FCC To Block Sprint/T-Mobile Joint Spectrum Bid
Sprint and T-Mobile US plan to launch a joint bid in the auction to be held next year to buy spectrum together that would transfer airwaves from broadcast TV stations to cellular carriers. But FCC chairman Tom Wheeler would block this attempt as he wants to promote competition.
In April, FCC provided an update on the auction to be held next year and showed regret about the fact that only two companies — AT&T and Verizon — control the best spectrum in the U.S. Wheeler believes that it is disadvantageous for mobile carrier industry to have such low competition. He wants to promote small companies to come up to the level of big giants like AT&T.
The latest proposal would promote partnerships between small and large companies instead of partnership between two big companies. According to stats, 95 percent of U.S. customers belong to either Sprint, AT&T, Verizon Wireless or T-Mobile.
The goal of the proposal is to make as many companies participate in the auction as possible. “We must make sure that the biggest providers are not able to limit broad participation in the spectrum auction,” wrote Roger C. Sherman, Wireless Telecommunications Bureau Chief. “As promised in the Mobile Spectrum Holdings Report and Order, we now seek comment on whether and how we should restrict the ability of wireless companies to combine their bids during an auction.”
Sprint and T-Mobile are two separate companies but they plan to act as one just for the auction in order to secure spectrum. FCC doesn’t like that and it is bad news for both companies. Wheeler believes that their joint resources to buy spectrum would be much larger than other companies and hence it will be unfair for small companies.
“If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition,” Sherman continued. “Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed. It also asks questions about such arrangements between providers of different sizes.”
Sprint may want to merge with T-Mobile by acquiring the company but FCC might block this move too just as they previously blocked the AT&T/T-Mobile merger. The intention behind all these moves by FCC is to promote small companies to compete with big four — AT&T, T-Mobile, Verizon Wireless and Sprint.