Regulators declined T-Mobile US Inc.’s request for more help to buy airwaves in a 2016 auction that may pit AT&T Inc. and Verizon Communications Inc., the largest mobile providers, against smaller competitors.
The Federal Communications Commission also allocated frequencies for Wi-Fi-like uses backed by Google Inc. and Microsoft Corp. as it set rules for the government’s auction of airwaves useful for smartphones.
FCC Chairman Tom Wheeler, a Democrat, called the package “a good, balanced logical solution to an incredibly complex, never-tried situation.”
Republicans said the decisions may result in electronic interference to mobile phone and other services that might reduce demand for the airwaves, which are expected to raise billions of dollars for the U.S. Treasury.
“The FCC is making it substantially more difficult than it needs to be to have a successful auction,” said Ajit Pai, the senior member of the agency’s Republican minority.
The National Association of Broadcasters, a Washington-based trade group whose members include CBS Corp. and Comcast Corp.’s NBC, called the vote “a major setback” in a statement issued by spokesman Dennis Wharton. The rules will bring lower payments to stations offering airwaves for sale at the auction, and will set up interference disputes, Wharton said.
The auction will sell frequencies carrying signals that go far and penetrate buildings. The airwaves are to be given up by television stations that will get a cut of auction proceeds.
T-Mobile had asked the agency to increase the portion of airwaves set aside, or reserved, for companies other than the largest carriers, saying the change would keep those companies from winning the lion’s share of available frequencies. AT&T and Verizon have said the proposal would protect T-Mobile from competition. The FCC decided not to increase the reserve, Commissioner Mignon Clyburn said in a statement.
T-Mobile “is committed to showing up, playing hard and being successful at the auction,” John Legere, its chief executive officer, said in a series of tweets that also called the FCC’s decision a “victory” and said it will encourage competition.
Google and Microsoft had asked the agency to make sure there are airwaves available for Wi-Fi-like devices that can perform tasks such as offering broadband service or remotely monitoring water levels. The agency said that after the auction, the devices can use spaces not occupied by smartphone or TV signals. Wheeler in July said the agency’s proposal would give the devices more space than they currently have.
Verizon will wait to look at auction rules before deciding whether to participate, Chief Financial Officer Fran Shammo told investors July 21. AT&T in 2014 said it intends to participate.
Bidding in the auction might pressure cash flow for carriers such as AT&T, Verizon, Sprint Corp., T-Mobile and U.S. Cellular, according to a note Thursday by Bloomberg Intelligence analysts John Butler and Matthew Kanterman.