Smaller Carriers Worry Big Two Will Dominate Spectrum Auctions

Debate rages over FCC authority

Fearing that AT&T and Verizon will gobble up the entire wireless spectrum in an auction, a group of competitors sent a letter to the Congressional Conference Committee considering spectrum auction legislation as one of the "pay-fors" in the payroll tax cut extension.

Like all wireless carriers, the eight companies that wrote the letter Wednesday, including Sprint and T-Mobile, are anxious for Congress to pass legislation that would authorize spectrum auctions to meet the growing demand for wireless services. But language in the House bill under consideration by the conference committee would prevent the Federal Communications Commission from determining which companies are eligible to participate in the auctions.

"Stripping the FCC of its auction design discretion would disserve the public interest by permitting unchecked participation by the two largest, best-funded wireless carriers in future spectrum auctions," the letter noted. "That would discourage smaller competitors from participating in future auctions, thereby reducing auction revenues and limiting wireless competition and innovation."

The FCC language in the Jumpstarting Opportunity With Broadband (JOBS) Act has become a flash point in the spectrum debate ever since FCC Chairman Julius Genachowski said last month that limiting the FCC's flexibility would be a "mistake," prompting AT&T to charge that the commission just wanted to "pick winners and losers." 

Author of the JOBS Act, Rep. Greg Walden (R-Ore.), who also sits on the conference committee, responded that the bill doesn't limit the FCC's authority because following an auction, it retains its regulatory authority to force divestitures if a company is too big. "The only reason I can think of for why the chairman is upset…is because he wants to exclude one of the big carriers from participating in the auction," Walden said at a recent press briefing.