Posted by: Joan Marsh on December 9, 2013 at 10:00 am
In an op ed last week, CCA again called for auction limits to “prevent the two dominant wireless carriers from blocking competitors’ access to low-frequency spectrum.” The problem, according to CCA, is that AT&T and Verizon control a significant portfolio of low band spectrum. CCA also alleges we were “handed” our 850 MHz allocations “free of charge” (despite the fact that the vast majority of our current 850 MHz licenses were acquired for significant value on the secondary market).
Finally, CCA alleges that we “want to keep other cellphone carriers (including, presumably, CCA members) from getting access” to low band allocations. CCA specifically identifies three member companies – Bluegrass Cellular, Cellcom, Cellular One – that “are anxious to further expand in rural America, and they need low-frequency spectrum to do so.”
As with so many arguments in the high band/low band spectrum debate, these arguments are made without much reliance on facts. So, let’s look at some relevant facts, starting with the three member companies CCA identifies in support of their argument:
• Bluegrass Cellular – Bluegrass Cellular won both 700 MHz B and C block licenses at auction. All told, it holds 15 700 MHz licenses. Bluegrass is also leasing some upper 700 MHz C block spectrum from Verizon as part of the “LTE in Rural America” program (which is a funny way to “block” competitive access to spectrum). Finally, Bluegrass Cellular, through affiliated partnerships, holds a number of 850 MHz cellular licenses. In short, Bluegrass has a robust portfolio of low band spectrum. Indeed, given its 700 and 850 MHz portfolio, it is likely that, if T-Mobile’s proposed auction restrictions were adopted, Bluegrass’ auction participation would be restricted in some markets.
• Cellcom – we assume this refers to New Cell, Inc., which does business as Cellcom, who is an investor in Nsighttel Wireless, LLC and Nsight Spectrum, LLC. Nsight won two 700 MHz licenses in Auction No. 73 and acquired an additional 700 MHz license on the secondary market. Like Bluegrass Cellular, Cellcom also leases 700 MHz spectrum as a participant in the LTE in Rural America program. Nsight Spectrum also holds two cellular licenses and has two affiliated partnerships (Wisconsin RSA No. 4 Limited Partnership and Wisconsin RSA-10 Limited Partnership) that hold cellular licenses. Like Bluegrass, this company already has access to low band spectrum in both 850 and 700 MHz.
• Cellular One – we assume this refers to MTPCS, a CCA board member that does business as “Cellular One.” MTPCS is owned by Alta Communications, which also has controlling interests in Central Louisiana License Co. and TX-10 Licensee Co., companies that hold five 850 MHz cellular licenses between them. MTPCS is also a part of Verizon’s LTE in Rural America program, and it holds a long term lease of 700 MHz C block spectrum.
In short, the very companies CCA argues lack, and therefore need, low band holdings in fact have low band holdings and have readily acquired those licenses at auction, on the secondary market and through lease arrangements with other licensees. There is simply no evidence that they have been blocked in any way from gaining access to low-frequency spectrum.
CCA is also critical of the depth of AT&T’s low band portfolio, but says little about how that portfolio was acquired. The fact is that in the 700 MHz auction, AT&T bid on one, and only one, of the five blocks of spectrum available for auction – and did not win a nationwide footprint in that block. The remaining allocations were acquired on the secondary market in transactions that any carrier was free to pursue.
Indeed, many of our 700 MHz allocations were acquired from member companies of CCA. Let’s review the status of the top 11 winners of 700 MHz B block licenses:
AT&T – has built out its licenses to support LTE services in both urban and rural markets;
US Cellular – has also built out its licenses;
Verizon – sold its licenses on the secondary market;
CenturyTel – sold its licenses on the secondary market;
Triad – sold its licenses on the secondary market;
David Miller – sold its licenses on the secondary market;
Cavalier – sold its licenses on the secondary market;
Cell South/CSpire – still holds but has not yet built out its licenses;
Broadband Wireless Unlimited – sold its licenses on the secondary market;
Cox Wireless – sold its licenses on the secondary market; and
PCS Partners – sold its licenses on the secondary market.
To be clear, I am not critical of any licensee’s business decision to sell its licenses, a decision they have every right to make. And an active and effective secondary market is essential to efficient spectrum use as fallow spectrum moves to providers that will deploy it to serve U.S. consumers. I do, however, object to claims by CCA that its members have been “denied access” to low band spectrum when in fact many of its members acquired low band spectrum at auction and subsequently made the decision to sell it.
I also have a problem with objections about the depth of AT&T’s low band portfolio, and AT&T’s alleged intent to “block” competitive access to low band spectrum. Much of AT&T’s spectrum portfolio was built through secondary market transactions with small carriers that made the business decision to sell rather than deploy their low band holdings. It is hypocritical, to say the least, to sell 700 MHz spectrum for a profit then allege disadvantage because you lack low band holdings.
Facts are indeed a troubling thing. And in the debate over low band spectrum holdings, the facts are too often missing.