Sprint, T-Mobile considering spectrum JV ahead of 600MHz auction

16 Jul 2014

Sprint Corp and T-Mobile US plan to create a joint venture (JV) to bid for spectrum in the Federal Communications Commission’s (FCC’s) planned incentive auction of 600MHz broadcast TV spectrum, Bloomberg reports. The two carriers, which are currently thrashing out the terms of a USD32 billion so-called ‘mega-merger’, plan to form a JV that will exist independently from the merger transaction. The venture would be led by a separate management team, and one of the two companies would have ultimate responsibility for the spectrum, a source told the news agency. Further, the companies have informally discussed the joint-bidding plan with FCC representatives and do not expect to encounter any opposition, the source noted.

According to the FCC, the two-sided auction – which is scheduled to take place in mid-2015 – will ‘use market forces to recover spectrum from television broadcasters who voluntarily choose to give up some or all of their spectrum usage rights in exchange for incentive payments, in order to auction new spectrum licenses to wireless providers’. The FCC plans to adopt technical and service rules for new 600MHz band licences that are similar to those governing the adjacent 700MHz band. Specifically, mobile devices must be interoperable across the entire 600MHz band. New licensees will be required to build out to 40% of the population in their service areas within six years and to 75% of the population by the end of their initial twelve-year licence terms.

In May the FCC voted 3-2 in favour of rules to withhold, or reserve, up to 30MHz of spectrum for carriers that currently hold less than one-third of the available spectrum below 1GHz in any given market. Thus, any nationwide carrier with 45MHz or more of low-band spectrum will not be able to bid on the reserved spectrum; mobile giants Verizon Wireless and AT&T Mobility are the only carriers that currently own more than 45MHz of low-band spectrum.