In another turn of events by the scrappy and defiant mobile carrier T-Mobile (NASDAQ:TMUS), the company sent an official letter to the Federal Communications Commission (FCC) this week asking the government entity to block AT&T's (NYSE:T) purchase of some low-band 700 MHz spectrum. The letter comes at time when T-Mobile is looking to expand its low-band spectrum in an upcoming 600 MHz auction next year.
So, why is T-Mobile making such a big deal over AT&T's pursuit of low-band spectrum when the the self-proclaimed uncarrier is about to offer up bids of its own spectrum next year?
Because it believes AT&T -- and Verizon Communications -- are being greedy with the coveted low-band spectrum already, and T-Mobile says they don't need any more.
Leaning on a new rule
Last spring the FCC passed a new rule saying that if any one carrier held one-third of spectrum below 1 GHz in any given area then the control of that area would come under review. Essentially T-Mobile's asking the FCC to enforce that new rule right now in parts of Kentucky, Ohio, and West Virginia, where AT&T could have about one-third of the low-band spectrum in certain areas, if its 700 MHz purchase went through.
Here's what T-Mobile had to say in its official letter to the FCC:
With this acquisition, AT&T will prove far more able to exclude competitors, raise their costs, damage their businesses and ultimately lessen competition in the Markets. Consumers in the Markets, which have a low population density with a high percentage of low-income consumers, will suffer from reduced competitive choice, less innovation, and higher quality-adjusted prices if the Commission allows AT&T to further entrench its growing duopoly with Verizon.
Harsh words, indeed. T-Mobile also noted that AT&T already dominates some of these areas already, meanwhile T-Mobile has little or no presence in those markets. Of course, there's two sides to every story, and AT&T argues that it's just trying to enhance its network for rural customers. In a blog post AT&T's Vice President of Federal Regulatory, Joan Marsh, took the gloves off and said that it's T-Mobile's fault for not investing in rural areas and said, "I guess un-investment in un-urban markets is the un-carrier thing to do."
What's at stake
T-Mobile is fighting so vigorously against AT&T's low-band expansion because the company needs more of it. Low-band spectrum penetrates through buildings better than high-band spectrum and can cover larger geographical areas using less transmitters. And while T-Mobile's meticulously built out a strong 4G LTE network over the past few years, it still falls behind the competition for overall performance and reliability, according to the latest RootMetrics data.
The FCC hasn't responded to T-Mobile yet, but as the company has asked the federal regulator to act on its own rules it's likely a response will come soon. If the FCC reviews AT&T's purchase and finds that it does indeed surpass one-third of the 1GHz spectrum in some or all of those markets then it may be forced to change AT&T' s spectrum acquisition.
But all fighting aside, the big picture here for T-Mobile is that it needs to improve its spectrum on its own, and not just fight with AT&T on the sidelines. The carrier has created a viable competitor to the nation's largest carriers and it needs to continue that push to bring better overall performance to more of its customers. Complaining the FCC won't do that -- buying up more low-band spectrum and building out the network in underserved areas will.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.