FCC Chairman Tom Wheeler today provided an update on next year’s auction of broadcast TV spectrum to wireless carriers and said that having two national carriers control the best spectrum is harmful to competition.

“Spectrum below 1 GHz—such as the Incentive Auction spectrum—has physical properties that increase the reach of mobile networks over long distances,” Wheeler wrote in a blog post. “The effect of such properties is that fewer base stations and other infrastructure are required to build out a mobile network. This makes low-band particularly important in rural areas. A legacy of earlier spectrum assignments, however, is that two national carriers control the vast majority of low-band spectrum. As a result, rural consumers are denied the competition and choice that would be available if more wireless competitors also had access to low-band spectrum.”

Wheeler didn’t mention the two national carriers by name, but it's pretty clear he was referring to AT&T and Verizon Wireless. Those two companies want to be able to buy as much spectrum in the auction as they can afford, but FCC officials have proposed rules that would prevent them from doing so. AT&T threatened to boycott the auction, saying that bidding restrictions would primarily affect itself and Verizon.

Wheeler also discussed his views in a letter yesterday to US Rep. John Barrow (R-GA), who had argued that carriers should bid “on equal terms” to maximize auction revenue that will go toward reimbursing broadcasters and improving public safety communications.

“Today, most of this low-band spectrum is in the hands of just two providers,” Wheeler wrote to Barrow. “The Incentive Auction offers the opportunity, possibly the last for years to come, to make low-band spectrum available to any mobile wireless provider, in any market, that is willing and able to compete at auction. I will shortly present a draft order to my fellow Commissioners designed to ensure that every mobile wireless provider has the opportunity to bid in every market, and that every consumer enjoys the benefits of a competitive wireless marketplace. My proposal would reserve a modest amount of this low-band spectrum in each market for providers that, as a result of the historical accident of previous spectrum assignments, lack such low-band capacity.”

The two largest national carriers “hold a combined share of almost two-thirds of all low-band spectrum licenses,” while the other national providers (Sprint and T-Mobile) hold just 10 percent of those licenses, he wrote.

The auction is of spectrum in the 600MHz range, although the amount that becomes available depends on how much broadcasters are willing to give up. In six previous auctions of spectrum below 3GHz, the average amount of spectrum sold was 45MHz and the largest amount was 90MHz.

The FCC’s plan would reportedly set aside for smaller carriers as much as 30MHz of spectrum in each geographic market when auction bidding hits some threshold that hasn’t been detailed yet. The FCC is expected to vote on a plan May 15.

Sprint has made it known that it would like to acquire T-Mobile. While no such deal has been struck, Reuters reported yesterday that a Sprint/T-Mobile merger could cause the FCC to change or eliminate the proposed bidding restrictions. The FCC could also block a merger, given that it previously prevented AT&T from purchasing T-Mobile in order to preserve the current market of four nationwide competitors.

The auction will take 6MHz TV stations and turn them into 5MHz blocks of LTE spectrum. Some amount of spectrum in the duplex gap (the space between uplink and downlink spectrum) and guard bands (the space between TV and mobile spectrum) will be made available for unlicensed use.

Unlicensed airwaves, which can be used by anyone, power a variety of technologies including Wi-Fi and Bluetooth. The "white spaces" between TV channels are already used for some large-scale wireless broadband networks, which could benefit from more unlicensed airwaves.

The specific amounts to be made available in the duplex gap and guard bands will range from about 12 to 20MHz, depending on how much spectrum broadcasters give up, an FCC official said. Additionally, the 6MHz Channel 37 will be made available for unlicensed use, with some exceptions to protect medical devices that operate in the band and wireless microphones used by broadcasters.

Switching channels

While the FCC today did not discuss detailed plans on how it will limit AT&T and Verizon bidding, it did describe how the auction will work for broadcasters. Broadcasters have expressed some annoyance at the FCC's plans, but Wheeler has assured them that channel sharing will allow them to remain on the air while still getting money from the auction.

“The auction is a once-in–a-lifetime opportunity for broadcasters, but the decision whether or not to participate is entirely voluntary,” the FCC said in a background document. “Broadcasters that choose to participate in the auction (by going off the air, moving from a UHF to a VHF channel, or sharing their broadcast spectrum) will receive part of the proceeds from auctioning that spectrum to wireless providers to support mobile broadband needs.”

Broadcasters may be affected even if they don’t agree to sell airwaves, because the auction will require a reorganization of the 600MHz band.

“If the broadcaster chooses to not participate in the auction, it will remain on the air, although its specific channel may change,” the FCC said. A process known as “repacking” will involve “assigning channels to the broadcast television stations that remain on the air after the incentive auction in order to clear nationwide, contiguous blocks of spectrum suitable for two-way wireless broadband use.”

Broadcasters will have up to 39 months to transition to new channels and will be reimbursed for relocation costs.