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DOJ Signals Preference for Hefty Low-Band Reserve

Add the Obama Justice Department to those pushing for the FCC to reserve low-band spectrum in the broadcast incentive auction for wireless carriers other than AT&T and Verizon, and those pushing for an incentive auction ASAP.

In a letter to the FCC, a copy of which was obtained by B&C/Multichannel News, assistant attorney general for antitrust William Baer stopped just short of overtly endorsing calls from T-Mobile and some advocacy groups for the FCC to increase its planned low-band spectrum reserve from 30 MHz, as chairman Tom Wheeler has proposed, according to multiple sources, to 40 MHz. But he made it clear that the more low-band in the reserve, the better.

DOJ has endorsed low-band reserves on more than one occasion, including in comments to the FCC in April 2014 and reiterated a month later. But the letter comes as a host of congressional Democrats are also pushing the FCC to set aside enough low-band spectrum to boost competition to AT&T and Verizon, who together already have more than two-thirds of that spectrum those Democrats are always willing to point out.

The FCC is expected to vote on the chairman's reserve proposal July 16.

"A number of stakeholders have called for the Commission to increase the amount of spectrum reserved from 30 to at least 40 MHz," Baer wrote without naming names. "They assert that unless there is a reserve of at least 40 MHz, the two largest carriers will be able to further enhance their dominance in low-frequency spectrum holdings, limiting the potential for vigorous competition going forward. The Department recognizes that the Commission must balance competing policy priorities in setting the appropriate reserve levels. In balancing these priorities, the Department urges the Commission to give considerable weight in determining the amount of spectrum included in the reserve to protecting and promoting competition, and the well-established competition principle that those with market power may be willing to pay the most to reinforce a leading position."

That is one reason broadcasters have not been so keen on a big reserve, since it could limit the prices paid in the reverse auction.

T-Mobile and others have argued that in order to reserve enough spectrum for at least two potential competitors to Verizon and AT&T, which have the lion's share of low-band, the FCC needs to free up at least 40 MHz, which would be 10 MHz uplink and 10 MHz downlink—the minimum for national services—times two.

As to the timing of the broadcast incentive auction—the FCC is still planning on an early 2016 timetable—Baer made the Justice Department's position plain: "The Department believes that the 600 MHz incentive auction should take place as expeditiously as possible," he said. Baer said the department recognizes many factors go into the timing of the auction, but added: "consumers will derive the greatest benefit from holding the auction as soon as practicable," framing it as an issue of competition rather than the vaunted "spectrum crunch."

"Because local mobile wireless markets across the nation are relatively concentrated, the sooner the auction is conducted, the sooner and more likely it is that the auction will provide significant competitive benefit for consumers." But Baer talked about freeing up more capacity as well, saying that those consumers will need faster and more reliable broadband to stream video and access various applications and data.

President Obama has made freeing up spectrum for mobile broadband a national imperative, endorsing the 2010 National Broadband Plan's proposal to free up 500 MHz of spectrum from commercial and government sources by 2020.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.