Fact-Checking the Duopoly
By: Steven K. Berry, President & CEO, CCA and Rebecca Murphy Thompson, General Counsel, CCA | July 2, 2015
It should come as no surprise that AT&T and Verizon released interchangeable blog posts on the same day promoting anticompetitive myths and asserting false facts regarding the history-in the-making 600 MHz broadcast incentive auction. It’s clear the duopoly is working in coordination to thwart competitive policies that provide consumers more broadband choice with increased competition, lower prices, and more innovative services from smaller, regional and rural carriers. Interestingly, while the duopoly throws around phrases like ‘unmitigated gaul’ and ‘magenta herring,’ the truth of the matter is that AT&T and Verizon are attempting to deflect consumers’ attention from the true facts. Particularly:
FACT: AT&T and Verizon together control 73% of all low-band spectrum in this country.
FACT: The upcoming incentive auction is the last near-term opportunity to gain access to low band spectrum.
FACT: AT&T and Verizon together spent two out of every three dollars bid in the last spectrum auction, for a combined $28 billion dollars. AT&T and Verizon foreclosed any meaningful competition from direct competitors in the AWS-3 auction by outspending all other facilities-based wireless carries by more than 10-to-1.
FACT: The U.S. Department of Justice—for the third time—has gone on the record warning the FCC that AT&T and Verizon have the incentive to, and given the opportunity, will foreclose smaller carriers from getting access to low-band spectrum in the upcoming auction.
FACT: Studies have shown that competition can be a downward driver of consumer retail prices by 10-20%. Studies estimate that mobile competition generates consumer benefits of $20 billion per year, worth over $200 billion in total.
FACT: AT&T or Verizon—and in some markets both—are eligible to bid on reserve spectrum covering 74% of the geography of the United States, and 40% of the population.
FACT: AT&T and Verizon are each eligible to bid on their desired 10×10 (20 MHz) block in every single market in the United States.
FACT: Many, many other reserve-eligible entities besides AT&T and Verizon (and T-Mobile) will likely bid on spectrum in this upcoming auction, from current operators to potential new entrants. CCA represents more than 100 competitive carriers, all of which need access to low-band spectrum. The upcoming incentive auction presents the last, best opportunity for carriers to get access to this much needed low-band spectrum. And the market-based spectrum reserve is the only competitive safeguard in the auction that can prevent AT&T and Verizon from walking away with all of this critical resource.
FACT: AT&T and Verizon have claimed that a 10×10 MHz channel (or 20 MHz of spectrum total) is‘table stakes’ for an LTE deployment.
Don’t be distracted by AT&T and Verizon’s shiny new hashtag. Under the Commission’s current incentive auction proposal, the maximum size of the spectrum reserve—should it come into existence at all—is 30 MHz, which means that only one reserve-eligible bidder at most will get access to enough 600 MHz spectrum to deploy a robust LTE network. Because AT&T and Verizon are reserve-eligible in so many parts of the country, and have the incentive to foreclose competitive carriers from getting access to this spectrum in the first place, the Commission should take action to increase the size of the reserve and make sure that AT&T and Verizon aren’t able to game the auction so that it is never triggered at all.
Competitive carriers aren’t asking for a hand-out, they’re asking for a fair shot. The spectrum to be offered in the incentive auction is expected to be some of the best spectrum in the world, and CCA’s members want a fighting chance to win some of it in the auction so that they can provide 4G LTE service to consumers and take part in the growing Internet of Things, which will improve everything from education and healthcare to agriculture and commerce. Our members aren’t afraid of a little competition – after all they are the ones offering better prices and more innovative services. And competition is the whole point of the FCC’s framework for this auction, answeringclear Congressional directives. It is plain and simple – AT&T and Verizon can squeeze out the competition by buying all the spectrum. The Commission should stick to its goals of promoting competition by non-nationwide providers, avoiding excessive concentration of licenses, disseminating licenses among a wide variety of applicants, and encouraging rapid deployment of new wireless broadband technologies to all Americans, including those residing in rural areas, by building on its framework with targeted improvements to prevent foreclosure from the duopoly.