AWS-3 Auction Shows Importance of Pro-Competitive Policies in Incentive Auction, Public Interest Groups Say

The FCC must not draw the wrong lessons from the AWS-3 auction, but instead should see the recently concluded sale as pointing to the need for competitive safeguards in the TV incentive auction (see 1501300051), members of the Public Interest Spectrum Coalition told the agency Tuesday. “The two dominant wireless carriers with the deepest pockets -- AT&T and Verizon -- walked away with 20 megahertz of the paired AWS-3 spectrum in most major markets and left the rest of the industry with only a smattering of paired blocks and 15 megahertz of low-value, unpaired, uplink spectrum,” the coalition said in a letter to FCC Chairman Tom Wheeler. It asked the FCC to set aside at least 40 MHz in every market for competitors to AT&T and Verizon in the incentive auction. Otherwise, the two big players could buy enough spectrum to keep others from getting much of anything in the auction, the group said. AT&T and Verizon own 75 percent of the “uniquely valuable” low-band spectrum, they said. The incentive auction “provides what may be the FCC’s final opportunity to prevent the two dominant carriers from monopolizing the low-band spectrum needed to compete in a broadband data world,” the coalition said. “It is difficult to see how the non-dominant carriers can effectively compete in a 4G marketplace without sufficient access to low-band spectrum that enables in-building penetration and economic wide-area coverage.” The coalition also said the AWS-3 auction points to the need for the FCC to make more spectrum available for licensed and unlicensed use and to base auction rules on consumer benefits, not revenue for the government. The $41.3 billion that carriers and others will have to pay to get the AWS-3 spectrum on which they bid will harm consumers twice over, the coalition said. “Revenues from the AWS-3 auction ultimately get passed along as higher prices to wireless broadband consumers,” the group said. “It also sucks investment capital out of the highly productive telecom sector.” The Benton Foundation, the Center for Media Justice, Common Cause, Engine, the Institute for Local Self Reliance, the National Hispanic Media Coalition, Open Technology Institute at New America, Public Knowledge and Writers Guild of America, West signed the letter. A wireless industry official noted in response that T-Mobile was outbid in markets it was pursuing far more often by Dish Network than by AT&T and Verizon. Dish beat T-Mobile 132 times, AT&T 26 times and Verizon 16 times, the official said. "As we have seen in countless spectrum auctions in the U.S. and around the world, it is virtually impossible to predict auction outcomes or to try to engineer them," Mobile Future said in a written statement. "The commission must resist any efforts to expand restrictions on auction participation that would negatively impact continuing mobile innovation and the hundreds of millions of U.S. wireless consumers using exponentially more mobile bandwidth each year."