spectrum aggregation

Sprint’s Decision To Skip Wireless Auction “Highlights The Folly” Of Federal Hubris

Posted by | Regulatory State, Wireless | No Comments

Few industry analysts seemed surprised when Sprint’s new CEO announced “after thorough analysis” that the company won’t participate in next year’s auction of TV broadcast spectrum (known as the “incentive auction”). Analysts already knew that Sprint “has the spectrum it needs to deploy its network architecture of the future.” As a senior telecommunications analyst for Bloomberg Intelligence said in response to the news, “Sprint really has a lot more spectrum than its rivals, so they don’t have that pressing need to get more.”

The announcement is an embarrassment to the Department of Justice (DOJ), which apparently didn’t know (or didn’t care) that Sprint was flush with spectrum for the foreseeable future. When the Federal Communications Commission (FCC) was developing its auction rules, the DOJ urged it to “ensure” that both Sprint and T-Mobile would “win” spectrum in the auction. The DOJ believed Sprint and T-Mobile had to win “low-frequency” spectrum in the auction in order to compete against Verizon and AT&T in the mobile marketplace. The FCC agreed with the DOJ’s expert opinion and decided to “reserve” the auction’s best spectrum for bidders other than AT&T and Verizon.

Though it’s no surprise, it’s now obvious the country’s federal experts on competition and antitrust matters were wrong in their analysis of Sprint’s alleged need for low-frequency spectrum in order to compete. The agencies were blind to Sprint’s effort to leverage Washington to its business advantage even though Sprint used the same tactics just a few years ago in the last major spectrum auction. As FCC Commissioner Ajit Pai recently noted, “Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins.” It’s been less than a year since Sprint told the FCC that it would be “unable to make up much, if any, ground” competing against Verizon and AT&T if the FCC didn’t expand its existing spectrum reserve so that Sprint could acquire additional spectrum. It was only after the FCC completed its spectrum reserve proceeding that Sprint announced it doesn’t need the spectrum after all. Read More

T-Mobile Spectrum Song Is A Broken Record At The FCC

Posted by | Wireless | No Comments

This week the Federal Communications Commission (FCC) is voting on procedures for an upcoming auction of spectrum (or airwaves) that will expand wireless broadband services to Apple and Android devices. Like bidders on eBay, it’s natural that spectrum bidders want to win big while paying as little as possible. It’s not natural for eBay or any other auctioneer to help some bidders win big by discriminating against other bidders, yet that’s what the FCC decided to do last year when it ruled that Verizon and AT&T can’t bid against T-Mobile or other bidders for nearly half of the spectrum expected at auction.

The FCC’s decision to shelter T-Mobile from competition for such a large portion of the spectrum for sale counts as a big win for T-Mobile before the auction even starts. But a bidding preference for nearly half of the spectrum still isn’t big enough to satisfy T-Mobile, who’s demanding an even bigger handout. The company claims it can’t buy the spectrum it needs unless the FCC gives it an additional unfair bidding advantage for more than half of the spectrum. Read More

H Block Auction Shows Need for Clearer Limits on FCC Spectrum Authority

Posted by | Wireless | No Comments

This post was originally published by FierceWireless here.

The Federal Communications Commission declared the auction of spectrum in the H block “successful” because (1) it licensed spectrum that could be used to provide mobile wireless service to the public, and (2) it “raised $1.564 billion from spectrum that used to be viewed as almost worthless.” In truth, however, the H block auction was a failure.

Though the auction did license spectrum in exchange for payment, that is not the criteria for a successful spectrum auction — virtually all spectrum auctions would meet this criteria, including the obviously failed C block auction in the PCS band.

To be truly successful, an auction must fulfill the fundamental purpose auctions are intended to serve. Congress authorized the use of “competitive bidding” to assign spectrum to the applicant who values it most highly, who is presumed to be the applicant most likely to provide quality service to the public in a timely manner, while minimizing rent seeking and transaction costs. An auction can serve this purpose only if it actually results in competitive bidding, which is why Congress prohibited the FCC from selling spectrum in the absence of competing applicants.

Based on bidding data and the unusual circumstances surrounding the adoption of its reserve price, the H block auction bears more resemblance to an impermissible “retail sale” of spectrum at a pre-determined price negotiated by the FCC than a “system of competitive bidding” designed to determine which applicant values the H block most highly. As I’ve previously explained in detail, the FCC illegally established an artificially high reserve price of $1.564 billion for the H block as part of a pre-auction bargain with DISH Network, who had committed to pay this price only if the FCC increased the value of DISH’s spectrum holdings in other bands. The FCC granted DISH’s wish, and a result, DISH “won” all of the H block licenses. Read More

In His Bid to Buy T-Mobile, Sprint Chairman Slams US Wireless Policies that Sprint Helped Create

Posted by | Wireless | No Comments

Sprint’s Chairman, Masayoshi Son, is coming to Washington to explain how wireless competition in the US would be improved if only there were less of it.

After buying Sprint last year for $21.6 billion, he has floated plans to buy T-Mobile. When antitrust officials voiced their concerns about the proposed plan’s potential impact on wireless competition, Son decided to respond with an unusual strategy that goes something like this: The US wireless market isn’t competitive enough, so policymakers need to approve the merger of the third and fourth largest wireless companies in order to improve competition, because going from four nationwide wireless companies to three will make things even more competitive. Got it? Me neither. Read More

Maximizing the Success of the Incentive Auction

Posted by | Public Safety, Wireless | 2 Comments

I prepared a report for the Expanding Opportunities for Broadcasters Coalition and Consumer Electronics Association entitled Maximizing the Success of the Incentive Auction, which was filed at the Federal Communications Commission on November 4, 2013. The executive summary is reprinted below and the full paper can be viewed here. Read More

FCC Commissioner Rosenworcel’s Speech on Spectrum Policy Reveals Intellectual Bankruptcy at DOJ

Posted by | Public Safety, Wireless | No Comments

This week at CTIA 2013, FCC Commissioner Jessica Rosenworcel presented ten ideas for spectrum policy. Though I don’t agree with all of them, she articulated a reasonable vision for spectrum policy that prioritizes consumer demand, incorporates market-oriented solutions, and establishes transparent goals and timelines. Commissioner Rosenworcel’s principled approach stands in stark contrast to the intellectually bankrupt incentive auction recommendation offered by the Department of Justice last month. Read More

DOJ Spectrum Plan Is Not Supported by Economic Theory or FCC Findings

Posted by | Public Safety, Wireless | One Comment

Frontline relied on the DOJ foreclosure theory to predict that the lack of eligibility restrictions in the 700 MHz auction would “inevitably” increase prices, stifle innovation, and reduce the diversity of service offerings as Verizon and AT&T warehoused the spectrum. In reality, the exact opposite occurred.

The DOJ recently recommended that the FCC rig the upcoming incentive auction to ensure Sprint Nextel and T-Mobile are winners and Verizon and AT&T are losers. I previously noted that the DOJ spectrum plan (1) inconsistent with its own findings in recent merger proceedings and the intent of Congress, (2) inherently discriminatory, and (3) irrational as applied. Additional analysis indicates that it isn’t supported by economic theory or FCC factual findings either. Read More

DOJ Files Political Screed Asking FCC to Rig Spectrum Incentive Auction

Posted by | Wireless | 10 Comments

“The DOJ’s recommendation would likely reduce the amount of revenue produced by the incentive auction and risk leaving the public safety network unfunded (as the economist who led the design of the most successful auction in FCC history will explain in this <webinar on Thursday). The unsubstantiated, speculative increase in commercial competition the DOJ says could occur if the FCC picks winners and losers in the incentive auction is a poor justification for continuing to deny our nation’s first responders the network they need to protect the safety of every American.”

Beyond enforcing the antitrust laws, the Antitrust Division of the Department of Justice (DOJ) advocates for competition policy in regulatory proceedings initiated by Executive Branch and independent agencies, including the Federal Communications Commission (FCC). In this role, the DOJ works with the FCC on mergers involving communications companies and occasionally provides input in other FCC proceedings. The historical reputation of the DOJ in this area has been one of impartial engagement and deliberate analysis based on empirical data. The DOJ’s recent filing (DOJ filing) on mobile spectrum aggregation jeopardizes that reputation, however, by recommending that the FCC “ensure” Sprint Nextel and T-Mobile obtain a nationwide block of mobile spectrum in the upcoming broadcast incentive auction. Read More

FCC Spectrum Management: Sometimes 2 + 2 = 4, Sometimes It Doesn’t

Posted by | International, Wireless | 4 Comments

In an opinion published in the Wall Street Journal last week, Federal Communications Commission Chairman Julius Genachowski admonished us to keep “discussions focused on solving problems, and on facts and data” when evaluating his spectrum policy proposals. That sounds reasonable, and it could be persuasive, if the FCC based its spectrum policy on consistently applied facts and data.

The FCC has instead chosen to selectively manipulate the facts and data to support its desired policy outcomes. Within a single quarter, the FCC has simultaneously concluded that:

  • 194 MHz of spectrum in the 2.5 GHz band is available for mobile broadband services (note: when the FCC wants to show licensed spectrum in the US compares favorably with licensed spectrum on a global basis and that the ratio of licensed to unlicensed spectrum in the US is relatively balanced), and
  • Only 55 MHz of the same 194 MHz in the 2.5 GHz band is available for mobile broadband services (note: when the FCC wants to deny a merger or limit the amount of spectrum available to disfavored competitors).

Neither the laws of physics and economics nor the regulations governing the 2.5 GHz band changed the actual facts and data in the intervening period between these inconsistent conclusions. The only things that changed were the results the FCC wanted to reach and the “facts and data” the FCC decided to present to the public. Read More