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Justice Department Nudges FCC to Help Smaller Wireless Carriers in Auction

The Justice Department says the FCC needs to keep AT&T and Verizon from snapping up all the best airwaves.

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Justice Department antitrust officials fired off a letter to federal regulators Wednesday suggesting that they ought to consider how many airwave licenses will be set aside for companies not named AT&T or Verizon in an upcoming TV airwaves auction.

Federal antitrust officials didn’t explicitly say the FCC should increase the amount of airwaves being held in reserve for bidding by T-Mobile and smaller wireless carriers. The FCC currently has set aside 30 Mhz of airwaves for smaller carriers but T-Mobile and others want at least 40 Mhz.

But the Justice Department suggested the FCC should give “considerable weight” to concerns that allowing AT&T and Verizon to acquire most of the airwaves in the auction could limit competition in the wireless market for years to come.

It’s not a new sentiment from Justice Department officials, but the fact that they publicly released this letter now, as FCC Chairman Tom Wheeler and his aides try to finalize rules for the upcoming auction of TV airwaves next year, is notable. It adds some pressure on FCC officials to reconsider a decision to set aside 30 Mhz of airwaves for bidding by smaller carriers.

Noting that some companies (i.e. T-Mobile, Sprint and smaller regional wireless carriers) want the FCC to set aside at least 40 Mhz of airwaves licenses for bidding by companies other than AT&T and Verizon, Justice Department officials carefully avoided weighing in but still hinted they wouldn’t be opposed.

“The Department recognizes that the Commission must balance competing policy priorities in setting the appropriate reserve levels,” Justice Department lawyers wrote in a June 24 letter. “In balancing these priorities, the Department urges the Commission to give considerable weight in determining the amount of spectrum included in the reserve to protecting and promoting competition, and the well-established competition principle that those with market power may be willing to pay the most to reinforce a leading position.”

It’s not a new sentiment from the Obama administration’s Justice Department, which famously killed AT&T’s bid to acquire T-Mobile in 2011. Federal antitrust officials have said several times that it’s important to keep AT&T and Verizon from hogging all of the so-called low-band airwaves, most of which were previously used by TV stations and now host carriers’ LTE networks.

In April 2013, Justice Department antitrust officials urged the FCC to use its policies “to preserve and promote competition and to ensure that the largest firms do not foreclose other rivals from access to low-frequency spectrum that would allow them to improve their coverage and make them stronger, more aggressive competitors.”

Justice Department antitrust chief William Baer reiterated those comments in a May 2014 letter to the FCC.

T-Mobile and its CEO John Legere have been waging a wonky campaign to get customers to weigh in on the issue. Sprint and other carriers have also joined a lobbying coalition aimed at getting the FCC to set aside at least half of the airwaves set to be auctioned off for smaller carriers.

“There’s no more spectrum coming down the pike after this auction,” said Steve Berry, president of the Competitive Carriers Association, which represents smaller wireless companies, in a recent interview. Unless the agency changes its rules, “two companies will be able to dominate the market,” he said.

Earlier on Wednesday, a group of five Democratic senators also asked the FCC to “continue making competition your priority moving forward with this historic auction.”

Like Justice Department officials, however, the senators also didn’t flat-out call for a bigger set aside for smaller carriers.

Instead, the lawmakers, including Sen. Al Franken of Minnesota and Sen. Ed Markey of Massachusetts, wrote that the FCC should “continue to evaluate its auction rules to ensure they prevent excessive concentration of spectrum among the nation’s largest wireless providers.”

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