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AT&T Will Be Bidder For Broadcast Spectrum

AT&T has indicated it will be a player in the broadcast incentive auction. That comes after the FCC made some changes to its mobile spectrum holdings item on local market spectrum screens and incentive auction spectrum set-asides that make them at least palatable. FCC chairman Tom Wheeler hailed that as a sign there would be enough money on the table to attract broadcasters to the auction.

AT&T and Verizon would have preferred a completely unfettered bidding process, but Wheeler was committed to setting aside some of the low-band spectrum so that smaller carriers would have a chance to get some and the larger carriers—AT&T and Verizon—who already together have about 70%—could not monopolize the market in low-band.

Wheeler signaled it was important to spread the low-band wealth among carriers to insure rural coverage and that 911 calls from inside buildings could go through (low-band spectrum travels more easily through obstructions). He noted that this would be the first time there would be a spectrum reserve nationwide.

But the set-asides will not trigger unless the auction meets a success benchmark, which AT&T had sought.

The FCC also decided to take into account more spectrum holdings in its local market spectrum screen, which AT&T had argued would level the playing field. Verizon praised that move.

The changes, which a source says includes a potentially smaller low-band set-aside than initially planned,  make it possible for AT&T to bid for enough spectrum in enough markets to make it worth their while. The FCC also said there would be no aggregation limits applied to the AWS-3 auction coming up later this year, where 50 MHz is up for bid.

Wheeler signaled the changes should bring the major carriers to the auction, and AT&T appeared to confirm that in a meeting with staffers May 14.

According to an FCC filing, AT&T told those staffers that "we believe the spectrum aggregation and auction rules now being considered will represent a significant step forward in demonstrating to broadcasters that the Incentive Auction will attract significant carrier interest and demand," including AT&T.

"With the modest modifications to the framework that AT&T has proposed," and which the FCC apparently adopted , "the framework would give AT&T a fair opportunity to expand its LTE footprint in all markets," an AT&T exec told the FCC. Given those modifications, the AT&T exec said, "AT&T would be committed to the auction and anticipates that it would participate broadly," which translates to between 20 MHz and 40 MHz of spectrum nationwide.

Wheeler cited that filing Thursday in pointing out that would translate to $9 billion and $18 billion for the auction and would incentivize broadcasters to show up. Actually, if AT&T got 40 MHz at $1.50 a POP,  which AT&T said was a reasonable price estimate, it could be as much as $32 billion.

He said the item was a big deal not only because it set aside that low-band spectrum reserve, but because at the same time it showed there would be "sufficient demand at sufficient prices to incentivize broadcasters to show up and produce significant spectrum."

Wheeler did signal that the new rules on spectrum holdings could change if the wireless market structure changes.

“AT&T’s statement today should put to rest claims from some quarters that the FCC will throw an incentive auction and no one will come," said FCC spokesman Neil Grace.  "AT&T joins other carriers who have expressed strong interest in participating. We look forward to educating broadcasters about the once-in-a-lifetime opportunity presented by the incentive auction.”