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AT&T, Verizon team to stop T-Mobile from getting more 5G spectrum

AT&T has officially joined Verizon in complaining that T-Mobile is on its way to an unassailable position in 5G spectrum.

The two carriers are now urging the FCC to take a hard look at how much low- and midband spectrum T-Mobile owns, and to take action against the carrier if it gains too much spectrum.

AT&T and Verizon ostensibly are arguing that T-Mobile's latest spectrum-leasing deal will push its overall spectrum holdings over the FCC's "spectrum screen." The agency's decidedly arbitrary screen was set up in 2004; it's designed to trigger an investigation by the FCC if an operator moves to purchase more than one-third of the total amount of spectrum available in a given market. However, the agency has rarely used the screen as a basis to prevent spectrum purchases.

At least, the spectrum screen is what AT&T and Verizon are using to prop up their concerns. What's really going on is that none of these companies care about the spectrum screen. What AT&T and Verizon are really worried about is that T-Mobile is going to wreak havoc in the upcoming C-band spectrum auction, forcing AT&T and Verizon to spend billions of dollars in extra money to ensure they gain critical midband spectrum for 5G – and T-Mobile doesn't.

Smoke screen
"In the wake of its acquisition of Sprint (in which the FCC declined to require any divestitures), T-Mobile itself now exceeds the commission's screen by an unprecedented margin throughout much of the country," wrote AT&T's regulatory chief Joan Marsh in a post on the company's website Friday.

The operator made similar arguments in its official filings on the topic with the FCC Friday. "This unprecedented level of spectrum concentration in the hands of one carrier compels changes in how the commission addresses additional acquisitions of spectrum by that carrier," AT&T argued.

Specifically, AT&T said that T-Mobile's latest spectrum deals will cause it to exceed the FCC's 250MHz spectrum screen by as much as 112MHz.

AT&T's complaints on the topic come just weeks after Verizon began complaining about the topic with the FCC. "Concentration of needed spectrum in the hands of a single operator can raise serious competitive concerns and, over time, threaten the health and competitiveness of the wireless market," Verizon argued to the FCC in August.

AT&T and Verizon are raising a stink over T-Mobile's request for a three-year lease to use Columbia Capital's 600MHz licenses (Columbia owns the licenses via its Channel 51 License Company and LB License Co spectrum bidding entities). T-Mobile initially scored access to Columbia's licenses in the early days of the pandemic as a way to address expected COVID-19 Internet traffic spikes (although they never really affected mobile networks since everyone was on their home connections).

Now, though, T-Mobile wants a three-year lease to those licenses in order to give itself some cover while it works to build out Sprint's 2.5GHz spectrum licenses.

This is where AT&T and Verizon have set up their initial battle lines.

A brewing C-band battle
What's really going on here though is that AT&T and Verizon are worried that T-Mobile will dominate the upcoming C-band auction for 5G spectrum. They're working to make a big stink about T-Mobile's leasing agreement with Columbia in an effort to get the FCC to do (something) to prevent T-Mobile from either buying all the C-band spectrum up for grabs, or from bidding up the price of those licenses so that AT&T and Verizon have to dole out billions of additional dollars to actually win the licenses in the auction.

Others agree. "We still wonder if Verizon is gearing up to argue that T-Mobile should not be permitted to bid in the C-band auction, given its already very deep mid-band spectrum holdings," wrote the financial analysts at LightShed Partners in a recent post for investors.

What's ironic here is that T-Mobile, along with some other, smaller network operators, had initially urged the FCC to issue firm rules that would prevent a single C-band auction participant from purchasing more than a third of the total available spectrum up for bid. Instead, the agency said only that it will apply its spectrum screen on a case-by-case basis in the auction.

Now, with less than three months before the start of the C-band auction, AT&T is arguing that's not good enough. "AT&T expects that as a result of the upcoming C-band auction, the commission will increase its initial screen from 250MHz to 345MHz. Notably, there are markets (including three impacted by these [T-Mobile/Columbia] leases) where T-Mobile's holdings already exceed 345MHz, and many others where T-Mobile would exceed the new, higher screen if it won even a single block in" the C-band auction, AT&T said in the FCC filing.

It's worth noting that none of the carriers involved in this debate have any right to a principled argument when it comes to the FCC's spectrum screen. For example, in its responses to Verizon's initial filing, T-Mobile pointed out that Verizon itself has often argued against a firm spectrum screen.

Killing each other
T-Mobile executives are well aware of the concerns by AT&T and Verizon.

"I think AT&T and Verizon will absolutely kill each other over C-band," T-Mobile CEO Mike Sievert said this week at a Goldman Sachs investor event. "I think they're going to spend tens of billions of dollars they don't have to stress out their balance sheets and put at risk their share buyback and dividend plans in order to not be left out of the party on 5G. Because they're stuck. They got themselves stuck. And they're way behind and they can't stand it. So they're going to have to do things that are probably going to be uneconomical."

And will T-Mobile purchase C-band spectrum in the upcoming auction? "We're interested in it. But we're coming from a position of strength and a tradition of being disciplined," Sievert said, noting that T-Mobile largely sat out the big AWS-3 auction in 2015 only to spend around $8 billion in the FCC's 2017 auction of 600MHz licenses.

That was a "much better deal," Sievert said.

"We'll see where we get to," T-Mobile's networking chief Neville Ray said in response to a question about whether the operator will bid in the C-band auction. "There's a lot of decisions to be made."

Added Ray: "More to come."

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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