Last week, T-Mobile, through its outside counsel, submitted into the incentive auction proceeding information about auction rules recently adopted in New Zealand.  Specifically, in connection with its 700 MHz auction that will offer 90 MHz of paired spectrum in nine 5 x 2 MHz blocks, the New Zealand Ministry for Communications and Information Technology ruled that no bidder would be permitted to acquire more than 15 x 2 MHz, or three 5 x 2 MHz blocks (or 1/3 of the 90 MHz available at auction).

Although T-Mobile’s counsel submitted this information into the record, the contrasts between the even-handed approach taken in New Zealand and T-Mobile’s Dynamic Market Proposal could not be more stark.

First, T-Mobile seeks a limit on all low band spectrum holdings, not just the spectrum newly available at auction.  New Zealand crafted generally applicable limits that apply only to the spectrum being sold.

Second, T-Mobile’s approach would skew the auction in its favor by limiting only those bidders that exceed its newly-proposed low band cap – namely AT&T and Verizon Wireless.  By contrast, New Zealand’s approach treats all bidders equally by imposing a limit on the amount of spectrum any one bidder can acquire.  In other words, while New Zealand’s approach would ensure that no one carrier could obtain all of the available spectrum at auction, T-Mobile’s proposal would allow a carrier like T-Mobile to do exactly that.

Finally, the limits proposed by T-Mobile would gate the disadvantaged bidders, in the first instance, to a single 5 x 2 MHz block – an amount that T-Mobile itself admits is not enough for an efficient LTE deployment.  New Zealand, on the other, permits all bidders to achieve up to 15 x 2 MHz position, which would allow for efficient deployment of LTE technologies.

AT&T continues to believe that the best way to ensure that the 600 MHz auction achieves its statutory purposes is to run an open and unrestricted auction, subject, of course, to the FCC’s existing spectrum screen.  We have demonstrated that auction restrictions that go above and beyond the spectrum screen are unnecessary and unwarranted and that a low-band cap is both unlawful and contrary to basic economic principles.  Moreover, restrictions that significantly limit the ability of AT&T and Verizon to participate in the auction could jeopardize the critically important statutory goals underlying this auction.  This too has been well-documented in the record.

Nonetheless, if rules are adopted for the purpose of ensuring multiple winners at auction, as they were in New Zealand, they should apply fairly and evenly to all participants to avoid the type of discrimination inherent in the Dynamic Market Proposal, which expressly favors some bidders to the detriment of others.

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