Airwaves auction may shrink -- not increase -- wireless competition

[Commentary] When the federal government auctions off a huge swath of airwaves early in 2016, it aims to give wireless carriers more capacity and also increase competition in an industry that is now firmly in the grips of AT&T and Verizon. It will likely deliver on the first goal, but analysts suspect it won’t on the second.

On July 16, the Federal Communications Commission will vote on exactly how the auction for so-called low-band spectrum will play out. The airwaves, in the 600 megahertz range, are highly coveted because they travel long distances and penetrate buildings, characteristics needed to build a nearly seamless nationwide wireless network. AT&T and Verizon, the nation’s two largest carriers, already own 73 percent of low-band spectrum, so they provide much more coverage than Sprint and T-Mobile, which own a negligible amount. More coverage has allowed AT&T and Verizon to sign up about two-thirds of all wireless customers nationwide. Sprint and T-Mobile say they need more low-band spectrum to better compete, and the upcoming auction, scheduled for the first quarter of 2016, may be their last chance for decades to get a big chunk of it at one time. That’s why they asked the FCC to create a reserve of spectrum that only they and other smaller carriers can bid on. AT&T and Verizon said no limits should be placed on the auction.