The FCC is circulating an NPRM that could dash the hopes of T-Mobile and Sprint to form a joint venture for bidding in the upcoming 600 MHz incentive auctions.
In efforts to promote wider participation in those auctions, the FCC said the combined bidding power and resources of two major wireless carriers could make it difficult for smaller companies to meaningfully bid for spectrum.
“We must make sure that the biggest providers are not able to limit broad participation in the spectrum auction,” FCC Wireless Telecommunications Bureau Chief Roger C. Sherman wrote in a blog post. “Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed.”
The CCA responded to the FCC’s proposal, saying it discouraged policies that disallowed its members—like Sprint and T-Mobile—to gain the “scope and scale” to take on AT&T and Verizon. It also pointed out that joint bidding has worked out well in past auctions.
“Past auction experience confirms that joint bidding arrangements can enhance auction revenues and encourage participation by large and small companies alike, benefiting consumers and competition, and increasing broadband deployment throughout the United States,” CCA CEO Steven Berry said in a statement.
The proposal will also look into similar arrangements from “providers of different sizes.”
Sprint and T-Mobile are reportedly dedicating $10 billion to a joint venture, run by T-Mobile, in order to better compete against AT&T and Verizon, both of which currently hold the majority of below-1 GHz spectrum licenses. The $10 billion is reportedly part of the $45 billion SoftBank is raising for Sprint’s bid to buy a majority stake in T-Mobile.
The $10 billion Sprint and T-Mobile seek to set aside for the auction is comparable to the $9 billion AT&T has earmarked for the auction.
On top of voicing its opposition to a Sprint-T-Mobile JV participating in the auction, the FCC has indicated it will heavily scrutinize Sprint’s reported plans to merge with T-Mobile.
Sprint and T-Mobile aren’t the first companies to join forces for a spectrum auction. Comcast, Time Warner Cable, Bright House Networks and Cox Communications formed SpectrumCo and in the 2006 AWS auction won 150 licenses for $2.4 billion.
Besides opposing a Sprint and T-Mobile joint venture for the 600 MHz auction, the FCC’s proposal focuses on propelling for smaller players into the wireless industry by facilitating “structured entry” via business partnerships with larger companies. It also suggests bidding credits for smaller entities looking to buy spectrum but the FCC warns it will be extremely vigilante against abuse of those rules.
“Some may try to take advantage of this flexibility to gain a discount for large incumbents, which we will not allow,” Sherman wrote. “If the small business is a stalking horse for another party, then the bidding credit will be lost.”
The 600 MHz incentive auctions are scheduled to take place in 2015.