FCC Auction Proposal Dings Dish, T-Mobile

It looks like T-Mobile's pleas may have fallen on deaf ears at the FCC as the regulatory body's chairman proposed Thursday not to increase the spectrum reserved for small carriers in the 2016 broadcast auction, as well as capping the bidding discounts small carriers can receive.

The latter proposal will be especially disappointing to Dish Network LLC (Nasdaq: DISH), which exploited a loophole in the Federal Communications Commission (FCC) auction process earlier this year to fund bids for smaller carriers, giving its partners a $3 billion discount. (See Hey Big Spenders! AT&T, Dish & VZ Splash Cash on Spectrum.)

FCC Chairman Tom Wheeler wrote in a blog post that the Commission’s competitive bidding rules have not been updated since 2006, when most mobile users were on 2G. He said that now, with 4G deployed and 5G on the horizon, is the time to update the rules with a bent towards helping carriers serving rural areas.

He proposed eliminating the clause that requires small businesses to offer facilities-based wireless service to qualify to bid and to create a new rural business bidding credit to incentivize their participation.

Indirectly referring to Dish, Wheeler also suggested establishing the first-ever cap on the total value of bidding credits "minimizing an incentive for major corporations to try to take advantage of the program" and making sure small businesses aren't acting as a "stalking horse for another party."

For more on the 4G spectrum wars, visit the dedicated 4G/LTE content section
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Wheeler did, however, stop short of proposing to expand the amount of spectrum that is available exclusively to small carriers that don’t have a significant amounts of low-band spectrum, as T-Mobile US Inc. has been lobbying it to do. It set aside 30Mhz of spectrum for this purpose last year, and Wheeler said the current reserve size balances "the desire to make low-band spectrum available to parties with limited holdings while facilitating competitive bidding for all auction participants." (See T-Mobile Takes Spectrum Fight to the People.)

"The rules adopted last year permit national carriers to bid for reserve spectrum in markets in which they have limited low-band spectrum and do not restrict any reserve-eligible bidder from bidding on unreserved licenses," he wrote. "There will be significant spectrum made available in all markets of the country to all bidders. As a result, consumers will benefit directly from competition in all parts of the country."

The FCC's five commissioners will vote on proposals at their meeting next month.

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

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