FCC votes to restrict AT&T, Verizon in 2015 spectrum auction

Thu May 15, 2014 5:59pm EDT
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By Alina Selyukh and Marina Lopes

(Reuters) - U.S. telecom regulators on Thursday voted to limit how much spectrum Verizon Communications Inc and AT&T Inc will be able to buy in next year's auction of highly valuable wireless airwaves.

In a 3-2 vote along party lines, the Federal Communications Commission approved a plan that would reserve part of the spectrum in each market for carriers that do not already have substantial blocks of low-frequency airwaves there, largely restricting the participation of Verizon and AT&T.

Sprint Corp and T-Mobile USA Inc had urged the FCC to ensure their two biggest rivals did not dominate the auction. FCC Chairman Tom Wheeler had agreed, saying last month that Verizon and AT&T already controlled almost two-thirds of the coveted low-frequency airwaves.

The final rules, however, represent something of a compromise that reserves some airwaves for smaller carriers while ensuring that larger providers would be able to get sizeable chunks of spectrum in the unreserved portion.

The FCC's rules are based on current market structure, meaning that if Sprint acquires T-Mobile, for example, the rules would be revisited and could be rewritten.

Sprint shares closed up 6 percent and T-Mobile shares closed up 1.3 percent on Thursday.

"Investors are responding to hope of a merger. The less stringent the rules are on spectrum, the more leeway you have to allow one. The more even the playing field for all providers, the less you are excluding a potential combination of the two," said Roger Entner of Recon Analytics.

The auction, planned for mid-2015, would be a first opportunity in years for wireless carriers to buy the low-frequency airwaves considered the beachfront property of radio spectrum for their reach and strength.   Continued...

The Verizon building in New York December 12, 2013. REUTERS/Eric Thayer