House Republicans: FCC acting like a cartel with airwave limits

The Republicans on the House Commerce Committee are asking the Federal Communications Commission (FCC) to rethink its attempts to limit wireless giants AT&T and Verizon in its airwave auction next year.

In a letter Monday, the House Commerce Republicans warned about the outcomes of Wheeler’s plans and compared the auction limits to cartel behavior.

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FCC Chairman Tom Wheeler’s plans to potentially keep AT&T and Verizon from participating in parts of the 2015 airwave auction defy Congressional instruction and will hurt the auction’s ability to hit Congressionally-set revenue goals, the lawmakers wrote.

Last month, Wheeler announced his plans for the 2015 auction, which will involve buying valuable low frequency back airwaves from television broadcasters and selling them to spectrum-hungry wireless companies looking to boost their networks.

Under Wheeler’s plans, some companies — especially AT&T and Verizon — would be kept from bidding on certain blocks of airwaves in each market once that auction has reached a yet-to-be-determined revenue benchmark.

While wireless companies with less spectrum have pushed for limits, AT&T and Verizon have come out against the plan, warning that bidding limits could depress revenues and drive away bidders.

In Monday’s letter, the group of 16 lawmakers sided with the industry giants, saying that they have “serious concerns” and urged the FCC “to adopt auction rules that allow the free market to decide the fate of the broadcast airwaves.”

The letter pointed to a situation where the FCC has 60 MHz of airwaves to auction off in each market. In that scenario, the FCC would reserve 30 MHz — three 10 MHz blocks — for the companies with less spectrum to bid on without competition from AT&T and Verizon.

“Disfavored bidders will be bidding against each other to win two of three licenses not because of a lack of available spectrum to meet bidder demand, but because the Commission has made a decision to artificially restrict supply,” the lawmakers wrote.

“This is not how a market-based auction should function; it is how a cartel controls price.”