The FCC’s wireless dilemma: More cash, or more competition?

If you've been following the debate about wireless spectrum, you know that Sprint and T-Mobile are at loggerheads with Verizon and AT&T over how much of the airwaves the big carriers will be allowed to buy in an upcoming auction. If Verizon and AT&T manage to snap up the bulk of it, regulators worry they'll threaten competition in the wireless industry. To avoid that fate, some have suggested imposing auction limits on the nation's two biggest carriers.

In a recent Senate hearing, observers got a glimpse of how these restrictions might take shape. One option being considered is a set of caps that explicitly acknowledge Verizon and AT&T's current position at the top of the market. "No one has ever suggested that the two dominant incumbents be excluded from the upcoming incentive auction," wrote T-Mobile, Sprint and a handful of other companies in a letter to the Senate Commerce Committee. "But they already control nearly 80 percent of all available low-frequency spectrum." Rules that primarily restrict the largest carriers would free up more spectrum for other bidders, these companies argue. But experts disagree over the second-order effects -- whether it would raise more revenue that way in the long run, for example, or whether the smaller carriers would be able to use that spectrum as efficiently as the larger ones. Sorting through all this is the Federal Communications Commission, which has to juggle sometimes competing goals in designing the auction. Making sure the auction generates enough wealth to fund other expensive projects is one example. But the FCC also has to consider whether the rules of the sale ultimately benefit consumers.