The battle to shape the rules for the Federal Communications Commission’s planned auction of 600 MHz spectrum licenses continued late last week as T-Mobile US put forth its ideas on how the government should conduct the highly anticipated bidding process.
The carrier’s plans, obviously, favor a model designed to prevent the nation’s two largest operators – Verizon Wireless and AT&T – from using their financial clout to gobble up these prized spectrum assets in favor of what it terms “dynamic market rules” that have various moving pieces.
As T-Mobile US explained in its filing:
“Under the dynamic market rule, the auction would first proceed with a spectrum-aggregation limit. If the commission’s revenue target is met while the limit is in place, then the auction would be able to close once there is no longer any active bidding. If the revenue target is not met, however, the limit would be gradually relaxed. Should the bidding fail to clear the revenue target once the limit is completely removed, the commission would resume the process by starting at the next lower spectrum target with the aggregation limit in place.”
One of the big challenges for this auction is that the FCC will have to provide an as yet undetermined amount of the proceeds to television broadcasters giving up their rights to the spectrum, meet government needs to raise funds for the U.S. Treasury and to help fund the FirstNet public-safety network initiative.
“T-Mobile is confident that the limit on low-band spectrum that it has proposed will have no adverse effect on auction revenue, and should in fact increase revenue while helping increase the amount of spectrum cleared at auction,” the carrier noted in its filing. “By relying on actual bids rather than predictions of bidder behavior, the dynamic market rule helps remove any risk that revenue targets for clearing broadcasters and funding the FirstNet public safety network will not be met.”
AT&T has been the most vocal of larger carriers in attempting to influence the FCC in crafting rules that allow for a more open bidding process. The carrier noted in a blog post earlier this month that the FCC should move forward with a minimum of regulations on the bidding process in order for all bidders to compete on a level playing field and for the FCC to garner the highest potential price per license.
“This approach offers the best prospect for a successful auction that meets all of Congress‘s stated goals, including freeing up the maximum amount of spectrum for mobile broadband use, reducing the deficit, and funding a nationwide public safety network,” explained Bob Quinn, SVP-federal regulatory and chief privacy officer at AT&T, in the post. “It also would ensure all the consumer benefits that will flow from putting spectrum to its best and highest use.”
Verizon Wireless has expressed interest in participating in the auction, noting it was looking to pad its coffers ahead of the planned auction.
“As I have said before, as auctions come up for spectrum they only come up opportunistically at times,” said Fran Shammo, EVP and CFO at Verizon Wireless parent company Verizon Communications, at a recent investor conference. “And you have to take them when they come, because spectrum is not an unlimited resource; so you need to provide for that.”
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