Verizon argument mirrors AT&T, shifts disruptor blame to Dish
“Lessons” continued to be offered up in the wake of the Federal Communications Commission’s Auction 97 proceedings, which managed to raise a record $44.9 billion in gross proceeds. The latest came from Verizon Communications, which came out of the proceedings having spent $10.4 billion on the AWS-3 licenses.
Kathleen Grillo, SVP for federal regulatory and legal affairs at Verizon, argued in a blog post that Verizon and AT&T were not the dominant players in Auction 97 as claimed by T-Mobile US, and that the auction results should not have any impact on how the FCC moves forward with rulemaking tied to the planned 600 MHz incentive auction.
Similar to AT&T’s argument, Verizon noted that Dish Network was the real disruptor in the AWS-3 auction, picking up 44% of the licenses up for bid, including 324 unpaired and 378 paired licenses. This aggressive bidding was mostly pointed at T-Mobile US, which Grillo said Dish outbid 132 times, compared with just 26 times by AT&T and 16 times by Verizon.
Grillo also noted that Dish Network’s eventual winnings were through a pair of designated entities, which allowed Dish to pick up a $3 billion discount on its license haul.
While Dish was touted as the auction’s true wildcard, Grillo also commented that Sprint decided to sit out the AWS-3 proceedings due to its significant 2.5 GHz spectrum holdings that in some markets tops 150 megahertz, while T-Mobile US went into the auction with deeper spectrum holdings in the 1.7/2.1 GHz band than both Verizon and AT&T. That depth was bolstered by T-Mobile US’ acquisition of MetroPCS and significant spectrum holdings AT&T was forced to hand over to T-Mobile US as part of the break-up fee tied to its $39 billion acquisition of its smaller rival.
In regard to auction bidding, Grillo said T-Mobile US outbid Verizon twice as often in head-to-head bidding compared with Verizon outbidding T-Mobile US, noting that of T-Mobile US’ licenses won it had outbid Verizon’s previous high bid on 32 of them, while Verizon’s haul included 16 licenses in which it outbid T-Mobile US.
Grillo also put the fact that T-Mobile US did not bid more aggressively in Auction 97 on parent company Deutsche Telekom.
“If, despite these ample holdings, T-Mobile wishes it had won more spectrum in the AWS-3 auction, it’s because its large, multinational parent company has decided it doesn’t want to invest in the U.S. market and, indeed, would prefer to sell T-Mobile and exit,” Grillo wrote.
In the end, Grillo used the blog post to argue against T-Mobile US’ claim that the FCC should set aside a larger chunk of spectrum in the upcoming 600 MHz incentive auction that Verizon and AT&T can’t bid on.
“Indeed, Dish’s performance in the auction demonstrates the risk of unintended consequences that flow from attempts to favor certain participants,” Grillo stated. “The FCC should focus instead on putting spectrum in hands of those who will put it to use to serve America’s consumers.”
The FCC has already said it is looking to set aside up to 30 megahertz of spectrum in each market for those participants holding less than one-third of spectrum in those markets below the 1 GHz level, an amount that T-Mobile US argues should be increased. The FCC also rolled out a notice of proposed rulemaking looking at changing DE rules. Those changes include the possible removal of barriers preventing DEs from leasing spectrum to other non-DE operators, and adjusting the financial threshold on DEs receiving bidding credits.
Similar to its counter-argument against AT&T, T-Mobile US responded to Verizon by reiterating the nation’s two largest operators control a vast majority of sub-1 GHz spectrum and should not be allowed to use their financial might to continue that trend.
“AT&T, and this time Verizon, conveniently miss the point by failing to mention that next year’s auction is all about low-band spectrum,” said Andy Levin, SVP of government affairs at T-Mobile US, in a statement. “Together, these two well-heeled offspring of ‘Ma Bell’ have completely cornered the market on this valuable spectrum, together holding 73% of the low-band spectrum serving wireless consumers today. We are simply asking for a meaningful spectrum reserve for competitors in next year’s auction to prevent AT&T and Verizon from being able to continue to foreclose every challenger that gets in their way.”
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