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Wheeler Doubts AT&T Would Sit Out Incentive Auction

Thursday, April 24, 2014

By Bryce Baschuk  

April 23 --Federal Communications Commission Chairman Tom Wheeler said during an April 23 press briefing that he doesn't think AT&T Inc. will ultimately sit out the agency's 2015 broadcast incentive auction.

Wheeler's response comes a week after the company said it would reevaluate its participation in the 2015 broadcast spectrum auction if the agency implements certain bidding restrictions.

“I have a hard time envisioning this once-in-a-lifetime opportunity for this kind of beachfront spectrum, being something that people throw up their hands and walk away from,” Wheeler told reporters. “The wireless carriers, including AT&T, have been very forceful and persuasive in making the case that the success of their ability to serve consumers and therefore the success of their business depends on additional spectrum.”

Reserve Spectrum Proposal

Wheeler recently confirmed that the agency will impose eligibility restrictions on certain bidders seeking to buy the highly valuable 600 megahertz (MHz) spectrum. Under the FCC's proposal for the forward auction the commission would reserve a portion of the broadcast spectrum for carriers that own less than a third of the sub-1 gigahertz (GHz) licenses in U.S. markets.

The restrictions are needed in order to encourage competition and facilitate the deployment of wireless broadband services in rural and unserved areas, Wheeler said in a recent letter to Rep. John Barrow (D-Ga.). “A priority of the auction should be to assure that companies that already possess low-band spectrum do not exploit the auction to keep competitors from accessing the spectrum necessary to provide competition,” Wheeler wrote in the April 17 letter. “This is particularly important in rural areas where low band spectrum is necessary if competitors are to fill in the blank white spaces on the coverage maps we see on TV commercials.”

AT&T Working With Commission

AT&T's Chief Financial Officer John Stephens said during an earnings call on April 22 that the company would like to participate in the auction. “We are and have been working with the Commission to establish auction rules that will certainly promote a good result for AT&T but will also promote a successful result for the auction,” Stephens said.

“We feel pretty good about our spectrum position right now,” Stephens said. “We feel like we have positioned ourselves well with the transactions and the spectrum deals we've done over the last few years, and we are optimistic about it. But as with anybody, we are always looking to continue to have that available.”

The remarks differ from a recent FCC filing in which Joan Marsh, AT&T's vice president of federal regulatory affairs said the company “will need to seriously consider whether its capital and resources are better directed toward other spectrum opportunities” if such restrictions are implemented.

FirstNet Implications

The auctions are part of President Barack Obama's plan to free up and auction about 500 megahertz of spectrum for use by mobile broadband providers by 2020.

If AT&T decides not to bid on the highly valuable 600 megahertz (MHz) spectrum, it could jeopardize the FCC's ability to generate enough revenue to fulfill the requirements of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96).

The law requires the FCC to hold a reverse auction that will enable TV broadcasters to voluntarily release their spectrum in return for a portion of the proceeds from a subsequent forward auction of the relinquished spectrum. The remaining revenue generated from wireless carriers in the forward auction is to be used to fund the $7 billion development of FirstNet, a nationwide interoperable communications network for first responders, and help pay down the nation's debt.

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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