Sprint/T-Mobile Plan To Buy Spectrum Together May Be Blocked By FCC

An anonymous reader writes with a FCC proposal that is bad news for Sprint and T-Mobile. A proposal from FCC Chairman Tom Wheeler would block an attempt by Sprint and T-Mobile US to buy spectrum together in the incentive auction that will transfer airwaves from broadcast TV stations to cellular carriers next year. Announced on Friday, Wheeler's proposal seeks to help the smallest wireless companies develop business partnerships with larger ones. But it would not allow partnerships between the biggest carriers, since more than 95 percent of US customers are served by either AT&T, Sprint, T-Mobile, or Verizon Wireless. "Our goal is to promote the participation of as many parties as possible in the auction," FCC Wireless Telecommunications Bureau Chief Roger Sherman wrote Friday. "If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition. Therefore, the item tentatively concludes that joint bidding arrangements between nationwide providers should not be allowed."

Comments

Shell Company

[Anonymous Coward]

1. Form Startup Co
2. Seek investment from T-Mobile & Sprint
3. Bid on Spectrum
4. Sell company to Sprint/T-Mobile
5. Profit

Common sense

[Anonymous Coward]

A good common sense opinion from Mr. Wheeler and the FCC. So where's that common sense when it comes to net neutrality?

Re:Common sense

[ShanghaiBill]

A good common sense opinion from Mr. Wheeler and the FCC.

I am not so sure. If the two companies co-own the spectrum, they can each use it where it is most effective. This makes it worth more to them, so they may bid more, thus paying more money to the government, and means that the spectrum should be more effectively utilized, bringing benefits to the consumer. It doesn't seem obvious to me that banning combined bidding is "common sense".

Re:Common sense

[hawguy]

A good common sense opinion from Mr. Wheeler and the FCC.

I am not so sure. If the two companies co-own the spectrum, they can each use it where it is most effective. This makes it worth more to them, so they may bid more, thus paying more money to the government, and means that the spectrum should be more effectively utilized, bringing benefits to the consumer. It doesn't seem obvious to me that banning combined bidding is "common sense".

Paying more money to the government is the opposite of "benefits to the consumer" -- the billions of dollars that companies pay for spectrum aren't paid out of "free money", it's paid by consumers.

But it's clear that under the current system, if Sprint and T-Mobile aren't allowed to pool their funds for bidding, they'll be out-bid by the 2 huge duopoly providers, it's unlikely that some fresh new upstart is going to be able to come up with the funds to compete in the spectrum bidding and still have money leftover to build out the network to use it.

Re:Common sense

[NoKaOi]

A good common sense opinion from Mr. Wheeler and the FCC. So where's that common sense when it comes to net neutrality?

Wrong companies. You'll notice his pet companies Verizon, Comcast and Time Werner aren't helped by this. It's more complicated than pushing things in favor of big business, it's pushing things in favor of the biggest businesses. Sprint and T-mobile combined have less market share than either Verizon or AT&T individually, and I'm sure Verizon and AT&T want to keep it that way.

So, what will happen is a smaller company or combined small companies will buy the spectrum, and then get bought out by Verizon or AT&T.

Re:Common sense

[Anonymous Coward]

The problem is that in the real world, huge companies can afford to acquire resources just to keep them from being available to competitors.

This actually happened in downtown Miami. During the early-2000s building boom, downtown Miami got several dozen new skyscrapers -- nearly ALL of which have huge pedestal garages with more parking spaces per square foot of commercial floorspace than some suburban office parks & shopping malls. Yet, if you go to downtown Miami on Saturday night, you're going to spend $20 to park in a moderately full garage surrounded by 5 or 6 empty garages that are officially closed for the weekend. Basically, a group of investors went in and bought up most of the surplus capacity for a pittance during the real estate crash with the express intent of taking most of the spaces off the market and allowing them to get away with charging a lot more for the few remaining spaces. Making matters worse, they even bulk-leased parking spaces from the goddamn CITY OF MIAMI, so even THOSE garages are "full" despite being mostly unoccupied by actual cars. The problem is the worst in Brickell (the area south of downtown Miami proper), because the City of Miami SOLD OFF the vacant lots it used to own and operate for parking on the assumption that all the new buildings had abundant private parking garage space anyway. In effect, a group of investors figured out how to hack the system, and totally pwn3d Miami residents in the process.

Re:Common sense

[evilviper]

the billions of dollars that companies pay for spectrum aren't paid out of "free money", it's paid by consumers.

This tired old canary again?

Companies can't just raise their prices and make more money. There is such a thing as supply and demand. If companies aren't already pricing their services as the highest they can get, they're leaving money on the table. So they simply can't make any more money by raising prices on consumers.

That means any added expenses taken on by the company, must either result in better services that consumers are willing and able to pay MORE for, or it must come out of the company's profits.

That's why things like tax breaks, subsidies, etc., given to companies, just result in higher profits for shareholders, rather than price reductions, more jobs, etc., etc.

Re:Common sense

[Vitriol Angst]

I'm sick of people saying that any fee or tax is "Paid by consumers" -- as if we consumers wouldn't be ruined if all taxes were on sales and wages and NONE on profits. Stop parroting this corporate drivel -- it's stupid, and it's damaging.

Taxes come out of profits. If all companies pay them they are the cost of business. Yes they make a company slightly less competitive with exports but we don't export goods that much anymore and we have business being bought from countries that have "onerous" government taxes -- so this is more nonsense.

OK, that off my chest -- I think that T-Mobile and Sprint pooling money and sharing bandwidth is a good thing. It's the only way they can compete with larger cellular companies right now AND the consumer benefits because they've paid more taxes with a higher bid and gotten rid of a few more closed networks. In fact, if all the cell companies just shared the same bandwidth -- we'd be fine.

What about we just tax them 30% of all gross fees on the cell bands and be done with it? More money comes in, and the fee doesn't stop startups.

We don't do this because selling off the public goods to monopolies is the way of business today. And then they take those extra profits and buy yachts or politicians so they can inform people of how consumers end up paying more for a corporate tax and will magically be better off if one guy gets an extra billion each year.

Re:Common sense

[Anonymous Coward]

This is a sale, not a lease? That's insane. Isn't this supposed to be the most tech-savvy administration ever? What happened?!?

Re:Common sense

[Anonymous Coward]

I have a better solution to this:
Spectrum shouldn't be purchased, but only leased for some period of years. 5? 10?

Re:Common sense

[TemporalBeing]

The problem is that in the real world, huge companies can afford to acquire resources just to keep them from being available to competitors.

This actually happened in downtown Miami. During the early-2000s building boom, downtown Miami got several dozen new skyscrapers -- nearly ALL of which have huge pedestal garages with more parking spaces per square foot of commercial floorspace than some suburban office parks & shopping malls. Yet, if you go to downtown Miami on Saturday night, you're going to spend $20 to park in a moderately full garage surrounded by 5 or 6 empty garages that are officially closed for the weekend. Basically, a group of investors went in and bought up most of the surplus capacity for a pittance during the real estate crash with the express intent of taking most of the spaces off the market and allowing them to get away with charging a lot more for the few remaining spaces. Making matters worse, they even bulk-leased parking spaces from the goddamn CITY OF MIAMI, so even THOSE garages are "full" despite being mostly unoccupied by actual cars. The problem is the worst in Brickell (the area south of downtown Miami proper), because the City of Miami SOLD OFF the vacant lots it used to own and operate for parking on the assumption that all the new buildings had abundant private parking garage space anyway. In effect, a group of investors figured out how to hack the system, and totally pwn3d Miami residents in the process.

Works only until some unbribed official decides to make a RICO case out of it for racketeering; or even an anti-trust case for abusing the monopoly powers they have.

Re:Common sense

[TemporalBeing]

A good common sense opinion from Mr. Wheeler and the FCC. So where's that common sense when it comes to net neutrality?

Wrong companies. You'll notice his pet companies Verizon, Comcast and Time Werner aren't helped by this. It's more complicated than pushing things in favor of big business, it's pushing things in favor of the biggest businesses. Sprint and T-mobile combined have less market share than either Verizon or AT&T individually, and I'm sure Verizon and AT&T want to keep it that way.

So, what will happen is a smaller company or combined small companies will buy the spectrum, and then get bought out by Verizon or AT&T.

Except that the stance that prohibits Sprint and T-Mobile from merging would also end-up prohibiting AT&T and Verizon from aquiring many other competitors.

AT&T and Verizon have shown...

[Isca]

That they have the best lobbyists money can buy!

Re:AT&T and Verizon have shown...

[bill_mcgonigle]

No kidding - Free having access to spectrum would be horrendously bad for the incumbent corporations' profits. We can't have that now, and, my, what coincidental timing! Thank goodness we have the FCC looking out for the "public interest".

Re:AT&T and Verizon have shown...

[Jane Q. Public]

No kidding - Free having access to spectrum would be horrendously bad for the incumbent corporations' profits. We can't have that now, and, my, what coincidental timing! Thank goodness we have the FCC looking out for the "public interest".

That's the only explanation that isn't astoundingly bizarre, so Occam's Razor says it's most likely the correct one.

But speaking of astoundingly bizarre: imagine living in a world in which FCC considers blocking Sprint and T-Mobile from sharing spectrum, and yet even briefly considered allowing Comcast and Time-Warner to merge into a blatantly and aggressively monopolistic mega-corporation.

(Note: a TWC employee recently told me the company is "making changes to their network because Comcast bought us". Apparently he isn't aware that it's not a done deal... and if his bosses are they aren't telling anybody.)

Should not be blanket banned

[technosaurus]

It should ban any entities with another spectrum in that location in round 1.  If no bidders then round 2 allow smaller entities with other spectrums in other areas.  ... if still no takers round 3 it should be open to all entities.

This would increase competition in rural areas where there may be no existing infrastructure, but not eliminate the possibility of allowing existing entities to provide service to those areas if no _local_ company wants it.

consolidate the legacy cell phone networks

[Anonymous Coward]

I think the legacy cell phone networks should be consolidated. 1 Legacy GSM cell phone network (AT&T, T-Mobile) as T-Mobile. 1 Legacy CDMA cell phone network (Verizon, Sprint) as Sprint. AT&T and Verizon will each become pure LTE networks. The legacy cell phone networks have been paid for, and the technology still works, so why not use it for old fashioned voice phone calls?

Cell phone companies seem to benefit from being bigger. I don't know if more networks will be beneficial.

Re:consolidate the legacy cell phone networks

[Miamicanes]

I'm sorry, but that's just stupid. If T-Mobile abolished 3G and 4G, they'd literally lose most of their customers almost OVERNIGHT.

It would be equally stupid for Sprint. For one thing, 3G GSM (UMTS/HSPA) is basically CDMA2000-1xRTT with wider channels and some minor refinement tweaks. In fact, with a little software effort, you could even overlay CDMA voice/1xRTT users on top of the same channel used for HSPA in a fringe-rural area (or interior femtocell). 4 CDMA2000/IS95 users, equally spread between 4 channels overlapping a single HSPA uplink or downlink channel, would just look like a second user of the same mode to the other phone simultaneously using the same frequency.

Legacy GSM is kind of brutish with its demands, and EVDO is bitchy in its own way, but 3G GSM and CDMA voice/1xRTT data are "kissing cousins".

If they were ever forced to make an absurd decision between legacy GSM and HSPA, T-Mobile would be better off abolishing legacy GSM, because they'd lose far fewer customers.

By the same token, god forbid, if the FCC approves a merger between T-Mobile and Sprint, the best thing Sprint could do is quickly release radio-modem upgrades for higher-end Android phones and iPhones to allow Sprint phones to be Canada-like and use CDMA (from Sprint towers) for voice, but HSPA (from T-Mobile towers) for data when LTE isn't available. AFAIK, every high-end Sprint Android phone since the Galaxy S2 and Motorola Photon has been capable of HSPA. If you really want to split hairs, even the now-ancient original HTC Evo had latent HSPA capabilities (but no SIM card, though I think some guys in India eventually found a way to hand-solder a USIM meant for embedded use into it... score one for the good guys subverting carrier-enforced arbitrary obsolescence...)

Frankly, Sprint doesn't need MORE spectrum so much as it needs BETTER spectrum. Sprint already has more licensed RF spectrum than it fucking knows what to do with. It's just that 100% of it is 1900Mhz or above. Sprint could solve 100% of its coverage problems by throwing more towers at it. And even with more towers, what Sprint REALLY needs is more fiber backhaul. T-Mobile isn't sitting on ABUNDANT spectrum, but with the new spectrum they got from AT&T, they have enough to solve their own problems with more tower sites, too. See, that's the nice thing about CDMA (and HSPA) -- you can solve just about ANY capacity problem by simply throwing more fiber-connected towers at it. It's the killer feature of CDMA-based technologies.

In a rational & sane world, companies like Comcast & U-verse would start building agile picocells into their cable & VDSL2 modems, allocating a few mbps of bandwidth (independently of what's available to customers) to them, and allowing AT&T, Verizon, Sprint, and T-Mobile users to roam on them at some cost low enough to be a better deal for cell carriers than deploying more towers (obviously, the carriers would have to delegate a small chunk of spectrum to them, too). If every cable & (V)DSL(2) modem was ALSO a mini cell tower with a few hundred feet of range, even fringe-suburbia would become blanketed coverage zones within a few months. And the reduced penetration of 1700, 1900, and 2100MHz would become an advantage rather than a drawback.

Re:consolidate the legacy cell phone networks

[Anonymous Coward]

In a rational & sane world, companies like Comcast & U-verse would start building agile picocells into their cable & VDSL2 modems, allocating a few mbps of bandwidth (independently of what's available to customers) to them, and allowing AT&T, Verizon, Sprint, and T-Mobile users to roam on them at some cost low enough to be a better deal for cell carriers than deploying more towers (obviously, the carriers would have to delegate a small chunk of spectrum to them, too). If every cable & (V)DSL(2) modem was ALSO a mini cell tower with a few hundred feet of range, even fringe-suburbia would become blanketed coverage zones within a few months. And the reduced penetration of 1700, 1900, and 2100MHz would become an advantage rather than a drawback.

It would also fix the absurd problem of homes with no/bad cell coverage but strong wifi.

Well, we can dream

[Krishnoid]

Just a couple edits, and ...

"If two of the largest cable companies are able to combine into one entity in the marketplace, their combined resources may have the effect of suppressing meaningful competition. Therefore, the item tentatively concludes that merger arrangements between regional providers should not be allowed."

Here's hoping.

Re:Well, we can dream

[PopeRatzo]

merger arrangements between regional providers should not be allowed.

I'll drink to that.

Oh to have a Justice Department that would enforce the anti-trust laws.

Taking spectrum from broadcast TV

[Anonymous Coward]

I wonder how that's going to work in markets like L.A. where every broadcast channel is allocated and in use.

Re:Taking spectrum from broadcast TV

[Anonymous Coward]

Not any more, digital conversion is eliminating certain physical channels from broadcast.

KCBS, formerly channel 2, is now on digital channel 43. KNBC? From 4 to 36. KTLA, from 5 to 31.

Re:Taking spectrum from broadcast TV

[Anonymous Coward]

Good observation....

Furthermore, look at most digital TV antennas that are currently available. Notice how most do not receive channels below the frequency range of "analog 7". The look at FCC charts on channel assignments to TV stations and you should find most are located in the frequency range typically allocated to analog channels 7-13 and into UHF space.

He's getting paid off by Verizon and/or AT&T

[Anonymous Coward]

The FCC's policymakers have *never* been about helping small wireless carriers compete with big ones. His little diatribe about helping the carriers that serve the tail 5% of customers is horseshit. Verizon and AT&T are much larger than T-Mobile and Sprint. The combined purchase in question here was the banding together of the two smallest carriers (out of the 4 that matter at all policy-wise) to try to get a leg up on the two top carriers (which dominate the smaller pair by a landslide). It would've been *good* for competition and good for consumers by leveling the playing field a little among the big four. The only people this deal is bad for is the shareholders of Verizon and AT&T (who I guess are better at "lobbying" the FCC, where "lobbying" probably means effectively mailing them giant boxes of cash).

Millions $ through Wheeler to Obama campaign

[raymorris]

> who I guess are better at "lobbying" the FCC, where "lobbying" probably means effectively mailing them giant boxes of cash).

They mailed checks to Wheeler, made out to "Obama campaign". Obama then appointed Wheeler.
Bundlers like Wheeler only have to report the amount as "over $500,000", so we don't know the exact number but it's likely to be a few million dollars.
http://www.opensecrets.org/pre...

Buh Bye Sprint and T-Mobile

[gelfling]

The plan was always to block all mergers of Sprint and T-Mobile so that they will eventually die on the vine and Verizon and AT&T can pick up their subscriber base for pennies. Then it's time to jack prices to the sky and crush service even more. Now that the state of the industry in the US is more than 15 years behind the curve of the rest of the industrialized world, things will only get worse. In a few more years Telcom will be so bad in the US it will become a driver to send people and industries out of the US. At that point the industry will do in death spiral of trying to jack prices and dialing back service and the whole industry implodes.

Soon retail telcom in the US will be like air travel.

Re:Buh Bye Sprint and T-Mobile

[operagost]

That's exactly what I thought. Convenient that the government's monopoly concerns are limited to the top four companies. Conveniently they focus on restricting the bottom two, which are the only ones capable of giving meaningful competition to the top two.