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FCC denies T-Mobile request for upcoming 4G spectrum auction

T-Mobile Announces Its Laying Off 1,900 EmployeesT-Mobile Announces Its Laying Off 1,900 Employees

Next year’s incentive spectrum auction will open up a windfall of new 4G airwaves to mobile operators, allowing them to build faster and higher-capacity LTE networks. The government and TV stations that currently broadcast over those frequencies aren’t just giving those licenses away, though.

The auction format will require operators to pony up billions of dollars to secure these airwaves, so naturally a smaller carrier like T-Mobile (TMUS) is looking for any advantage it can get over its bigger and deeper-pocketed competitors AT&T (ATT-INC) and Verizon (VZA). T-Mobile specifically asked regulators to set aside 40 MHz of spectrum across the country that AT&T and Verizon would be prohibited from bidding on. The Federal Communications on Thursday denied T-Mobile’s request, although T-Mobile didn’t leave empty handed.

The FCC’s original rules already reserved 30 MHz of spectrum solely for smaller carriers like T-Mobile, Sprint and regional carriers. To put that in perspective, the first LTE networks in the U.S. launched using 20 MHz of spectrum, and the new high-powered 4G services Verizon and T-Mobile debuted last year use 30-40 MHz frequency chunks. Those 30 MHz will grant a sizable amount of new 4G capacity to the carriers that win them.

Though its request to boost that reserve was denied, T-Mobile nevertheless seemed happy with the results (the big operators would rather see the reserve reduced or eliminated entirely). T-Mobile’s very vocal CEO John Legere took to Twitter after the FCC ruling, claiming “victory.”

“Good news – the reserve includes great quality spectrum & looks like the @FCC will be monitoring closely so duopoly can’t game the system,” Legere tweeted, using the term duopoly to describe AT&T and Verizon (which is only slightly more polite than his usual moniker for the two operators: “dumb and dumber.”)

Even though it didn’t work, you can’t blame T-Mobile for trying to further change the rules in its favor. The gambit shows just how much is at stake in this auction, not just for the mobile carriers, but also for government bean counters, TV broadcasters, Silicon Valley and especially for FCC chairman Tom Wheeler.

If it succeeds, the auction would supply the necessary spectrum for the next wave of mobile data services. It would also put billions of dollars into government coffers and TV stations’ bank accounts. Depending on where the chips fall, the auction could also open up more unlicensed frequencies like those used for Wi-Fi—which tech giants like Google and Microsoft favor—or it can further limit public use of the band.

The problem is that there are so many competing interests, no one seems to trust anyone else. That’s especially true for broadcasters, many of whom who see the auction as nothing more than a raid on their TV licenses.

For those of you old enough to remember a day when TVs had UHF and VHF dials, the spectrum in question is in the UHF band, broken up into 6 MHz channels each operated by TV station in a specific market. The transition from analog to digital TV meant that TV stations could now transmit a lot more video over the same frequencies, so the FCC is inviting them to double up on the same channels or go off the air entirely in order to sell their unused spectrum. The broadcasters big concerns are that the FCC won’t adequately compensate them for their licenses and that the TV stations that remain on air in the band won’t be protected from interference when mobile networks move in.

If the broadcasters agree to sell, then the FCC must “repack” the UHF band, putting all the mobile operators on one end and the remaining broadcasters on the other. It also has to reapportion those 6 MHz channels into licenses mobile operators can actually use. Whatever frequencies are left over will become “white spaces,” unlicensed frequencies anyone can use for broadband services.

The reason the mobile operators are so worked up over the auction is because it will open up the lowest-band frequencies in history for mobile use. Low band is a big deal in the wireless world, because the lower the frequency the further its signals propagate. That means operators can disperse their towers much further apart in rural and suburban areas. In urban areas those low frequencies are much better at punching walls, improving indoor coverage.

Whoever has low-band spectrum has a significant network advantage over its competitors, and today most of the low-frequency mobile spectrum out there is in the hands of Verizon and AT&T. That’s why everyone else is so keen on ensuring those two carriers don’t lock down every license in the auction simply by cutting two enormous checks.

The one individual with the most to gain or lose is Wheeler. His tenure as FCC chairman will be judged by the auction’s success or failure. We’ll know more in March when this enormously complex process is scheduled to kick off.