DOJ identifies lower frequency spectrum as key to wireless competition

The Department of Justice has provided the FCC with new recommendations for governing spectrum auctions, and with a heavy emphasis on leveling the playing field, the findings are likely to draw the ire of AT&T and Verizon. In its briefing, the DOJ made its case that the nation's two largest carriers currently hold market power, which is due to the heavy concentration of lower frequency spectrum (below 1,000MHz) allocated to the two incumbents.

According to DOJ officials, "This results in the two smaller nationwide carriers having a somewhat diminished ability to compete, particularly in rural areas, where the cost to build out coverage is higher with high-frequency spectrum." Although the DOJ never came right out and said it, one can easily surmise that it's guiding the FCC to establish rules that favor smaller carriers -- namely Sprint and T-Mobile -- in future low-frequency spectrum auctions. In the DOJ's opinion, an incumbent carrier would need to demonstrate both compelling evidence of capacity constraints and an efficient use of its current licenses in order to gain additional lower frequency spectrum. Otherwise, the opportunity exists for AT&T and Verizon to snap up licenses simply in attempt to harm competitors.

Given that the FCC and DOJ share the responsibility of ensuring competition in the marketplace, it seems unlikely that this latest brief will fall on deaf ears.