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T-Mobile’s Support For Title II Could Earn It Favors From The FCC

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Peter Fricke Contributor
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T-Mobile recently reversed its opposition to the FCC’s plan to regulate the internet as a public utility, and is now asking the commission to protect it against competition from larger rivals.

Roslyn Layton, a Ph.D fellow at Aalborg University in Copenhagen and a visiting fellow at the American Enterprise Institute, told The Daily Caller News Foundation that, “I don’t have any proof, but I think this is a quid pro quo between T-Mobile and the FCC whereby T-Mobile would support Title II in exchange for special treatment.” (RELATED: Corruption at the FCC? TV Exec’s Donate to Dem Lawmaker, Get Million-Dollar Rule Exemption)

Initially, according to Fierce Wireless, “T-Mobile CEO John Legere came out against President Barack Obama’s … push for the FCC to reclassify broadband as Title II common carrier services.”

In an interview with The Wall Street Journal last week, though, the company’s COO, Mike Sievert, claimed to have no objections to the Title II proposal, saying, “There is nothing in there that gives us deep concern about our ability to continue executing our strategy.”

“The whole reason T-Mobile is even in the United States is because the EU put excessive regulations on the telecom industry,” Layton pointed out, so it seems suspicious that T-Mobile would suddenly start to favor government regulations. (RELATED: Republican FCC Commissioner Slams ‘Obama’s Plan to Regulate the Internet’)

In comments filed with the FCC, T-Mobile contends that during the last spectrum auction, “some bidders were able to successfully exploit certain loopholes in the Commission’s auction design and anti-collusion rules to the detriment of other bidders and the public interest,” and called on the FCC to adopt “measures … designed to tighten the competitive bidding rules.”

Specifically, T-Mobile’s complaints were directed against Verizon and AT&T, the two largest wireless carriers in the U.S., which it claims were able to take advantage of their “deep pockets” to win 63 percent of the spectrum sold in the last auction, whereas “T-Mobile bidding on its own was able to secure only 7 percent of such spectrum.”

In an effort to prevent Verizon and AT&T from hogging spectrum again at the next auction, Fierce Wireless reports that representatives for T-Mobile began lobbying the FCC in August “to increase the size of the reserved spectrum to be set aside for smaller carriers.”

Currently, three out of seven “blocks” of spectrum are set aside for small carriers, but T-Mobile wants to increase the reserve to four blocks.

“Expanding the reserve,” the company explained. “Would ensure that the two dominant carriers will be forced to compete with one another in the auction, and that sufficient blocks will exist for two non-dominant carriers to acquire spectrum sufficient to compete nationally against the two dominant providers.”

However, Layton argued that, “T-Mobile is extremely profitable, they’re competitive, and they’re gaining customers, so they don’t need special treatment from the FCC.” (RELATED: The FCC’s Obsolete Wireless Competition Mindset)

“There are always people willing to question the efficacy of markets,” she explained. “We have no proof that Verizon and AT&T did anything of a collusionary nature,” so there is no way to justify major changes to the system on that basis.

Moreover, she said, “T-Mobile has a certain strategy where they can compete with limited spectrum using wholesale agreements,” which involve “buying extra capacity from Verizon and ATT&T and selling it as their own. From T-Mobile’s perspective, it shouldn’t really matter who buys the spectrum, since they can just buy it from ATT&T or Verizon later.” (RELATED: Verizon Wireless Looks to Sell Unused Spectrum for Billions of Dollars)

The real losers under T-Mobile’s plan, she continued, would be “the American public, to whom the spectrum ostensibly belongs,” and broadcasters, who were convinced to sell unused spectrum at the auction with the understanding that it would be subject to open bidding.

By excluding the largest (and richest) companies from bidding on spectrum, Layton explained, the FCC artificially reduces the price of the reserved blocks, depriving both taxpayers and private sellers of the full value of their assets.

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