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T-Mobile wants you to tell Washington what matters on wireless

T-Mobile CEO John Legere aims to rally consumers to his cause as he pressures government regulators to change the rules to favor smaller carriers in wireless auctions.

T-Mobile CEO John Legere is urging consumers to contact the FCC to adopt more favorable rules in its upcoming spectrum auction to ensure future competition. CNET

T-Mobile CEO John Legere wants you to "make some noise" about an obscure and highly technical topic that may help the wireless carrier improve its service.

Legere, in his usual bombastic and foul-mouthed way, is attempting to drum up support from the 180 million American smartphone users in an effort to sway regulators in an upcoming government auction of spectrum, or the radio waves necessary to ferry video, text messages and phone calls through the air. He's hoping that the consumer outreach will have an effect on regulators who are in the middle of deciding the rules for how that spectrum will be auctioned off.

"There is serious s--- (happening in Washington, D.C.)," Legere said in a video published on the company's blog on Thursday. "If you're not pissed off right now. You need to be."

The auction represents potentially the last opportunity for a carrier to bulk up on the kind of spectrum optimal for covering rural regions and improving in-building coverage, which is key to ensuring comprehensive coverage down the line. T-Mobile, alongside a host of other smaller carriers, have argued for rules that make it easier for them to compete against the deep pockets of AT&T and Verizon, by far the nation's two largest carriers. AT&T and Verizon have pushed for a more open auction process.

Legere accused AT&T and Verizon, who he calls "Dumb" and "Dumber," of strong-arming regulators at the FCC "to look the other way while they play keep away with your mobile future by once again dominating a government spectrum auction."

T-Mobile, the nation's fourth-largest wireless operator, has been lobbying officials at the FCC for months to adopt rules for an auction of valuable spectrum set for early next year. The FCC is currently considering rules for the auction that will allow TV broadcasters to resell their unused airwaves to mobile operators. The agency is expected to vote on the rules next month.

T-Mobile isn't alone. The carrier has formed a coalition with Sprint, Dish Network and several regional wireless operators to ask the FCC to increase a "reserve" of spectrum in the auction that would allow T-Mobile, Sprint and other smaller carriers to bid without competition from Verizon and AT&T.

The FCC already agreed last year to restrict the participation of AT&T and Verizon in the auction by setting aside some spectrum for T-Mobile and other smaller carriers to bid on, but T-Mobile and the rest of its coalition are asking the agency to increase the size of this reserve. Without this increase, T-Mobile argues that AT&T and Verizon will dominate the auction and shut out competitors, resulting in a future with fewer competitors in the market. Legere explained the repercussions for consumers in his blog post:

"Every consumer in America loses," he writes. "You'll face higher bills, stifled innovation, crappy customer service -- all the usual AT&T and Verizon treatment! It would be a nightmare for American wireless consumers!"

Experts agree that this auction is important for all wireless carriers, particularly operators such as T-Mobile, which need additional spectrum to continue to grow their businesses.

Wireless spectrum, or the airwaves that carry bits of voice and data to cellular devices, is considered the lifeblood of the wireless industry. And the spectrum being sold in this auction is particularly valuable, because it is low-band, also known as low-frequency, spectrum that allows carriers to transmit signals over longer distances, allowing operators to cover suburban and rural areas more cost-effectively. Also, the lower-frequency signals can penetrate through obstacles like walls more easily, offering consumers better connectivity while inside.

"This is the last big auction of wireless spectrum below 1Ghz," former FCC chairman Reed Hundt said in a recent interview. "There is no prospect of spectrum below 1GHz in volume ever being distributed again. Therefore, the FCC gets the market structure right now or it never gets it right. It's now or never."

AT&T and Verizon already own more than 70 percent of this "low-band" spectrum, while T-Mobile only owns about 5 percent of this valuable asset. But AT&T and Verizon argue that they are not to blame for T-Mobile's lack of low-frequency spectrum and should not be penalized for poor business decisions the company's former management team may have made.

In its own blog post Thursday, Verizon points out that neither T-Mobile nor Sprint participated in an auction of similar low-band spectrum that concluded in 2008.

"T-Mobile is more than welcome to participate in any auction the FCC holds," the company writes. "No company can prevent another from participating. The last time large swaths of low-band spectrum came to auction in 2007, for example, T-Mobile could have participated. It chose not to."

Verizon accused T-Mobile of trying to "bake rules into an auction to prevent other companies from participating fairly and squarely in the auction."

The blog post also highlights that while T-Mobile and Sprint have been advocating for a special reserve of spectrum for smaller carriers with limited resources, these two carriers are actually owned by deep-pocketed parent companies that could afford to bid against AT&T and Verizon in any auction. T-Mobile is owned by German telecommunications giant Deutsche Telekom, which has a market capitalization of $76 billion, while Sprint is owned by Japanese Internet and phone company Softbank, which has a $70 billion market cap. Meanwhile, Verizon's market cap is $193 billion and AT&T has a market cap of $180 billion.

Verizon also points out that T-Mobile is rumored to be in early merger talks with Dish Network, which owns large amounts of spectrum it has not put to use yet and is currently being investigated by the FCC for trying to claim a $3.3 billion discount on spectrum that was intended for "small carriers."

"The FCC doesn't need to give additional handouts to global companies with the financial wherewithal to compete," the Verizon blog says. "Nor should it be handing out discounted spectrum to companies with a track record of not investing in networks or serving consumers."

The FCC has not circulated its final recommendations for the rules on the auction, but it's believed that the agency is unlikely to increase the reserve. While two of the three Democrats on the commission, Chairman Tom Wheeler and Commissioner Mignon Clyburn, have indicated they would vote in favor of an increase, fellow Democrat Jessica Rosenworcel advocated previously for the smaller reserve. There have been no indications that she is willing to reconsider her vote. The two Republicans on the commission, Ajit Pai and Michael O'Rielly, are not in favor of a reserve nor are they in favor of increasing the reserve previously proposed.

T-Mobile is hoping that its last-ditch effort to appeal to the American public will help rally support for its position and spur concerned consumers to contact the FCC, urging officials to craft rules that it says will help it compete. Legere claims in his video that if his company can steal just 15 percent of the market, it will save consumers $1 billion, by providing more competition.

"If they win, guess who loses?" he asked. "You. Every single wireless customer, whether a T-Mobile customer or not... It's time for all of us to make some noise. Make it known you demand more choice."