The Keyboard is Mightier Than the Sword

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Company blog posts are where all the action is these past couple of weeks. After the AWS-3 spectrum auction ended, T-Mobile CEO John Legere took to the company blog and called the auction “a disaster for American wireless consumers.” Legere tore into AT&T and Verizon, and urged the FCC to reserve 40 MHz or at least half of the available spectrum in the next auction for sale to the competition. A few weeks after Legere posted his unrestrained thoughts about the auction, AT&T’s Vice President of Federal Regulatory Joan Marsh explained how AT&T and Verizon weren’t T-Mobile’s competition, Dish was. “AT&T conducted an analysis of winning bids and who the winning bidder bid off to take the license. The fact is that Dish outbid T-Mobile on 132 licenses to win the license. (AT&T outbid T-Mobile on 26 licenses – Verizon 16.) Even of the 151 licenses T-Mobile won, T-Mobile had to outbid Dish on 69 of those licenses to succeed (compared to AT&T on 12 and Verizon on 32). AT&T and Verizon weren’t T-Mobile’s competitive nemesis in the auction – Dish was. And the 600 MHz reserve won’t protect T-Mobile from Dish, or Sprint, or Google, or any other player not named AT&T or Verizon that comes with capital to win spectrum,” Marsh wrote.

Now, Kathleen Grillo, Verizon’s Senior Vice President of Federal Regulatory and Legal Affairs, explains the “Real Lesson of the AWS-3 Auction.” “Everyone is talking about “lessons learned” from the recently completed AWS-3 auction. It comes as no surprise to us that T-Mobile, Sprint, and others are trying to teach the wrong one,” Grillo wrote. She explains that “those companies” are claiming AT&T and Verizon dominated the auction (which they did, but should they be punished for bringing more capital to the table?) and should be prevented from doing the same thing in the incentive auction next year. Grillo also points out “how at odds with the facts these claims are.”

“Let’s look at what really happened in the AWS-3 auction: Of the 31 applicants that won licenses, one entity bought more licenses, more spectrum, and covered more POPs (the measure of the number of people covered by each megahertz of spectrum) than any other – and it wasn’t Verizon or AT&T,” Grillo explained. “DISH, through its two ‘designated entities’ (DEs), bought 44% of the licenses in the auction, bidding more than $13 billion, and won 324 unpaired and 378 paired licenses. By comparison, AT&T and Verizon bought 16% (251 paired licenses) and 11% (181 paired) of the licenses respectively. So what about the other players? Well, they shouldn’t be complaining about AT&T or Verizon. Sprint decided to skip the auction altogether, and if T-Mobile has a bone to pick with another bidder, it’s with DISH.” But T-Mobile hasn’t mentioned Dish’s use of two designated entities to win spectrum and pay $3 billion less for it than they should have, which has infuriated others.

In AT&T and Verizon’s defense, T-Mobile has been targeting the two major carriers. Maybe it’s warranted as they do dominate the market, but is T-Mobile holding back frustrations with Dish because they want to partner up with them? It’s no secret that top executives at T-Mobile think it would be a great idea to team up with the company. “Dish and we, that makes some sense,” Legere told investors at Deutsche Telekom’s capital markets day. “It makes sense from the standpoint of integrating that spectrum and capability and deploying it at our network,” he said, referring to the spectrum Dish bought last month in the auction of airwaves for mobile data, which yielded record proceeds of $44.9 billion. (Reuters)

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