WASHINGTON, April 12 (Reuters) - Smaller wireless carriers should be able to get a fair share of spectrum in the forthcoming U.S. auction to ensure the market is competitive, the Justice Department told the Federal Communications Commission in a filing made public on Friday.
The filing underlines the high value placed on low-frequency spectrum that will be auctioned off, and delivers a blow to the two largest U.S. providers, Verizon Communications Inc and AT&T Inc, in acquiring those airwaves.
“The Department concludes that rules that ensure the smaller nationwide networks, which currently lack substantial low-frequency spectrum, have an opportunity to acquire such spectrum could improve the competitive dynamic among nationwide carriers and benefit consumers,” the Justice Department said.
Federal telecom regulators are drafting rules that would guide a major shakeup of ownership of airwaves that carry radio signal through a large and complex auction of some of the most attractive spectrum, to be held in 2014 or possibly later.
Verizon and AT&T worry that the FCC’s auction rules would put caps on how much spectrum one provider could buy or otherwise limit their participation in the auction. Sprint and Deutsche Telekom AG’s T-Mobile, lagging far behind as No. 3 and No. 4, have lobbied for assurances they would be able to go to bat against their larger competitors.
In the filing, the Justice Department gave T-Mobile and Sprint’s arguments a boost.
Signed by the department’s antitrust chief William Baer, the filing urged the FCC to “maintain vigilance” against any efforts to further concentrate market power, warning that carriers may have incentives to buy spectrum not for better services or efficient expansion but just to deprive competitors access to the valuable airwaves and to keep costs high.
“A large incumbent may benefit from acquiring spectrum even if its uses of the spectrum are not the most efficient if that acquisition helps preserve high prices,” the Justice Department said.
The four carriers did not immediately comment on the filing. AT&T in the past has argued against valuing low-frequency spectrum higher than other airwaves.
The Justice Department suggested the FCC may want to allow big carriers to buy “smaller blocks” of such spectrum “even if it seeks to restrict the acquisition of larger blocks.”