FCC chairman sides against T-Mobile on wireless auction rules

Federal Communications Commission (FCC) Chairman Tom Wheeler recommended on Thursday that the agency reject calls to expand the amount of wireless spectrum set aside for smaller carriers, like T-Mobile, in an upcoming auction.

His recommendation is a blow to T-Mobile and others that had asked for a larger reserve.

Last year, the commission said 30 megahertz of spectrum, the airwaves that carry signals and data to mobile devices, would be saved for smaller carriers. That move was designed to keep AT&T and Verizon, the largest players in wireless, from amassing too much high-quality spectrum and forcing out their competition.

{mosads}But T-Mobile and others called for the commission to expand that reserve to 40 MHz. They argued that was the minimum amount of spectrum needed to ensure that two small carriers could be competitive in any market against AT&T and Verizon.

The large carriers countered that T-Mobile is owned by a major German telecom company and insist it is able to compete with larger carriers.

Under Wheeler’s proposal Thursday, the 30 MHz of spectrum will be reserved for the smaller carriers, a senior FCC official confirmed to reporters on a call Thursday.

Those auction rules are currently slated to be voted on by all five commissioners in mid-July.

T-Mobile had launched a massive lobbying effort to expand the reserve, even bringing bombastic CEO John Legere to Washington to meet with regulators and reaching out directly to customers about the issue.

In one video, they portrayed AT&T and Verizon as comic book supervillains and the FCC commissioners as heroes.

On Thursday, T-Mobile said the FCC should not heed Wheeler’s recommendation.

“Low band spectrum is the holy grail for AT&T and Verizon,” said Andy Levin, T-Mobile’s senior vice president of government affairs in a statement.

“They know if we get our hands on it, they will finally have to compete with us on price. Their customers alone would save over $20 billion per year. That’s why everyone with a phone has a stake in the outcome of this proceeding, and the FCC should heed the calls of DOJ, many in Congress and a slew of consumer groups and move to strengthen the reserve.”

The smaller carriers, which include DISH and Sprint in addition to T-Mobile, have received some support from Congress and the Department of Justice in their effort to obtain a larger block of reserved spectrum.

“As the Commission moves towards a final vote on the incentive auction order, the FCC should continue to evaluate its auction rules to ensure they prevent excessive concentration of spectrum among the nation’s largest wireless providers,” several Senate Democrats said in a letter to Wheeler this week.

The head of the DOJ’s Antitrust Division said in a letter Wednesday that the FCC should put “considerable weight” on competition concerns while deciding the size of the reserved spectrum.

A Verizon representative referred a reporter to a blog post from May where the company accused T-Mobile and smaller carriers of “mounting a slick PR campaign” to gain an unfair advantage in the auction.

“Spectrum is too valuable a public resource to consumers and the U.S. economy for the FCC to set aside large amounts for select companies at cut-rate prices,” the post says.

AT&T declined to comment.

The spectrum auction is slated for early 2016. For the first time, the FCC will be purchasing excess spectrum from TV broadcasters and then selling it to wireless carriers.

The close attention being paid to the auction reflects how important spectrum allocation has become to wireless providers, as Americans continue to consume increasing amounts of data on smartphones.

This story was updated at 4:09 p.m.