A proposal from FCC Chairman Tom Wheeler would block an attempt by Sprint and T-Mobile US to buy spectrum together in the incentive auction that will transfer airwaves from broadcast TV stations to cellular carriers next year.
FCC chairman regrets that AT&T and Verizon control the best spectrum
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Announced on Friday, Wheeler’s proposal seeks to help the smallest wireless companies develop business partnerships with larger ones. But it would not allow partnerships between the biggest carriers, since more than 95 percent of US customers are served by either AT&T, Sprint, T-Mobile, or Verizon Wireless.
“Our goal is to promote the participation of as many parties as possible in the auction,” FCC Wireless Telecommunications Bureau Chief Roger Sherman wrote Friday. “If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition. Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed.”
That’s bad news for Sprint and T-Mobile. “The two rivals are working with separate teams and outside counsels to form a joint-bidding venture to participate in the Federal Communications Commission’s airwave auction next year,” Bloomberg reported last month. “The bidding alliance is part of a push by Masayoshi Son, whose SoftBank Corp. controls Sprint, to sway skeptical regulators as it tries to take over T-Mobile. By pooling their resources in the auction, the companies would be able to pay more to the federal government to acquire wireless spectrum—demonstrating that a full merger would help the companies make bigger investments in their networks, benefiting consumers.”
A Sprint/T-Mobile merger would result in the US having three major nationwide carriers instead of the current four. The companies haven’t finalized an agreement yet, but, if they do, it will face scrutiny from antitrust officials who previously blocked an AT&T/T-Mobile merger.
French company Iliad is also bidding on T-Mobile, but T-Mobile owner Deutsche Telekom has reportedly turned down Iliad’s offer.
Wheeler’s proposal would encourage smaller companies to participate in the broadcast TV auction and other spectrum auctions by letting them “leverage business partnerships with larger companies through more flexible leasing arrangements to gain access to capital and cash flow, not to mention operational experience,” Sherman wrote.
“Of course, this policy will have to be policed,” he continued. “Some may try to take advantage of this flexibility to gain a discount for large incumbents, which we will not allow. We will be on the lookout for such abuse and enforce our rules vigorously. Protection will come from the proposal’s focus on who is ‘calling the shots.’ The small business entrepreneur must exercise independent decision-making authority. If the small business is a stalking horse for another party, then the bidding credit will be lost.”