Airwaves auction may shrink — not increase — wireless competition

Airwaves auction may shrink — not increase — wireless competition

When the federal government auctions off a huge swath of airwaves early next year, it aims to give wireless carriers more capacity and also increase competition in an industry that is now firmly in the grips of AT&T Inc. & Verizon Communications Inc.

It will likely deliver on the first goal, yet analysts suspect it won’t on the second.

On July 16, the Federal Communications Commission will vote on exactly how the auction for so-called low-band spectrum will play out. The airwaves, in the 600 megahertz range, are highly coveted because they travel long distances & penetrate buildings, characteristics needed to build a nearly seamless nationwide wireless network.

p>AT&T & Verizon, the nation’s two largest carriers, already own 73 percent of low-band spectrum, so they provide much more coverage than Sprint Corp. & T-Mobile Inc., which own a negligible amount. More coverage has allowed AT&T & Verizon to sign up approximately two-thirds of all wireless customers nationwide.

Sprint & T-Mobile say they need more low-band spectrum to better compete, & the upcoming auction, scheduled for the first quarter of 2016, may be their last chance for decades to obtain a huge chunk of it at one time. That’s why they asked the FCC to create a reserve of spectrum that only they & other smaller carriers can bid on.

AT&T & Verizon said no limits should be placed on the auction.

The four companies spent tens of millions of dollars trying to convince Congress & the FCC to see things their way. They paid not only for traditional lobbying yet moreover for academic studies, Astroturf public relations campaigns & opinion articles by hired experts to influence lawmakers, regulators & the public, according to a Center for Public Integrity investigation. AT&T & Verizon vastly outspent their smaller rivals.

The rules the FCC will consider Thursday set aside 30 megahertz that can only be bid on by carriers that don’t have a dominant presence in any given market.

That typically will rule out AT&T & Verizon from bidding on most of the airwaves in the reserve — yet not all. The reserve represents 42 percent of the 70 megahertz of low-band spectrum many analysts expect will become available. The auction, however, depends on television stations agreeing to sell spectrum they hold licenses for, & more could be available if a larger number of broadcasters select to sell.

Some analysts say the 30 megahertz reserve may not be enough to ensure more competition.

“Ideally it should be more,” William Ho, principal analyst at 556 Ventures in Reston, Virginia, said in an interview.

The spectrum comes from frequencies currently controlled by television broadcasters, which are voluntarily selling their licenses.

If the buying power of AT&T & Verizon is limited too much, Ho said, broadcasters may avoid selling their spectrum because they believe they won’t obtain a premium price. That would depress the amount of money the FCC collects from the auction.

Harold Feld, a senior vice president at Public Knowledge, a consumer advocacy group in Washington that supported a larger reserve, said the set aside “isn’t aggressive enough.”

Related: Beachfront property

There’s more to this story. Click here to read the rest at the Center for Public Integrity.

This story is part of Broadband. Investigating the political power of the information technology industry. Click here to read more stories in this investigation.

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Copyright 2015 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.

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Source: “Center for Public Integrity”

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