May 15, 2014, 4:02 PM — The U.S. Federal Communications Commission will limit the amount of spectrum the nation's two largest mobile carriers can buy in an upcoming auction of highly sought spectrum now controlled by television stations.
The FCC voted Thursday to approve a controversial spectrum holdings plan that would cap the amount of spectrum AT&T and Verizon Wireless could acquire in the upcoming 600MHz auction by reserving about half of the available spectrum in a region for their competitors once bidding reaches a target price.
The FCC plan would set aside up to 30MHz of spectrum available in each region for smaller competitors if the bidding targets are reached during the so-called incentive auction, scheduled for mid-2015. AT&T and Verizon would still be able to bid on the unreserved spectrum. The spectrum available depends on TV stations giving up their spectrum in exchange for a portion of the auction revenues.
FCC Chairman Tom Wheeler and fellow Democrats on the commission defended the spectrum plan, saying the limits are needed to ensure a competitive mobile market in the U.S.
"Every party has a right to bid" under the rules, but multiple carriers need access to 600MHz spectrum to provide competition in rural areas, Wheeler said. "What this rule does is prevent those with current low-band spectrum from monopolizing the market in the auction," he said.
The plan doesn't name Verizon and AT&T, but the limits on bidding would only apply to the two largest U.S. carriers because of the amount of low-band spectrum they already control.
AT&T and Verizon won most of the spectrum sold by the FCC in the 2008 700MHz auction, and the upcoming auction of the TV spectrum may be the last one in several years to include coveted sub-1GHz spectrum that allows mobile signals to travel farther and penetrate buildings easier than higher band spectrum.
The commission's two Republicans blasted the spectrum plan, saying it amounts to the agency picking winners and losers in the mobile industry.
"The primary objective of today's decision seems to be the re-engineering of the wireless marketplace to reflect the commission's vision of how it should be structured," said Republican Ajit Pai. "Rather than choosing competition, we restrict it."
Instead of embracing the free market, the commission "places its faith in centralized economic planning," he added.
The limits on AT&T and Verizon participating could also doom the auction or significantly reduce the bidding, said Pai and fellow Republican Michael O'Rielly.