FCC commissioner Ajit Pai links Sprint decision to folly of FCC auction plans
Sprint’s decision to sit out the Federal Communications Commission’s upcoming 600 MHz incentive auction proceedings drew the attention of Republican Commissioner Ajit Pai, who used the move to express his displeasure in how the auction process has been handled by the Democrat-led government agency.
“Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins,” Pai stated. “It also intensifies doubts about how competitive the bidding will be for set-aside spectrum and whether American taxpayers will receive fair compensation for that scarce public resource. Sprint’s announcement only strengthens my belief that the FCC should not have granted a spectrum giveaway in this auction or placed artificial limits on carriers’ participation.”
The FCC recently came out with rules for the 600 MHz auction that include setting aside 30 megahertz of spectrum for participants with sparse holdings below 1 gigahertz. The rule was seen as a partial victory for carriers like Sprint, T-Mobile US and regional carriers looking to bolster their low-band spectrum proceeds without having to bid against larger rivals Verizon Wireless and AT&T.
Pai and fellow Republican Commissioner Michael O’Rielly have been against the FCC’s set-aside plans, claiming the move will suppress overall auction revenue and unfairly treats auction participants differently.
Sprint over the weekend said it will not participate in the auction, which is currently scheduled to start on March 29, citing its already robust spectrum position in support of its own network plans. Sprint’s current spectrum position includes an average of around 34 megahertz of spectrum in the 1.9 GHz band, 14 megahertz in the 800 MHz band and upwards of 150 megahertz of spectrum in the 2.5 GHz band.
The carrier’s 1.9 GHz spectrum currently supports most of its legacy CDMA operations, with about 10 megahertz of that band being used as the base layer of its LTE efforts. Sprint is using its 800 MHz spectrum assets to broaden LTE coverage as well as to support high-capacity CDMA voice services. The carrier is currently rolling out LTE support in the 2.5 GHz spectrum band.
At the CTIA Super Mobility event, Claure specifically cited recent results from RootMetrics in Denver that show Sprint has the fastest mobile network in the market, which the carrier said now supports LTE-Advanced carrier aggregation of its spectrum holdings and wider channels in the 2.5 GHz band. Claure told CTIA attendees that the Denver network was a model for Sprint’s plans across the country.
Sprint has sat out of nearly all of the FCC’s recent spectrum auctions, including the more recent AWS-3, AWS-4 and 700 MHz auctions. The record haul raised in the AWS-3 auction could also have played a role in Sprint’s decision as the carrier is currently struggling to manage costs while at the same time improve network performance.
Despite Sprint’s decision, the auction is still expected to see participation from at least three of the nation’s four largest mobile operators.
T-Mobile US has already said it plans to bid on the spectrum, which should be a bit easier on the pocketbook now that Sprint is out of the running for the 30 megahertz of set-aside spectrum.
“For [T-Mobile US] we see this as a very positive development,” said Wells Fargo Securities senior analyst Jennifer Fritzsche in a research note on Sprint’s bypassing the proceedings. “As long as there is enough spectrum from the broadcasters, it should face a lot less competition in the fight for the 30 megahertz of reserve spectrum.”
AT&T previously committed to spending at least $9 billion in the auction as part of it garnering approval of its recent $48.5 billion acquisition of DirecTV.
Verizon Communications remains officially undecided on its plans, though many expect the carrier to be a player. The carrier, which spent $10 billion earlier this year as part of the FCC’s AWS-3 auction, stated it is waiting to see the final auction rules before deciding on its participation level. The carrier mentioned that the AWS-3 auction’s record-setting haul could artificially inflate licenses in the 600 MHz auction.
“I will say that I think that the AWS-3 auction has given the [Federal Communications Commission] a little bit of a challenge around unintended consequences,” said Fran Shammo, CFO at Verizon Communications, during a recent conference call. “When you bid up spectrum so high and now you have broadcasters sitting on the sidelines that believe their spectrum is worth a certain amount of money, and then you have – where the FCC is trying to draft the rules around giving other carriers more, if you will, favorability to get the license than, say, some others – I think you’ve created a problem for yourself.”
Verizon Wireless is at an advantage compared to its rivals in that it already controls 20 megahertz of nationwide spectrum in the 700 MHz band that has provided the carrier with a broad “base” layer of coverage for its LTE network. Verizon Wireless has been more active in layering in higher-band spectrum resources in the 1.7/2.1 GHz and 1.9 GHz bands to provide additional capacity in densely populated areas.
Bored? Why not follow me on Twitter
