Technology

Verizon to Senate: It Would Be Ridiculous to Stockpile Spectrum

Tells Panel Possibility of Telco, Another Company Would Foreclose Competitor's is 'Vanishingly Small' 2/26/2014 12:47 PM Eastern

 

At a Senate Antitrust Subcommittee Wednesday, Feb. 26 on the wireless marketplace, Verizon executive vice president and general counsel Randal Milch said flatly that it would be ridiculous for a company like his to Stockpile something as capital-intensive as spectrum without trying to get a return on it.

He told the Senators that the prospect of his or another company buying spectrum to foreclose it to others is "vanishingly small" and essentially an alarmist talking point.

Milch and other witnesses were asked to weigh in on the incentive auctions and whether the government should take steps to insure that the low-band broadcast spectrum available at the auction was spread around, rather than potentially go to Verizon or AT&T, which already have the majority of that beachfront wireless spectrum.

Broadcasters interested in potentially putting up spectrum for auction are concerned that if the FCC did impose spectrum aggregation limits, it could limit the bidding and lower the prices they could receive.

Verizon, joined by Jonathan Spalter of Mobile Future, argued that the wireless market is wildly competitive and innovative to the benefit of consumers. Milch pointed out that the telecom industry had spent $7 billion in advertising

Ranking subcommittee member Mike Lee (R-Utah), agreed with that assessment, saying "the wireless market is, in fact, very competitive."

Spalter said where there might be problems, the FCC could apply a case-by-case approach rather than taking prescriptive approaches to perceived, or he would likely argue misperceived, harms. Lee seconded that as well, saying "we must be careful to ground antitrust analysis in specific transactions."

Subcommittee chairman Amy Klobuchar (D-Minn.) pointed to T-Mobile's aggressive ad campaign and no-contract, free data roaming and paying off termination fees as evidence that there had been a recent "surge" of competitive activity," but pointed out that T-Mobile had just reported quarterly losses. T-Mobile vice president of federal regulatory affairs Kathleen O'Brien Ham said that it still did not have the scale of AT&T and Verizon and that she could not say how long T-Mobile would be able to sustain the cost of that surge.

Framing the company as "the little engine that could" and saying that T-Mobile had been "doing our darndest" to compete, she couldn't say whether aggressive marketing, and the cost, is sustainable.

Ham made a pitch for putting aggregation limits on spectrum holdings so that the broadcast incentive auctions would be an opportunity to level the low-band playing field, pointing out that Verizon and AT&T have some 80% of low-band.

She said the auctions represent a critical moment for the wireless industry that will impact the market for years to come, and said broadcasters should be encouraged to give up as much spectrum as possible.

But that will depend on what price they can expect from the government, which will depend on what wireless companies are willing to bid in the forward auction.

Spalter, who is no fan of aggregation limits, said the auctions should catalyze systemic competition and not favor one business plan over another. Policymakers should proceed with "restraint and humility" he said.

The FCC has yet to weigh in on whether it plans to modify its local market spectrum aggregation screen in a way that could limit participation by AT&T and T-Mobile in the incentive auctions, perhaps by adding a low-band element to the screen.

Klobuchar ended the hearing by saying while there had been a surge in competitive activity in the wireless market, there were still challenges.

September