wireless spectrum
April 15, 2013

Justice Department To FCC – Give Small Carriers A Competitive Shot At Spectrum Auction

redOrbit Staff & Wire Reports - Your Universe Online

Smaller wireless carriers such as Sprint and T-Mobile should be able to get access to a fair share of low-frequency spectrum in an upcoming US auction in order to help keep the market competitive, the Justice Department told the Federal Communications Commission (FCC) in a filing made public Friday.

In the filing, the Justice Department´s antitrust division emphasizes the high value of the spectrum set to be auctioned off in the near future, Reuters reporter Alina Selyukh said on Friday. At the same time, though, their insistence that the market remain competitive could be viewed as a setback to larger American service providers such as Verizon and AT&T, who also are attempting to acquire those airwaves, Selyukh added.

“The Department concludes that rules that ensure the smaller nationwide networks, which currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum could improve the competitive dynamic among nationwide carriers and benefit consumers,” the Justice Department filing, which was signed by the department's antitrust chief William Baer, said.

“The Department believes it is important that the Commission devise policies that address the allocation of low-frequency spectrum in particular so that acquisitions of such spectrum do not hamper the ability of carriers in markets where that spectrum is important,” they added, according to Selyukh. “A large incumbent may benefit from acquiring spectrum even if its uses of the spectrum are not the most efficient if that acquisition helps preserve high prices.”

According to Selyukh, the FCC is in the process of drafting new rules which would lead to a massive reshuffling of the ownership of the airwaves which carry radio signals. That shakeup would involve wireless broadband currently owned by television stations and would come in a large, complicated auction of some of the most highly sought after spectrum in the world — an auction which could be held as early as next year.

In addition, in a separate issue, US telecom regulators are considering establishing a spectrum cap, said CNET´s Marguerite Reardon. That spectrum cap would limit the amount of spectrum that any given carrier can own, and would focus especially on low-frequency broadband below 1GHz. That spectrum is considered especially valuable because it can travel great distances and penetrate through buildings, Reardon said.

The low-frequency spectrum which will be made available in the auction sits in the 600MHz frequency band, according to CNET. Both AT&T and Verizon have argued against any type of regulation or spectrum cap that would limit their ability to participate in the auction. Conversely, Sprint vice president of government affairs Larry Krevor told Reardon that the Justice Department is “absolutely right” and that the FCC should ensure that “all carriers, large and small, have access to low-band spectrum would improve competition and benefit consumers.”

“The DOJ told the FCC that if AT&T and Verizon Wireless were to purchase all the spectrum they want from the auction, they won´t use the spectrum efficiently,” said Brian Sin of SlashGear. “It believes that the two major wireless carriers will purchase the spectrum just to make sure the smaller carriers don´t have the chance to use them. Without the added competition, the major carriers would be able to continue to charge high fees.”

Conversely, by allowing smaller carriers an opportunity to purchase additional spectrum, the FCC would be encouraging competition that would benefit the wireless industry, he added. If those smaller firms can secure low-band airwaves from the auction, they could improve their coverage and become “stronger, more aggressive competitors.” However, Sin points out that the Justice Department is only making suggestions, and that it remains undecided exactly how the auction will proceed when it does occur.