FCC could strike a blow for competition among wireless carriers

T-Mobile CEO John Legere has challenged many of the top wireless carriers' consumer-unfriendly practices. (Photo: Scott Eells/Bloomberg)

With a few small changes next week to plans for a 2016 spectrum auction, the Federal Communications Commission could go a long way toward promoting the "robust competition" that U.S. lawmakers and regulators always say they want for the wireless industry - and sometimes seem to support.

Insiders are saying: Don't count on it. That may be good news for the nation's two dominant carriers, Verizon and AT&T. But it would be a blown opportunity for American consumers, so it deserves a reexamination by FCC Chairman Tom Wheeler and his fellow commissioners.

Today's topic - a complex auction of high-quality, low-band radio spectrum no longer needed by TV stations - is about as arcane as they come even at the FCC, where wonkery is a way of life. I'll spare you the details, involving such terms as "reserves" and "triggers," and focus on the big picture. What the FCC decides could affect what you pay in the future for everything from mobile calls and data to pay TV and broadband service.

As I explained here last week, phone, broadband, and cable customers in a city such as Philadelphia can spend three times as much as their counterparts in, say, Paris for a similar set of services. Studies repeatedly find that U.S. consumers pay more for slower Internet access than those in other developed countries.

But wireless is different, you say? Well, sort of.

U.S. mobile-phone and data customers are not stuck with one or two providers, as broadband customers are. Even after years of consolidation, we

still count four wireless

carriers that can claim a national footprint.

But unlike their counterparts overseas, U.S. regulators have foresworn tools to push down prices such as requiring network owners to lease elements of their systems to rivals. Instead, we have largely trusted that the market's invisible hand is all we need to spur growth and competition.

Broadband customers suffer most directly from our feeble competition - one reason Wheeler's FCC has tried to lift barriers against municipal networks. But our mobile markets need help, too.

In one comparison last year, a Verizon Wireless customer paid 60 percent more than a similar subscriber would pay a British provider, taxes included - and the Brit would get unlimited data for the lower price.

One positive step recently is that the FCC and antitrust enforcers have finally quit rubber-stamping mergers. They blocked AT&T's 2011 plan to swallow up T-Mobile, and last year warned away a proposed marriage of T-Mobile and Sprint. This spring, they threw up a roadblock to Comcast's purchase of Time Warner Cable.

But there are limits to that stance - perhaps reached last week, when the FCC ignored consumer groups and approved AT&T's acquisition of DirecTV.

That raises the question of what they can do instead - and brings us back to next year's "incentive auction" of TV spectrum.

The big picture: Around the country, TV stations have valuable spectrum they can do without - frequencies in the 600-megahertz range perfect for both rural and urban areas because the signals travel far and pass easily through walls.

Congress envisioned the auction as a win-win-win. Broadcasters and the Treasury Department cash in by selling spectrum. Mobile carriers and others - Dish Network is a likely bidder - benefit by acquiring it.

Where are consumers in that equation? That's the trouble.

Descended from companies given free low-band spectrum in the 1980s to launch the U.S. wireless industry, AT&T and Verizon are rich enough today to overbid - even the Justice Department has warned of that outcome. Big Wireless wants to keep you saying, "Sure, I'd try those other carriers, but their networks just don't work as well." That's why smaller carriers, backed by consumer groups, have been urging auction-rule changes to boost their chances.

T-Mobile, among others, wants the FCC to reserve an extra 10 megahertz per market for bids by companies that lack big slices of low-band spectrum, so more carriers can acquire enough to go up against AT&T and Verizon. Under CEO John Legere, T-Mobile has challenged many of the top carriers' consumer-unfriendly practices, demonstrating how competition can disrupt a market. He'd love to up his game.

There are too many other issues to detail here, such as the need to also set aside more spectrum for WiFi and other unlicensed uses. It's important to note, too, that Verizon and AT&T would be eligible to bid for reserved spectrum in much of the country, though not in Philadelphia, New York, and other key markets.

As T-Mobile rightly says, this is a once-in-a-generation chance to level the playing field for wireless calls and mobile data.

With the right call, the FCC can give the market's hand a little extra punch.