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Justice Dept., Democratic lawmakers want smaller carriers to get larger slice of spectrum

Lawyers from the Justice Department along with five Democratic senators send letters to the FCC urging it to craft rules that favor smaller players like T-Mobile in next year's spectrum auction.

The Justice Department and several Democratic lawmakers are urging federal regulators to make certain smaller wireless operators like T-Mobile get access to more airwaves critical to boosting coverage in the government's upcoming wireless spectrum auction.

Senators ask the FCC to ensure that valuable low-band spectrum is not predominantly controlled by AT&T and Verizon. James Martin/CNET

There's a fierce fight over how much spectrum needs to be reserved for smaller players, with the results of the auction likely shaping the future of the competitive landscape. The extra spectrum could help T-Mobile and Sprint build networks that could truly compete against Verizon and AT&T, offering consumers true-nationwide alternatives to the two largest wireless operators in the US. On the other hand, it could also reinforce the dominance of AT&T and Verizon. Whichever way it shakes out, will likely determine who consumers can choose as wireless operators and how much they will pay for service.

On Wednesday, antitrust officials from the Department of Justice and five Democratic senators sent letters to the Federal Communications Commission reiterating their support for rules in the auction scheduled for next year that would ensure larger operators like AT&T and Verizon Wireless don't walk away with the bulk of valuable spectrum licenses at the expense of smaller operators.

The Justice Department urged the FCC to "give considerable weight" to the notion that AT&T and Verizon may use their market power to buy up all the spectrum and shut out competitors. The five senators also cautioned the FCC against allowing the two largest wireless operators to own too much of this valuable asset at the expense of smaller competitors.

Wireless spectrum are the invisible airwaves that carry streaming video, Web downloads and voice service to mobile devices. The upcoming auction will auction off low-band spectrum currently used by TV broadcasters that is particularly valuable because it transmits signals over longer distances and through obstacles like walls.

The views of both the Department of Justice and the Democratic senators should come as little surprise to the FCC. The Justice Department has been on record stating its preference for rules fostering a competitive wireless auction, as have the five Democratic senators. But the timing of the letters is important, given that the FCC will likely vote on final rules for the auction next month. The letters also come as T-Mobile, which has been the most vocal in pushing for more spectrum to be set aside, has been releasing videos to strum up grassroots support from consumers.

Neither the Justice Department nor Congress, however, has a say in establishing the details of the wireless auction. That is left to the FCC. But the political influence of these institutions could sway the agency's decisions as it puts the finishing touches on its rules.

AT&T and Verizon already own more than 70 percent of this type of spectrum. Companies like T-Mobile have been pushing the FCC to expand the amount of spectrum set aside for smaller carriers, so they can compete for licenses without having to bid against the deep pockets of AT&T and Verizon.

AT&T and Verizon, which oppose any reserves, say the move will result in much lower prices for the auction, which could discourage TV broadcasters, who must volunteer to sell their spectrum, from participating in the auction.

The Justice Department in its letter didn't explicitly say that the FCC should limit how much spectrum AT&T and Verizon can bid on, only that it would be enough to foster a competitive environment.

In their letter to the FCC, Sens. Al Franken (D-Minn.), Ed Markey (D-Mass.), Richard Blumenthal (D-Conn.), Maria Cantwell (D-Wash.), and Ron Wyden (D-Ore.) asked the FCC to ensure that this valuable low-band spectrum is not predominantly controlled by AT&T and Verizon. They argue that preventing excessive concentration of this asset will help boost competition, innovation and consumer choice in the mobile broadband market.

"This auction represents an historic opportunity to decrease this concentration of low-band spectrum," the senators wrote in their letter to the FCC.

The FCC is expected to begin circulating its final order regarding how much spectrum should be set aside in the auction for smaller players to bid on today. The item is expected to be voted on at the FCC's open meeting July 16.