AT&T Threatens Boycott if TV Airwaves Auction Rules Aren’t Changed

At least one of the largest wireless carriers in the U.S. is unhappy about the Federal Communications Commission’s new proposed rules for an upcoming auction of TV airwaves, which would reserve some licenses for smaller companies.

AT&T launched its campaign to change the rules Wednesday, releasing a letter to the agency suggesting that if some rules restricting the company’s ability to buy licenses aren’t changed, it may not participate at all.

The agency’s proposed bidding limits on large carriers “would put AT&T in an untenable position, forcing AT&T to reevaluate its potential participation in the auction,” wrote Joan Marsh, AT&T’s vice president of federal regulatory issues. Her letter summarized a conversation she had with an aide to FCC Chairman Tom Wheeler on Monday.

“AT&T has never declined to participate in a major spectrum auction and certainly did not intend to do so here,” Marsh wrote in the letter. “But if the restrictions as proposed are adopted, AT&T will need to seriously consider whether its capital and resources are directed toward other spectrum opportunities that will better enable AT&T to continue to support high quality LTE network deployments to serve its customers.”

It’s not a bad argument to make with the FCC, which needs AT&T and Verizon Wireless to bid if it wants to raise the billions of dollars Congress told it to make from the auction. But it’s also hard to imagine AT&T sitting out an auction this important, which would allow its competitors to scoop up airwaves that would help make their LTE networks a stronger competitive threat.

AT&T (and presumably Verizon) is upset about a proposal in the still-to-be-released rules for an auction next year of prime airwaves currently used by TV stations. A Verizon spokesman said the company had no comment about the proposed rules.

Wheeler’s staff has proposed allowing all companies to bid for TV airwaves in the upcoming auction. Under the proposal, up to 30 megahertz of the airwaves would be reserved for smaller wireless carriers if overall bidding reaches a certain threshold.

Wheeler’s aides are trying to structure a sale that allows smaller carriers, such as Sprint or T-Mobile, a chance at getting enough prime airwaves to make them stronger national competitors while still raising enough money to cover the auction’s expenses and fund a new wireless public safety network.

But the proposal means that AT&T and Verizon, the two carriers that hold the largest amount of prime airwaves, wouldn’t be allowed to bid on a sizeable chunk of licenses. They’d have to bid against each other for the unreserved licenses.

AT&T is worried that TV station owners may not participate in large numbers, so the agency won’t have that many licenses to auction off. That could mean there may not be enough large chunks of airwaves available to AT&T or Verizon to make them economically efficient to use.

The proposal also prohibits winning bidders from flipping the licenses and selling them to the largest wireless carriers for six years, according to people briefed on the plan.

This article originally appeared on Recode.net.