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Regulators push for more broadband competition, but is it enough?

FCC chief Tom Wheeler says the agency is doing all it can to promote broadband competition, but smaller wireless providers disagree.

FCC Chairman Tom Wheeler: "Competition is paramount."
FCC Chairman Tom Wheeler: "Competition is paramount." Mark Wilson/Getty Images

FCC chairman Tom Wheeler says that the upcoming wireless spectrum auction is one of many opportunities for the agency to promote broadband competition, which he says is crucial for getting high-speed Internet service to every American. But smaller wireless providers worry he isn't doing enough.

Speaking at the Brookings Institution in Washington, DC, on Friday, Wheeler said protecting and encouraging competition is a "foundational requirement of the modern FCC." He pointed to the upcoming wireless auction early next year, in which TV broadcasters will sell unused spectrum, as an opportunity for the agency to ensure that all Americans have access to broadband.

"It's pedal to the metal on broadband policy," Wheeler said. "We're not going to let up on protecting and promoting broadband competition...As I have made plain on innumerable occasions, competition is paramount."

Wheeler highlighted his agency's efforts in designing this complicated auction, which for the first time will offer existing spectrum license holders an incentive to sell their spectrum rights back to the government so it can be repurposed for a new use. The auction is seen as a make-or-break event for wireless carriers, who need access to the airwaves to deliver streaming video and other Web-based services to mobile devices. The spectrum in this auction is particularly important because it is low-band or low-frequency spectrum that travels longer distances and can penetrate through obstacles like walls.

But T-Mobile and other smaller players say Wheeler's focus on competition doesn't square with his actions. On Thursday the chairman indicated he is recommending the FCC vote against a proposal from T-Mobile that would expand the amount of spectrum the government will set aside for smaller players to bid on during the auction. T-Mobile and other smaller players say they can't compete in an auction against well-capitalized AT&T and Verizon.

In a letter to the FCC sent Friday, T-Mobile CEO John Legere, who has tried to drum up grassroots support through two videos the company has posted, expressed his disappointment in Wheeler's position regarding T-Mobile's proposal. He asked the chairman to reconsider his position before the full FCC votes on the matter at its meeting July 16.

"From the day you took office you have repeated a mantra of competition, competition, competition," Legere said. "However, your recent blog proposes a low-band spectrum reserve that is too small to support a robustly competitive market and is really frustrating."

The FCC agreed last year to set aside some spectrum to allow operators of all sizes a fair shot at getting these valuable licenses. Companies such as T-Mobile and Sprint have pushed for the FCC to carve out even more spectrum for them to bid on without having to bid against AT&T or Verizon, which could easily outspend everyone else. T-Mobile argues the extra spectrum is crucial if the FCC hopes to promote true competition in the wireless market.

The proposal supported by T-Mobile and other small carriers to increase the amount of spectrum for smaller carriers to bid on has the support of antitrust officials at the Department of Justice. Earlier this week the agency sent a letter to the FCC stating it recognized the FCC "must balance competing policy priorities" in setting the reserve. But it asked the agency to "give considerable weight" to ensure that larger competitors like AT&T and Verizon don't walk away with the bulk of spectrum in the auction.

The Competitive Carrier Association, which represents T-Mobile as well as hundreds of smaller rural and regional service providers, says ensuring smaller operators have access to spectrum in this auction is critical. Following Wheeler's speech, the group's head, Steven Berry, called on "the FCC to follow the Department of Justice's guidance."

"We must do more to promote mobile competition," Berry said in a statement.

Wheeler did not address the issue of increasing the amount of spectrum the agency will set aside in the auction. Instead, he talked more broadly about how the policies the FCC has adopted will help promote competition within the wireless industry. Wheeler said as the agency works to free up additional spectrum for future auctions and encourages stakeholders to share their wireless licenses to make more efficient use of airwaves, there will be more room for additional competitors in the market.

"The economics are changing," Wheeler said. "That's why spectrum is so important. And we need to make sure there are multiple providers."