Bloomberg News

Google Vision Opposes AT&T as U.S. Looks to Sell Spectrum

January 23, 2013

FCC Chairman Julius Genachowski

Federal Communications Commission Chairman Julius Genachowski, a Democrat who has pushed for broader access to high-speed Internet, backs a vision shared by Google Inc. and Microsoft Corp. of setting aside spectrum for mobile services not yet invented. Photo: Alex Wong/Getty Images

U.S. regulators preparing to auction airwaves craved by wireless providers to meet demand from data- hungry smartphones are facing a divisive choice: how much to devote instead to mobile service that can be free.

Federal Communications Commission Chairman Julius Genachowski, a Democrat who has pushed for broader access to high-speed Internet, backs a vision shared by Google Inc. (GOOG:US) and Microsoft Corp. (MSFT:US) of setting aside spectrum for mobile services not yet invented. He’s accused opponents of waging a “nascent war on Wi-Fi,” the aerial Internet connection found globally in coffee shops and offices.

Airwaves withheld from the auction and allocated to new uses would mean fewer frequencies for established carriers such as AT&T Inc. (T:US), whose largest effort to add spectrum was quashed in 2011 when the FCC objected to its proposed acquisition of T- Mobile USA Inc.

“The largest holders of spectrum have no interest in seeing new competition,” Cathy Sloan, vice president of government relations with the Computer & Communications Industry Association, said in an interview. Members of the Washington- based trade group include Google, Microsoft, biggest social network operator Facebook Inc. (FB:US), Internet radio provider Pandora Inc. (P:US), and Sprint (S:US) Nextel Corp., a wireless telephone competitor to AT&T and Verizon Wireless.

Carriers straining to meet growing demand from smartphones and tablets want as many airwaves as possible, Jot Carpenter, vice president of government affairs for CTIA-The Wireless Association, said in an interview.

Television Frequencies

“Let’s find a way to maximize the amount of reclaimed spectrum that’s devoted to licensed operations,” or carriers operating under FCC imprimatur, Carpenter said. Members of the Washington-based trade group include AT&T, Verizon, T-Mobile and Sprint, which together serve almost nine in 10 U.S. wireless subscribers, according to data compiled by Bloomberg.

The debate is part of a broader discussion at the FCC about rules for divvying airwaves during the auction next year of frequencies now used by television stations. Station owners that opt to participate will be assigned new frequencies.

The FCC in September voted unanimously to begin crafting auction rules, and Genachowski’s proposal for unlicensed or Wi- Fi use was part of that package.

Wresting Spectrum

“This is about the wireless companies trying to wrest spectrum from the broadcasters,” Gigi Sohn, president of the Washington-based advocacy group Public Knowledge, said in an interview. The FCC is trying to set rules so broadcasters offer enough airwaves for mobile carriers, and so “that at the end, some of that spectrum is being preserved for other uses,” Sohn said.

Bigger arguments are in store as the FCC decides how to conduct the auction, which may generate $15.2 billion and is to provide $7 billion to help build a nationwide wireless network for public-safety officials.

The FCC would be allowed to bar particular companies from bidding on some blocks of airwaves, Representative Henry Waxman, of California, the senior Democrat on the Energy and Commerce Committee, told the House last year, according to the Congressional Record. The agency can set a limit on airwaves acquisitions by any company, Waxman said.

Waxman spoke in opposition to remarks four days earlier by Representative Fred Upton, the Michigan Republican who chairs the committee.

“The FCC should not be picking winners and losers,” Upton said, according to the Congressional Record. The agency can’t exclude qualified bidders, Upton said.

T-Mobile Rejection

The FCC under Genachowski has signaled a willingness to take on AT&T and Verizon, the two largest carriers with a combined 62 percent of U.S. wireless subscribers, according to data compiled by Bloomberg.

Genachowski broke with Republican predecessors and declined to call the wireless market competitive, and he has said regulators’ quashing of No. 2 mobile company AT&T’s bid for fourth-largest carrier T-Mobile eased a market that was “on the doorstep of duopoly.”

Michael Balmoris, a Washington-based AT&T spokesman, didn’t return a telephone call and e-mail seeking comment. Ed McFadden, a Verizon spokesman in Washington, declined to comment.

In an October speech, Genachowski cast those who oppose his push for more airwaves outside carriers’ control as being against “balanced spectrum policy.”

The FCC’s proposal for swaths devoted to Wi-Fi could cost the government as much as $19 billion in revenue if those airwaves bands aren’t offered at the auction, Representative Greg Walden, an Oregon Republican, said at a hearing last month.

Campaign Money

“This is a very valuable taxpayer-owned commodity,” Walden, chairman of the House communications and technology subcommittee, said in a press briefing today. “I would take a dim view of just making it available at no charge.”

The clash pits a Democratic-leaning high-technology industry against telecommunications companies whose employees trend Republican in campaign donations.

About 60 percent of computer- and Internet-industry employees’ political contributions went to Democrats during the 2012 elections, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign donations. That category is by led Microsoft, Google, InterSystems Corp., Oracle Corp. (ORCL:US) and Intel Corp.

Telecommunications industry employees, on the other hand, gave 61 percent of their contributions to Republicans.

Largest search-engine owner Google, based in Mountain View, California, and biggest software-maker Microsoft joined more than 300 companies and organizations in calling for more Wi-Fi. The request came in a Dec. 10 letter to Walden and to Representative Anna Eshoo of California, the top Democrat on the communications subcommittee, who represents Silicon Valley.

“If the commission does not designate more unlicensed spectrum, the fuel for this growth engine will be lost,” the companies said in the letter.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net.

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net.


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