FCC Unlikely to Favor Smaller Companies

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Reuters reported on Thursday that U.S. telecom regulators, like the FCC, are leaning towards rejecting T-Mobile’s request for more airwaves RqmymBBQN4dYfDstXXhkJEjydTi5bcz_JNEZSB6gMyeoxDy2VKwhUXurk5WZkrRdlRm9ZiwrKhP6_irZvx3CSAS5cc12r28v6q7J0YPr-WXueLbG8E0-ObytfgaurdhzluVQLWrt-Kqa3fTVLIirSrECVLTvikKPJWD1OQ=s0-d-e1-ftbe set aside for smaller wireless companies like itself to bid on during a government auction next year. It’s likely a decision will be finalized in the coming weeks, which would end months of speculation and lobbying from T-Mobile. The company wants the FCC to limit how much spectrum AT&T and Verizon can buy the 2016 auction.  Last year, the FCC voted to restrict the two major wireless carriers’ participation in the 2016 auction by reserving a piece of each market’s airwaves for non-dominant carriers. However, this restriction wasn’t quite tough as T-Mobile was looking for. According to Reuters, “The vote was something of a compromise among the FCC’s Democrats, who wanted to give smaller carriers a leg up but also to ensure that restrictions on the big carriers would not cut the proceeds of the auction, expected to be the agency’s largest.”

Amir Rozwadowski of Barclays wrote, “Overall, while we recognize the rules are not finalized (and thus could shift) the report suggests that they may be solidifying in the near future.” Rozwadowski explained the firm found it unsurprising that Verizon and AT&T have pushed for more accommodating rules that allow the carriers less restrictive participation in the action. Other groups have recently urged the FCC to increase the size of the reserve spectrum, which would ultimately be a good thing for Sprint and T-Mobile. “While the report suggests that an incremental reserve is unlikely, we do not perceive this development as a material negative for T-Mobile.  For Sprint, it has been our contention that the rules will likely need to be settled before Sprint’s strategy on the auction becomes more apparent given that they could materially influence the potential bidding levels,” Rozwadowski explained. It seemed unlikely that Sprint would participate in the auction, but CFO Joe Euteneuer recently noted that their participation in the auction is not a foregone conclusion.” Rozwadowski noted, “We believe the emergence of solidified rules can then allow the carrier to assess its strategy and the means by which 600MHz could be part of its ‘Next Generation’ network initiative going forward.  In other words, once rules are set, we could see more details around Sprint’s network strategy and more clarity on SoftBank’s role in its decision.”

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June 1, 2015 |
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