AT&T threatens to boycott airwave auction

AT&T is threatening to sit out the Obama administration’s highly anticipated spectrum auction next year, which will sell of billions of dollars worth of airwaves.

As the Federal Communications Commission (FCC) plans the auction, it is considering "complicated and unnecessary" restrictions on large companies, AT&T Vice President Joan Marsh said in a filing.

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Last week, the FCC began laying out its plans for the airwave auction, which will involve buying airwaves from broadcasters, repackaging those airwaves and then selling them to spectrum-hungry wireless companies.

As the agency has worked on the auction’s structure over the last few months, industry observers have waited to see if the FCC will limit the participation of wireless giants AT&T and Verizon.

The larger companies argue that limits on participation could keep the auction from reaching its congressionally mandated revenue goal, needed to fund the auction itself as well as a nationwide network for first responders.

On the other hand, smaller wireless companies say limits will allow small carriers to obtain more of the low-frequency, 600 MHz airwaves — which travel better through walls and over long distances than higher-frequency airwaves — and better compete with AT&T and Verizon.

According to those briefed by the agency, the FCC is planning to set aside up to 30 MHz of spectrum in each market for companies with less low-frequency spectrum to bid on without competition from AT&T and Verizon.

The amount of spectrum set aside will depend on how much broadcasters are willing to sell back, and the agency will only keep AT&T and Verizon from bidding on those airwaves if the auction in each market reaches a yet-to-be-determined revenue benchmark.

“Such restrictions would put AT&T in an untenable position, forcing AT&T to reevaluate its potential participation in the auction,” Marsh wrote.

AT&T’s filing pointed to the auction’s x-factors, including where the FCC sets the revenue benchmark.

The proposal in front of the agency — which will be voted on at the FCC’s May meeting — “does not define the threshold for initiation of the restrictions, instead deferring this determination to a subsequent order,” Marsh wrote. 

She urged the FCC to set the benchmark “at a significant and material level” to keep the small wireless carriers from getting the airwaves “at a discount that the FCC cannot afford to give in this auction.”

Marsh also noted the uncertainty around how much of their airwaves broadcasters will be willing to sell back. If they’re only willing to sell back 60 MHz or less, AT&T and Verizon will be forced to split the available three 10-MHz blocks.

“The restrictions would thus put AT&T in an untenable and unacceptable position,” the filing said.

“AT&T could either participate in the auction, accepting that it will likely obtain only a fragmented and inefficient 600 MHz footprint, or it can choose to withhold its capital for other investments and sit out of the auction entirely.”