The U.S. telecom players’ thirst for spectrum seems insatiable. Since wireless airwaves is the life blood of a telecom provider, there is continuous fight to purchase additional airwaves. And low band frequency, in particular, attracts special interest from telecom players. Second largest U.S. wireless provider, AT&T (T, Financial), has proposed quite a few deals involving the purchase of low band airwaves in the 700 MHz spectrum block. Obviously, it has impacted other players in the industry.
The reaction and opposition
Verizon (VZ, Financial) and AT&T are the two stalwarts of the U.S. telecom industry. Though Sprint (S, Financial) and T-Mobile (TMUS, Financial) hold the third and fourth spot, they are way behind the two biggies. FCC chairman Tom Wheeler said that Verizon and AT&T “hold a combined share of almost two-thirds of all low-band spectrum licenses” compared with the other two national providers Sprint and T-Mobile who jointly hold less than 10% of the low band frequencies.
So any action undertaken by either Verizon or AT&T, with respect to purchasing further spectrum in the lower frequency band, has to deal with a heavy scrutiny from the FCC and strong opposition from their smaller rivals. This is what exactly happened with AT&T now after its proposal for buying spectrum in the 700 MHz spectrum band.
Other than Sprint and T-Mobile, other parties opposing the proposal include numerous public interest and industry groups. If the airwave proposal forwarded by AT&T is given a go-ahead signal by the FCC, the Dallas-based company would reign nearly a third of the highly-coveted frequency below the 1 GHz range. Back in May, the FCC decided that any spectrum purchase transaction that increased the spectrum holding of the carrier to this extent would draw severe scrutiny from the regulator.
An unfair advantage
Verizon and AT&T already have great advantage over Sprint and T-Mobile in terms of market share, spectrum holding, and financial cushioning. AT&T’s current spectrum proposal would further increase the gap. Therefore Sprint, T-Mobile and among others the New America Foundation, Comptel, Computer & Communications Industry Association, the Writers Guild of America, West, Public Knowledge, and Free Press have forwarded a signed letter to the FCC, requesting the regulatory body to scrutinize and screen AT&T’s purchase offer more strictly.
The latest filing from AT&T unveiled numerous transactions that would increase the carrier’s low band frequency concentration remarkably and improve its holding to more than 45 MHz, if the FCC rewards a green signal. As AT&T is a dominant industry player, it is essential for the watch dogs to perform a strong screening of the pros and cons of the deals, and weigh its effect on other players in the industry. There are concerns regarding spectrum anti-competitive concentration in the wireless space.
In contrast this is what an AT&T spokesperson had to say:
“These small deals will cause no harm to competition and will result in significant public interest benefits”
Despite strong resistance from several, the carrier looks quite confident and believes that these deals should pass through the FCC screening comfortably. However, there is no doubt that FCC would go in for solid investigation, particularly after receiving letters from several concerned parties including Sprint and T-Mobile.
Parting thoughts
Will the FCC give a go-ahead to AT&T, or will it support the cause of Sprint, T-Mobile and other interested parties. Enough concerns have been raised regarding the possible spectrum purchase transaction as it is believed that AT&T could hurt competition in markets where it plans to acquire airwaves. How FCC would decide on this will determine the fate of AT&T’s deal. For now it’s time to wait and watch how things mature for various parties.
