House Republicans back call for unrestricted U.S. sale of airwaves

WASHINGTON Mon May 5, 2014 1:11pm EDT

WASHINGTON May 5 (Reuters) - Republicans on the U.S. House of Representatives' technology panel are urging regulators to scrap plans that would restrict the top two U.S. wireless carriers in the upcoming major sale of valuable airwaves, according to a letter released on Monday.

House Energy and Commerce Committee Chairman Fred Upton and every other Republican on the communications and technology subcommittee echoed the arguments of Verizon Communications Inc and AT&T Inc in a letter to Federal Communications Commission Chairman Tom Wheeler ahead of a May 15 FCC vote on the rules for next year's auction.

Wheeler recently proposed rules for the complex sale of highly-valued low-frequency airwaves that would reserve part of the spectrum in each market, up to 30 megahertz, for wireless carriers that do not already have dominant blocks of low-frequency airwaves.

Such restrictions would largely benefit the No. 3 and No. 4 carriers, Sprint Corp and T-Mobile US Inc, by limiting the two biggest carriers, Verizon and AT&T, which dominate the low-band spectrum and have criticized the rules in meetings with FCC officials.

Without naming any companies in their letter, which was dated May 2, the Republican lawmakers referred to restricted carriers as "disfavored bidders." They said if Wheeler's rules are adopted, the regulators would be picking winners and losers and, by doing so, would "manipulate the market to force the hands of a select group of bidders."

"This is not how a market-based auction should function; it is how a cartel controls price," the letter said, urging the FCC to "allow the free market to decide the fate" of the auction.

The auction's success hinges on television stations voluntarily giving up control of low-frequency airwaves, valued for their strength and reach.

Depending on how much spectrum they offer up, AT&T has said that Wheeler's plan may restrict it and Verizon from bidding on almost half of the spectrum in the auction.

Republicans agreed, saying that under the rules, "disfavored bidders" would be pitted against each other to win two of the three spectrum licenses in a market because the FCC would "artificially restrict supply."

AT&T has said that the plan could leave only one of the restricted bidders with a chance to get a block of airwaves large enough to deploy new-generation wireless technology.

Wheeler is scheduled to testify at a hearing of the House communications and technology subcommittee on May 20, shortly after the FCC votes on his proposed auction rules. (Reporting by Alina Selyukh; Editing by Ros Krasny and Paul Simao)