AT&T's new complaint: T-Mobile has too much 5G spectrum
AT&T is urging the FCC to block T-Mobile from receiving some of the 2.5GHz spectrum it won during one of the commission's recent auctions. The carrier alleges that T-Mobile's midband spectrum holdings "threaten long-term competition for mobile broadband services."
"T-Mobile controls a grossly outsized portion of the midband spectrum needed to fuel the 5G revolution," AT&T told the commission.
"T-Mobile holds this disproportionate midband spectrum position not because it outbid others at auction, but because it purchased Sprint, which for years had accumulated massive interests in legacy EBS and BRS spectrum in the 2.5 GHz band outside of any auction context and before the commission recognized the enormous competitive significance of that band," AT&T argued.
As a result, AT&T is asking the FCC to withhold T-Mobile's 2.5GHz auction winnings and to eventually require T-Mobile to divest a massive portion of its overall 2.5GHz midband spectrum holdings. AT&T is also asking the commission to revisit its definition of a "spectrum screen," which is basically a limit to the amount of spectrum any one mobile provider can hold.
The timing of AT&T's request is noteworthy in light of the growing likelihood that Democrats will soon enjoy a majority at the FCC. Democrats in general are viewed as more sensitive to complaints about anticompetitive situations.
Unsurprisingly, T-Mobile took a dim view of AT&T's arguments. In its filing to the FCC, T-Mobile wrote that AT&T's petition "presents the remarkable spectacle of AT&T – the beneficiary of structural competitive advantages for decades and the recent recipient of massive amounts of prime 3.45 GHz and C-band spectrum – asserting that T-Mobile’s minor screen overages resulting from Auction 108 [of 2.5 GHz spectrum] constitute a competitive harm."
T-Mobile continued: "Strikingly, the [AT&T] petition does not provide a single fact to support its claims that T-Mobile’s participation in the 2.5 GHz auction is part of an anticompetitive foreclosure strategy to raise AT&T’s costs. Nor could it, since AT&T elected not to place even one bid in this auction."
Broadly, T-Mobile argued that AT&T's newest petition to the FCC simply represents an attempt by the company to slow T-Mobile's advances in the US wireless market.
"AT&T alleges that T-Mobile has engaged in an anticompetitive strategy to raise its rival’s costs and harm consumers through undue spectrum aggregation," T-Mobile wrote. "Its petition, however, does not show any basis for its claims that T-Mobile’s participation in Auction 108 is part of a plan to raise AT&T’s costs or deny AT&T access to spectrum necessary to compete."
T-Mobile won roughly 90% of the spectrum licenses up for grabs during the FCC's recent 2.5GHz spectrum auction. The company's bids came as little surprise because they built on T-Mobile's heavy reliance on midband 2.5GHz spectrum – gained through the $26 billion acquisition of Sprint – as the cornerstone of its 5G strategy.
AT&T and Verizon have also been spending billions of dollars on midband spectrum of their own, whether that's C-band or 3.45GHz. Partly as a result, the financial analysts at New Street Research don't expect AT&T to make much headway in its efforts to turn the FCC against T-Mobile.
"We don’t think AT&T will be successful for many reasons," they wrote in a note to investors over the weekend.
Specifically, the analysts noted that AT&T has previously argued against the type of spectrum band-specific limits it's now asking for. The analysts also pointed out that AT&T didn't participate in the recent 2.5GHz auction, "which likely undercuts its credibility on the issue with the commissioners."
The analysts also noted that AT&T has previously said it commands a solid spectrum position. For example, they said AT&T officials in 2021 described the company's "very healthy" spectrum position.
So why is AT&T pursuing this issue now?
"Perhaps it wants to slow the rollout of T-Mobile’s home broadband service in AT&T’s wired footprint," the New Street analysts speculated. "Perhaps AT&T is raising the issue to establish a precedent that may be useful to it when the next spectrum auction occurs."
Regardless, they wrote, "odds of success in having this petition granted are very low."
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