By John Legere, President & CEO
Unless you’re a DC insider or wireless industry wonk, you’re probably not paying much attention to the government’s most recent spectrum auctions in DC right now. But if you have a wireless phone, you should be. What’s going down in Washington right now is going to impact you, me and every other American for decades to come. Why? Because the smartphones that power our personal and professional lives − not to mention entire industries − all ride on wireless networks built with a precious, limited resource called spectrum.
In fact, the federal government just finished a major auction of what’s called mid-band spectrum a few weeks ago. This AWS-3 spectrum is ideal for carrying data. It’s what we built our Data Strong™ network on. Fortunately, T-Mobile has a good amount of mid-band spectrum to support our network. So we were able to be pretty conservative and strategic in this auction. That’s fantastic news for T-Mobile and our customers, but next time we may not be as lucky.
This mid-band auction exceeded everyone’s expectations, raising nearly $45 billion for the US Treasury – and it was a success on that front many times over. With that done, 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. Because overall, while the AWS-3 auction was a success for the US Treasury, it was a disaster for American wireless consumers.
AT&T and Verizon showed that they can, and will, dig into their deep pockets to corner the market on available spectrum at nearly any cost. To add insult to injury, the FCC’s rules actually allowed companies that don’t provide wireless service at all to buy up huge amounts of spectrum and sit on it for ten years! The results are not good for consumers. Three companies alone spent an insane $42billion between them, grabbing a ridiculous 94 percent of the spectrum sold at this auction.
This whole thing should scare the hell out of you and every other wireless consumer in the US, because there is another important auction coming next year, and the results have to be different if wireless competition is going to survive.
The next auction will offer up a different type of spectrum. The kind that wireless companies demand the most: low-band spectrum. While mid-band spectrum is ideal for data, low-band spectrum covers more distance and gets those signals deeper into your home and office. It gives a wireless network reach.
AT&T and Verizon already control 73 percent of the nation’s low-band spectrum. Yes. I said 73%! Wondering how the hell this happened? Back in the ‘80s, before the government started auctioning spectrum, it gave Ma Bell’s offspring a ridiculous amount of free spectrum to begin building wireless networks. Each company got a juicy 25 MHz of prime, low-band spectrum across the country. And these Twin Bells, infused with this government gift, have leveraged it into market dominance. Yes, they are now AT&T and Verizon! And they now have two-thirds of the nation’s wireless customers, and nearly $162 billion in annual wireless revenue between them.
T-Mobile has been challenging that market dominance and changing this industry. Over the past two years, we have ignited a genuine consumer revolution and built America’s fastest nationwide 4G LTE network. Americans are getting a world-class wireless experience from the Un-carrier™, but with the exploding demand for mobile Internet access, we too require low-band spectrum. And a lot of it.
So the next auction – for the same type of low-band spectrum that the government gifted to those Twin Bells all those years ago – can’t happen soon enough. But if the results are anything like the AWS-3 auction, it’s going to be an epic failure. And it’s you, the consumer that will pay the price. Again.
If the government wants a competitive wireless market, they need to establish auction rules to reflect that. Here’s what they need to do:
First, reject the Twin Bells’ ploys to delay the next auction, supposedly so they can restock their coffers. Verizon just admitted publicly that they have vast amounts of spectrum already, and don’t need to buy a lot more. So if they are restocking their coffers, they are doing it for one reason, and one reason only: to keep competitors out! Don’t let them strangle competition and buy out the future of American wireless. The sooner this auction happens, the better.
Second, the rules need to promote competition by reserving 40 MHz or at least half of the available spectrum in the next auction for sale to the competition. We’re not asking for a government handout like the Twin Bells got. We’re just asking that the rules level the playing field to sustain a competitive market.
Third, change the rules so that this valuable spectrum is actually used to provide service to consumers rather than allowing it to be collected and traded like financial securities.
Americans have responded to our Un-carrier consumer revolution by making T-Mobile the fastest growing wireless company in the country. Over 46 million US wireless customers have voted with their feet for an end to the old-guard regime, and to eliminate their crazy costs and restrictions. And, very slowly, even the industry giants have begun to wake up to the change that’s underway. As the Un-carrier, we’ve listened to American consumers and taken action. Now we need you to do the same.
You’ve never been shy about telling us what you want in wireless so don’t stop now. Speak up for the future of wireless. The decisions the Federal Communications Commission makes will forever determine the choices available to American wireless customers in the future. If you want to see more of the same consumer advocacy and industry-rocking innovations that the Un-carrier has already delivered, you should let Congress and the FCC know that you demand a competitive, innovative future for US wireless. Go here for an easy way to write them. And, because I believe social media is a powerful way to speak out, I also encourage you tweet @FCC and tell them you stand for more competition in the wireless space.
This playfield isn’t going to level itself. This is going to take all of us to make it happen.