(Adds FCC statement, further details)
By Alina Selyukh
WASHINGTON, April 16 AT&T Inc has
threatened to sit out a major U.S. auction of airwaves if
regulators reserve some of the spectrum for smaller rivals, the
No. 2 wireless company said in a filing released on Wednesday.
The Federal Communications Commission recently drafted some
of the rules for the complex auction scheduled for mid-2015. The
auction would reshuffle the ownership of valuable frequencies
between TV stations and wireless carriers clamoring for faster
speeds and better services for their devices.
FCC Chairman Tom Wheeler has proposed reserving part of the
spectrum in each market for wireless carriers that do not
already have dominant blocks of low-frequency airwaves there,
people briefed on the plan have told Reuters.
AT&T estimated that such a plan, which has not been formally
proposed yet, would restrict its bidding in markets covering
more than 70 percent of the U.S. population, according to
Wednesday's filing by Joan Marsh, AT&T's vice president of
Marsh said the rules might force AT&T to decide to spend its
money elsewhere, which could undermine the FCC's congressionally
mandated goal of raising enough cash from the auction to pay
broadcasters for giving up airwaves, help pay for a new $7
billion public safety network and return some funds to the U.S.
"Such restrictions would put AT&T in an untenable position,
forcing AT&T to reevaluate its potential participation in the
auction," Marsh told Wheeler's legal advisor, Renee Gregory, in
a meeting on Monday, according to the filing.
AT&T and the No. 1 carrier Verizon Communications Inc
currently dominate the low-frequency airwaves, which are valued
for their strength and reach. Their smaller rivals, No. 3 Sprint
Corp and particularly No. 4 T-Mobile US Inc, have
urged the FCC to limit how much spectrum the two biggest
competitors are able to buy in the auction.
The Justice Department gave that position a boost a year
ago, calling for auction rules that ensure smaller nationwide
networks get some low-frequency spectrum to "improve the
competitive dynamic among nationwide carriers."
Verizon did not respond to a request for comment.
THE PROPOSED RULES
Wheeler's proposal, which has yet to be reviewed by four
other FCC commissioners, sets aside up to 30 megahertz (MHz) of
spectrum in each market for smaller carriers after bidding
reaches a threshold that will be set at a later date, sources
briefed on the plan said.
The market-based threshold, for instance, could be a
particular bidding price per megahertz or a point in the auction
when TV stations give up enough spectrum and enough money is bid
on it to deem the auction a success, said one of the sources.
The FCC chairman's office has briefed some of the
stakeholders about the plan and will circulate a formal proposal
among other commissioners next week. The five are expected to
vote on proposed rules at their meeting on May 15.
"All who want to participate in the auction will be able to
bid," Wheeler said in a statement. "In order to assure coverage
and competition in rural America it may be necessary to assure
no one can monopolize the bidding."
Wheeler's proposal would permit all parties to bid on paired
5-MHz blocks of airwaves until the threshold is triggered and
only the companies with less than one-third of the low-band
spectrum in that market are allowed to bid.
In some markets, the players facing the restriction would
include smaller carriers such as U.S. Cellular Corp.
AT&T, in Wednesday's filing, expressed concerns that, in
some markets, the plan to restrict up to 30 MHz could leave only
one bidder with an opportunity to get a block of airwaves large
enough to deploy LTE technology.
"If the restrictions as proposed are adopted, AT&T will need
to seriously consider whether its capital and resources are
directed toward other spectrum opportunities that will better
enable AT&T to continue to support high-quality LTE network
deployments to serve its customers," Marsh added.
(Reporting by Alina Selyukh; Editing by Jonathan Oatis and