FCC chief defends plan to limit large carriers in auction

The head of the Federal Communications Commission (FCC) is defending its plans to limit large wireless carriers when the federal government auctions off airwaves worth billions of dollars next year.

In a letter to House members on Thursday, FCC Chairman Tom Wheeler said the agency is designing the highly anticipated auction with “equity and openness in mind” to “deliver to consumers, regardless of their zip code, greater wireless competition, improved services and lower costs.”

{mosads}Wheeler’s letter is in response to a letter from 78 House Democrats who asked him last week to allow unlimited competition among wireless carriers in the 2015 auction.

That auction will involve buying airwaves from broadcasters, repackaging those airwaves and selling them to spectrum-hungry wireless companies. Revenue from the 2015 auction, as well as from two airwave auctions this year, will go toward funding a nationwide network for first-responders.

While some have encouraged the FCC to limit the participation of industry giants AT&T and Verizon, the group of lawmakers said allowing wireless companies to bid without limits will help the auction reach the revenue goal set by Congress.

“Inviting as many bidders as possible to compete in an open and fair auction on equal terms will allow for the full market price of spectrum to be realized,” which will encourage broadcasters to sell back more spectrum and increase overall revenue, they told Wheeler.

In his response, Wheeler defended the proposal currently in front of the commission, which limits certain wireless companies — especially AT&T and Verizon — from bidding on certain airwaves once a market’s auction reaches a yet-to-be-determined revenue benchmark.

Those limits would allow wireless companies with less low-frequency spectrum — which travels better through walls and over long distances — to compete for some of the 600 MHz airwaves being auctioned off next year without competition from companies like AT&T and Verizon.

“My proposal would reserve a modest amount of this low-band spectrum in each market for providers that, as a result of the historical accident of previous spectrum assignments, lack such low-band capacity,” Wheeler wrote, adding that the proposal will “contain safeguards to ensure that all bidders for reserved spectrum licenses bear a fair share of the cost of making incentive payments to broadcasters.”

Wheeler pointed to wireless companies’ need for law-frequency spectrum, especially in rural areas.

“Today, most of this low-band spectrum is in the hands of just two providers,” he said. “The Incentive Auction offers the opportunity, possibly the last for years to come, to make low-band spectrum available to any mobile wireless provider, in any market, that is willing and able to compete at auction.”

Wheeler said he agreed with lawmakers looking to incentivize broadcasters and wireless companies to participate.

“At the same time, a priority of the auction should be to assure that companies that already possess low-band spectrum do not exploit the auction to keep competitors from accessing the spectrum necessary to provide competition,” he said.

Earlier this week, AT&T threatened to sit out the auction if the FCC goes forward with the proposed limits on the company’s participation.

An FCC official said Thursday that Wheeler will continue to focus on competition in the wireless market as the agency considers the proposal.

“Chairman Wheeler’s philosophy is simple and consistent: Wireless competition is in the public interest. … When he proposes reasonable rules of the road to prevent a single company to run the table at the incentive auction, he is speaking on behalf of consumers and completion,” the official said.

“Not surprisingly, companies that compete in the market also compete for the most favorable regulatory policy. … Companies are free to advocate the views that are in their best interest, but the public interest is not measured against the business model of one or two companies; it is measured against the ability of the market to deliver the benefits of competition to Americans in urban, suburban and rural America alike.”