Mobile Future

Games of Spring: Sprint and Auction Advocacy

Just like the Nationals hope for a strong start as spring baseball gets underway, Washington’s tech policy players also are gearing-up for an important home game slated to take place at next month’s meeting at the FCC:  the much-anticipated announcement of the rules-of-the-road that will guide our nation’s next big auctions for wireless airwaves.

For many spectators of this pre-auction policy jockeying, it’s been hard to follow the intricate and at times downright convoluted arguments of some of the companies that stand to benefit most from auction restrictions.

Sprint, for example, has been busy arguing that the FCC should limit bidding for low-band spectrum in ways that would restrict competitors such as Mobile Future members AT&T and Verizon, as well as smaller players C-Spire and U.S. Cellular.

Sprint says this is necessary, among other things, to reflect the significant propagation advantages of airwaves below 1 GHz for deployment in rural areas.  Sprint’s focus on the need for this lower-band spectrum for rural build-out is curious, to say the very least, since the company has chosen not to build-out any infrastructure to rural areas.  And this is in spite of the fact that Sprint has more spectrum than any other nationwide carrier and has near-nationwide access to an average 17.5 MHz/POPs in the 800 MHz and 900 MHz bands.   Sprint has held this spectrum for decades, but even a cursory review of the Sprint coverage map shows precious little rural coverage.

Sprint’s newly minted interest in spectrum below 1 GHz is even more perplexing since it chose to sit-out the FCC’s last significant auction of spectrum in this range – the FCC’s 700 MHz auction conducted in 2008.   Lots of carriers of all sizes showed up for that auction for this “vital” low band spectrum, but nary a penny came from Sprint.

Recent events suggest that we may be in for a repeat in the upcoming incentive auction.

Sprint’s new Chairman, Softbank CEO Masayoshi Son, made an announcement at an industry show last month, revealing that Sprint has developed a program to foster continued deployment of 4G LTE coverage in underserved rural areas.  Under the program, Sprint will partner with rural carriers that already hold low-band spectrum, those rural operators will build-out 4G networks in their rural areas, and Sprint customers will roam on those networks.  Mr. Son did not announce any plans for Sprint itself to build-out those rural areas.

BTIG analyst Walter Piecyk already has questioned whether Sprint will even participate in the incentive auction.  In a recent blog post, he said:

“We believe there are valid reasons and more focused business plans that would also obviate Sprint’s need to bid for low-band spectrum in the incentive auction. As we wrote last week, Sprint Chairman Masayoshi Son sent a message that it would be looking to other companies to build its rural coverage. We are not certain that this message was heard clearly enough in DC but if the company elects to focus on metro coverage in order to improve its return on capital and take advantage of its depth of 2.5 GHz spectrum, there might be little need for them to bid in the incentive auction.”

We have seen this Sprint game before – and very recently.  Sprint lobbied aggressively to impact the rules that would govern the H Block auctioned three months ago, only to ultimately sit-out that auction even though the airwaves sit immediately adjacent to the nationwide swath of 1.9 GHz spectrum Sprint already holds.  Over the course of the H Block and AWS-4 proceedings (related to adjacent spectrum), Sprint filed no fewer than 80 pleadings (including notices of ex parte presentations), the bulk of which urged the FCC to take action with respect to H Block rules or other rules to protect H Block spectrum.  Sprint went so far as to say in the AWS-4 proceeding that “it values the H Block as LTE expansion spectrum and intends to bid for geographic area licenses once the Commission auctions the spectrum as directed by the Middle Class Tax Relief and Job Creation Act of 2012.”  But in the end, Sprint declined to show up.

So, why is Sprint pushing the FCC to restrain bidding in the incentive auction?  To drive up competitor costs?  To facilitate T-Mobile participation?  We, and the FCC, don’t know – and that is really the point.    Open and unrestricted auctions have time and time again proven to serve the public interest by enabling spectrum resources to go to the entities that value them most and will put them to use to serve consumers.  Let’s leave the DC spring season for Nationals Park, and keep games – and gamesmanship – away from the FCC.