The fight for stateside wireless customers shifted from intense to very intense when regulators quashed AT&T’s planned purchase of T-Mobile in late 2011.
Break-up fees of $2 billion, plus required AT&T spectrum, helped T-Mobile grow its network and enhance its presence. With Verizon still incredibly strong and Sprint’s investment from SoftBank, all four players are focussed on positioning their networks for the future.
Their future strategies include tactics for a titanic battle brewing over the spectrum needed to compete effectively. With Pew reporting that over half of all Americans possessed a smartphone at the start of this year, with almost as many owning a tablet device, spectrum access has become crucial in meeting the growing demand for data. Because of this demand, services on already-available spectrum already are becoming sluggish.
The Federal Communications Commission (FCC) has proposed a 2015 auction for new spectrum that will come from the TV bands that, long ago, were given to broadcasters. Those broadcasters will share in the auction returns with the government.
The proposed auction is for new “good”, low-band spectrum, which travels longer distances and traverses more difficult terrain, including the thick walls of buildings. All four of America’s biggest wireless providers are eager to attain this newly available spectrum, but the amount they will be allowed to purchase is still in question.
The argument boils down to competitive policy: should the wealthier carriers – for which read AT&T and Verizon – be allowed to buy as much of the new spectrum as they desire, or should other carriers such as Sprint (with SoftBank), T-Mobile (more than half-owned by Deutsche Telekom) and smaller carriers be empowered toward greater participation through through spending caps?
This question has been debated for over a year now, and the “Big Four” have pinched no pennies in making their voices heard, although at $29.6 million, AT&T and Verizon spent more than 3.5 times as much as T-Mobile and Sprint’s combined lobbying efforts in 2013.
The argument from the largest players is that an auction with limits would reduce the total money being raised by billions of tax dollars. A Sprint study from Europe, however, showed that low-band spectrum auctions across the Atlantic have fetched no less revenue when using a cap system.
In the end, the wireless behemoths will aim to garner as much new spectrum as possible, while T-Mobile and Sprint hope that new rules will help them play with the big kids of the cellular playground. For now, economic researchers, auction theorists and lobbyists are happy to benefit from the debate.
