FCC limits Verizon, AT&T in airwaves auction

The Federal Communications Commission voted Thursday to limit the purchasing power of industry giants AT&T and Verizon in an airwaves auction scheduled for next year.

The plan approved Thursday will “promote a healthy, competitive mobile marketplace and “make sure that consumers are more likely to benefit directly from increased competition in all parts of the country,” FCC Chairman Tom Wheeler said Thursday.

{mosads}In the auction, the FCC will buy back airwaves from TV broadcasters and then resell them to wireless carriers, which are hungry for spectrum to meet the growing demand for cellphone services. The airwaves being bought and sold are considered especially valuable because they are low-frequency airwaves, which travel farther and better through walls.

Wheeler called the auction “a once in a lifetime opportunity” for broadcasters to profit from selling back their spectrum.

While some have applauded Wheeler’s move to limit AT&T and Verizon’s spectrum purchases, critics — including Republicans and some Democrats on Capitol Hill — have warned the rules could keep the auction from reaching its Congressionally set revenue goals.

The chairman had initially announced a plan that would have limited AT&T and Verizon even more.

Under the original plan, AT&T and Verizon would only have been allowed to bid on 30 MHz of spectrum if broadcasters were willing to sell 60 MHz or more. As spectrum is usually sold in 10 MHz blocks, AT&T and Verizon would have had to inequitably split the airwaves available to them in each market.

But the revised plan approved Thursday allows AT&T and Verizon to bid on at least 40 MHz regardless of how much spectrum broadcasters are willing to sell back.

The new plan was crafted with Commissioner Jessica Rosenworcel, who had raised concerns about meeting the revenue goals for the auction. Under a 2012 law, revenue from the sale will go toward funding a $7 billion nationwide network for first responders and toward deficit reduction.

Rosenworcel applauded the changes and thanked Wheeler for working with her to make more spectrum available to AT&T and Verizon.

In addition to promoting competition in the wireless marketplace, “our approach also ensures that we meet our special responsibilities to our nation’s first responders,” she said.

Wheeler said that, after the recent revisions, he is “confident that the wireless industry … will rally around the rules package and make clear that they want to participate aggressively in this auction.”

Earlier this year, AT&T told the agency it would consider boycotting the auction if the FCC went forward with Wheeler’s original plans to limit the company.

Wheeler noted recent filings from AT&T that said the company was looking to bid on 20-40 MHz blocks of spectrum under the lessened limits, which would bring the agency billions, allowing it to “blow past” concerns about low revenue.

“We’re seeing indications that there is going to be sufficient demand at sufficient prices,” he said.

While Democratic Commissioner Mignon Clyburn concurred — giving Wheeler the three Democratic votes he needed to get the auction item passed — she said she preferred the earlier version, where AT&T and Verizon would have had to compete over smaller amounts of airwaves.

“We are encouraging the top two carriers in every locally market to each acquire their coveted 20 MHz of spectrum without having to aggressively compete against each other,” she said.

The agency’s two Republicans — Ajit Pai and Michael O’Rielly — voted against the auction plan, saying that the limits were unfair and could undermine the auction.