lose will be multiples greater than what the auction brings in."

AT&T and Verizon have argued that it's unfair and unwise for the FCC to exclude them from bidding on all of the 600Mhz spectrum that would be made available by TV stations deciding to give up their spectrum. These TV stations would move to other channels or stop broadcasting over the air in exchange for a piece of the auction proceeds.

 

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