Mobile US Inc (NYSE:TMUS) Suffers Setback On Request To Limit Spectrum

A report from Reuters says that the FCC has voted to deny T-Mobile’s request for more spectrum to be set aside for smaller carriers in the upcoming spectrum auction. (NYSE:T) to pile up their spectrum. T-Mobile wanted to bump that limit up to 40 megahertz, or at lest half of the spectrum. That is especially to limit both Verizon Communications Inc.

But the auction is highly complicated and some of the specific procedures are controversial, with implications for the amount of airwaves available to the largest wireless companies and potential problems for interference with the over-the-air signals of broadcasters and the ability to download data on smartphones.

While voting in favor of the new rules, FCC Commissioner Ajit Pai said he shares concerns expressed by the AHA and members of Congress. He proposed that whenever a WMTS facility determines that designated protection zones are not adequate to prevent harmful interference, those zones should be automatically extended up to three times their current size, following a licensee’s filing of a waiver request.

The FCC contention is that there are enough restrictions now in place to protect the interests of the small carriers and that they could outbid the top two carriers.

“While not as large as we had hoped, I thank Chairman Wheeler and the Commission for establishing a spectrum reserve of 30MHz, which is absolutely essential for competitive carriers’ participation in the incentive auction”, Berry said in a statement.

T-Mobile “is committed to showing up, playing hard and being successful at the auction”, John Legere, its chief executive officer, said in a series of tweets that also called the FCC’s decision a “victory” and said it will encourage competition. He said that the reserve included good quality spectrum and felt that the regulator will be closely observing so that duopoly will not be able to change the system.

Bidding in the auction might pressure cash flow for carriers such as AT&T, Verizon, Sprint, T-Mobile and U.S. Cellular, according to a note Thursday by Bloomberg Intelligence analysts John Butler and Matthew Kanterman. His reference was in respect of Verizon Communications Inc.

He said setting aside spectrum in some markets for T-Mobile and other smaller wireless companies put the FCC in the position of picking winners and losers in the auction.

But she was still not satisfied with the ultimate outcome, stating that the framework the FCC adopted raises “significant questions about the value and utility of the spectrum that will be made available at auction”.