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AT&T Threatens Absence at Spectrum Auction, FCC Doesn’t Budge

April 24, 2014 - Written By Ray Greer

The definition of spectrum in terms of wireless service can be explained pretty easily. When talking about wireless spectrum people are referring to the radio frequency. This radio frequency is how wireless communication travels through the air. Simple enough in definition, but in terms sales, spectrum gets pretty complicated. Most recently, those complications come in the form of AT&T refusing to attend the next spectrum auction being held by the FCC next year.

The Federal Communication Commission (FCC) essentially has final say over who gets to buy what spectrum and where. The reason for this, is spectrum operates on various frequencies ranging from 3 kHz to 300 GHz. However if there are two different signals being sent out over the same frequency, in the same city, than this can cause some issues. It is the goal of the FCC to maintain and prevent such things from happening. With that responsibility, the FCC holds auctions selling off spectrum if they become available. They’re not selling towers, rather selling licenses to use certain frequencies in certain areas. In January, we heard that the FCC was finally getting ready to hold another spectrum auction. This auction will be held sometime in 2015 and will be the first auction since 2008. The attendance of these auctions usually include the majority of wireless carriers in the US. All of which want a chance to buy some of the best spectrum available, like T-Mobile for instance.

Recently T-Mobile spoke up asking for more attention to fairness during the upcoming spectrum auction. This is something that the FCC has been considering since January. They have been trying to find a way to make things more fair for the smaller wireless carriers. To clarify, Verizon and AT&T are top dogs in the US. That title comes with more money to spend, which means they will have the upper hand at the auctions. Needless to say, that leaves T-Mobile and Sprint with the table scraps in terms of spectrum at the auction. The initial idea the FCC had, was to limit the amount of spectrum one wireless carrier can purchase in an area. This seems fair enough, but not everyone sees it that way, like AT&T for instance.

AT&T has spoken out about the way spectrum will be sold at the auction, making the following comment, “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.” The question is, why would AT&T feel that them stepping away from the auction, has any effect on the FCC? Well the FCC spectrum auctions bring in revenue, which in turn goes to the US government. Having AT&T pull their money from the auction, could mean less revenue built during said auction. Though the FCC doesn’t seem to be too concerned with the threats.

FCC chief Tom Wheeler made a comment on Wednesday in reply to AT&T’s threat. Wheeler said he has a “hard time envisioning this once-in-a-lifetime opportunity for this kind of beach-front spectrum being something that people throw their hands and walk away from.” Wheeler is clearly under the impression that AT&T is just blowing smoke. Wheeler may be correct, this is a big game for AT&T to just sit out of to make a point. If Wheeler  is wrong, that could cause major declines in final sale prices of the spectrum being auctioned. The FCC still wouldn’t be able to legally make AT&T attend the auction. The only way it would seem, is if they back down from their proposed ideas to make things fair for everyone. At the end of the day, the spectrum auction of 2015 has become possibly one of the most complicated sales of all time.