AT&T threatens to not participate in the auction if rumored restrictions are put in place

An upcoming spectrum auction that will offer up airwaves previously reserved for broadcasters could actually give the most benefit to smaller mobile network providers. The auction, which will have highly-desirable 600MHz spectrum up for grabs, may have restrictions placed on it that will keep the big players Verizon and AT&T from snatching up too much. According to reports, FCC Chairman Tom Wheeler plans to set up the auction in a way that smaller providers — such as T-Mobile and smaller regional carriers — will have a fair shot at buying some spectrum without being drastically outbid by the big money behind the leading carriers.

Chairman Wheeler explains that because Verizon and AT&T have taken advantage of their market position in past auctions they have snatched up a majority of the sub-1GHz spectrum across most of the country, while smaller carriers have traditionally relied on the less-efficient spectrum above 1GHz and even 2GHz in some cases. The proposed auction plans expect to restrict any single buyer from picking up more than one-third of the spectrum up for grabs in any given market — once they bid and control that amount, the other two-thirds will be up for sale to other carriers.

Naturally Verizon and AT&T aren't too happy about the situation, and AT&T in particular has made statements that it could possibly not participate in the auction altogether — even though it has participated in every major auction in the past — if the restrictions are put in place. The nation's second-largest carrier claims the restrictions would keep it from making a bid for spectrum covering upwards of 70 percent of the U.S. population. The threat of dropping one big bidder out of the auction means the government would potentially raise a far smaller amount of money for the high-value spectrum.

Although Wheeler's positions on providing more competition in the wireless carrier market have been questionable in the past, it doesn't seem that a threat from AT&T will deter him from putting together an auction that could in the end benefit lower-tier carriers and in turn competition amongst the big four. A formal showing of the final rules for the auction is expected in the near future.

Source: WSJ