(Image Credit: iStockPhoto/KathyDewar)
From an outside perspective, the FCC’s recent AWS-3 spectrum auction looked like a landmark success. The auction generated a record $44.9 billion for the U.S. Treasury, and major carriers secured spectrum assets to support both current operations and future network upgrades.
However, T‑Mobile’s outspoken CEO John Legere publicly criticized the auction’s outcome, arguing it demonstrated an unfair process. Although T‑Mobile won 157 licenses in 5×5 MHz paired blocks across multiple markets—allowing the company to aggregate those holdings with its existing AWS‑1 spectrum—Legere called the results “a total disaster” for consumers.
Legere and T‑Mobile are already looking ahead to the 2016 auction, where valuable low‑band spectrum will be available.
In a company blog post, Legere wrote: “The rules for the next auction should be focused on fostering competition in the US wireless industry and doing what’s right for the American consumer. If the government wants a competitive wireless market, they need to establish auction rules to reflect that.”
T‑Mobile paid about $1.8 billion for its AWS‑3 winnings. While that is a substantial sum for many companies, it is small compared with several competitors’ spending in the same auction:
- AT&T spent roughly $18.2 billion on J Block licenses (paired spectrum in 1770–1780 MHz and 2170–2180 MHz) in major markets including New York, Chicago, Boston, Atlanta and San Antonio, securing a total of 251 licenses.
- Verizon invested approximately $10.4 billion to acquire 181 licenses across J Block, H Block (1760–1765 MHz and 2160–2165 MHz) and I Block (1765–1770 MHz and 2165–2170 MHz).
- DISH Network committed about $13.3 billion through two joint ventures, potentially gaining access to up to 702 licenses, though specifics remain unclear.
T‑Mobile’s relatively modest spend raised concerns, but it’s important to recognize the company already holds a significant amount of mid‑ and high‑band spectrum. Those holdings have supported the carrier’s wideband LTE deployments over the past year and have enabled improved capacity and speeds in many markets.
That said, Legere and T‑Mobile are focused on the next major opportunity: the 2016 auction, which is expected to include valuable low‑band spectrum. Low‑band frequencies travel farther and penetrate buildings more effectively than higher bands, making them especially useful for improving indoor coverage and reaching additional customers. AT&T and Verizon already control more than 70% of low‑band spectrum in the United States, which is a central part of Legere’s argument for clearer, more competition‑focused auction rules.
The next auction should be designed to promote competition across the US wireless market.
Legere fears AT&T and Verizon could outspend rivals at the next auction—not necessarily because they need the spectrum, but to prevent competitors like T‑Mobile from acquiring it. “We too require low‑band spectrum,” Legere acknowledged. “And a lot of it.”
Because of that anticipated dynamic, T‑Mobile is conserving capital to pursue low‑band licenses in 2016. Without changes to FCC auction rules that encourage fair competition, T‑Mobile may enter the next auction at a financial disadvantage relative to larger incumbents prepared to spend aggressively.
Should the FCC implement fairer rules at the next auction? Share your thoughts in the comments.