AT&T: Congress, not the FCC, should set spectrum auction rules

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 The proposed law would authorize the FCC to auction airwaves, or spectrum, that currently belong to television broadcasters, splitting some of the revenue with the stations that choose to participate.

The spectrum is potentially worth billions of dollars to wireless carriers like AT&T, which are struggling to meet the growing data demands of smartphones and tablet computers.

The bill would also establish a nationwide broadband network for first-responders — one of the recommendations of the 9/11 Commission Report.

The House GOP version of the legislation would prohibit the FCC designating the spectrum it reclaims from broadcasters for unlicensed use. Unlicensed spectrum, which can be used by any company for free, powers technologies such as Wi-Fi, garage door openers and remote controls.

Democrats say additional unlicensed spectrum could spur new technologies, but Republicans argue the government should not pay to reclaim airwaves that it will then give away for free.

The Republican version of the bill would also restrict the FCC's ability to impose conditions on the companies that buy the spectrum at auction.

The bill would ensure that the spectrum would go to the highest bidder, but Democrats argue that the FCC should be able to consider competitive issues to prevent the largest carriers from consolidating their control of the airwaves.

AT&T and Verizon are the two largest wireless carriers.

Republicans argue that the FCC should address competition issues through its official rule-making process instead of through auction conditions.

In a speech at the Consumer Electronics Show in Las Vegas on Wednesday, FCC Chairman Julius Genachowski urged Congress to pass the spectrum legislation, but warned lawmakers not to tie the FCC's hands.

"A broad range of America’s top experts on auctions agree that it would not be wise to prejudge or micromanage FCC auction design and band plans," Genachowski said. "Doing so could significantly diminish the value of spectrum auctions, and stifle mobile innovation."

But AT&T's Cicconi said the FCC should be a "neutral arbiter," and Congress should set the policy. 

“The entire principle behind spectrum auctions is to allow free and competitive markets to work, thus ensuring that valuable spectrum goes to the most economically viable uses," Cicconi said. "This also provides maximum return to the U.S. Treasury. For the FCC to assert, in the name of ‘fostering competition’, that it should have final say on which companies can bid on spectrum is for them to engage in picking winners and losers. That is not the job of the FCC."

Tensions have been high between the FCC and AT&T since the agency helped to kill AT&T's $39 billion merger with T-Mobile.

The FCC fired back at AT&T with a statement on Friday evening.

"Since the dawn of spectrum auctions, Congress has rightly recognized the need for the FCC to have appropriate flexibility to conduct them," FCC Wireless Bureau Chief Rick Kaplan said in a statement.

"Indeed, as the Senate spectrum bill recognizes, stripping this traditional authority for the first time ever would threaten the tremendous innovation and investment the FCC has helped foster in the wireless space during the last 30 years."

The Senate spectrum bill cleared the Commerce, Science and Transportation Committee in June but has not come up for a vote in the full Senate. 

The House version is awaiting a vote in the Energy and Commerce Committee. House Republicans included the legislation in their payroll tax deal at the end of the year but eventually approved the Senate package, which did not include the spectrum provisions.

--Updated at 5:46 p.m.