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Verizon to FCC: Restrictions on airwaves auction are unjust

A sign of Verizon Wireless is seen at its store in Westminster, Colorado April 26, 2009. REUTERS/Rick Wilking
A sign of Verizon Wireless is seen at its store in Westminster, Colorado April 26, 2009. REUTERS/Rick Wilking

WASHINGTON (Reuters) - Verizon Communications Inc has urged U.S. regulators not to restrict how much it can buy in next year's auction of wireless spectrum, saying such a limit would subsidize the smallest national carriers and their foreign owners.

Federal Communications Commission Chairman Tom Wheeler recently proposed rules for the complex sale of valuable airwaves scheduled for mid-2015. The rules would reserve part of the spectrum in each market for wireless carriers that do not already have dominant blocks of low-frequency airwaves there.

That would 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 Inc, which dominate the highly valued low-band spectrum.

The sale is considered one of the most complex undertakings by the FCC. It would first involve TV stations' giving up airwaves they exclusively use and the FCC then auctioning them off to wireless carriers. Congress has mandated that the FCC raise enough money to pay broadcasters for their lost spectrum and fund a new $7 billion public safety network.

Verizon on Monday pushed back against the proposed rules in meetings with Ajit Pai and Mike O'Rielly, the FCC's two Republican commissioners, who have also expressed concerns about the proposed restrictions, according to an FCC disclosure posted online on Thursday.

AT&T last month told Wheeler's staff that it may choose to sit out the auction if such rules are adopted, though it later told investors that outcome would not be ideal.

"Verizon stressed that it would be perverse and unjust for the commission to adopt auction rules that subsidize some large multinational companies at the expense of their competitors," Verizon said in Thursday's filing, referring to Sprint's Japanese parent, SoftBank Corp, and T-Mobile's German parent, Deutsche Telekom AG.

"T-Mobile and Sprint are large corporations with established, well-financed corporate parents. They and their parent corporations are more than capable of paying substantial amounts to acquire spectrum in the incentive auction if they choose to do so," Verizon said.

Wheeler has repeatedly asserted that his goal is to ensure that non-dominant carriers in each market get some low-frequency spectrum.

His plan would reserve up to 30 megahertz of airwaves in each market for carriers that do not already have one-third of low-band spectrum there, whether that be Verizon, AT&T or a regional carrier. The reserve would kick in only after the auction reaches a particular trigger, which will be established in coming months.

The FCC is slated to vote on formally proposing the rules at its May 15 meeting.

(Reporting by Alina Selyukh, editing by Ros Krasny)

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