Small carriers want guarantees they won’t get burned at next year’s spectrum auction

At CTIA Wireless this week, FCC Chairman Tom Wheeler made a plea to mobile carriers: Commit to participating in the next year’s broadcast incentive auction, so he can convince reluctant TV stations to sell their airwaves to the mobile industry. Smaller mobile carriers aren’t quite ready to put their money on the table, though, because they’re just as worried as broadcasters that they’ll get a raw deal.

I moderated a panel of regional and rural carrier CEOs this week at Competitive Carriers Association conference, which ran concurrently with CTIA’s show in Las Vegas, and I got the impression few of them are inclined to cooperate with Wheeler. Why? C Spire CEO Hu Meena put it rather succinctly: The FCC still owes him a rather large check. C Spire is sitting on $200 million worth of 700 MHz spectrum auction in 2008 that it has simply been unable to use.

regional mobile carrier

Source: Shutterstock / Nneirda

C Spire, like many rural and regional carriers, bought licenses in a portion of the 700 MHz band called the A block, expecting to fully participate in the LTE revolution of the last several years. It was sorely mistaken. Verizon Wireless and AT&T essentially carved out private little empires in their portions of the 700 MHz band, over which their devices – and their devices alone – would work.

Many smaller carriers like C Spire and U.S. Cellular found themselves stranded on their own island of 4G spectrum called Band 12. And if their networks don’t interoperate with the big carriers that means the devices they use are incompatible as well. To this day, Apple still hasn’t built an iPhone that works on a Band 12 network, despite commitments from AT&T and Sprint to back interoperability.

C Spire, U.S. Cellular and other carriers have managed to circumvent the problem by building their own LTE networks on the PCS bands or partner with Verizon and Sprint to lease their spectrum. But when you ask Meena about this temporary fix he just fumes. While he’s proud that C Spire able to provide its customers in the southeastern U.S. with LTE services, he’s furious that he has to dip into his 2G and 3G spectrum to do so. He wants to use the 4G airwaves his small company paid hundreds of millions of dollars for six years ago.

The other carriers on the panel — U.S. Cellular, Bluegrass Cellular, SI Wireless and nTelos — weren’t in C Spire’s exact same predicament, but every single one of them could relate. The 600 MHz auction in 2015 may present a big opportunity for carriers of all sizes to get the spectrum for future mobile broadband networks, but in their minds it also presents another big opportunity for the big carriers and the FCC to screw over the little guy. They all want assurances from Chairman Wheeler that that won’t happen.

Federal Communications Commission (FCC) Chairman Tom Wheeler listens during an open meeting to receive public comment on proposed open Internet notice of proposed rulemaking and spectrum auctions May 15, 2014 at the FCC headquarters in Washington, DC. The FCC has voted in favor of a proposal to reform net neutrality and could allow Internet service providers to charge for faster and higher-quality service. (Photo by Alex Wong/Getty Images)

Can FCC Chairman Tom Wheeler assure small carriers they won’t get shafted at the incentive auction? (Photo by Alex Wong/Getty Images)

The frustrating thing is that all of the carriers will probably participate in the incentive auction whether they get those assurances are not. The auction and its very attractive low-frequency airwaves are just too important for any carrier to simple ignore, they admitted.

“It just goes to show how important getting low-band spectrum is,” Meena said on the panel.

CTIA ticker