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from: CNN Money

AT&T Criticizes FCC's 'Open Access' Auction Proposal

Dow Jones
July 16, 2007: 04:55 PM EST

(Updates with background and comments from the CTIA and a consultant.)

By Roger Cheng

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- AT&T Inc. (T) said the Federal Communications Commission's proposal to open the radio spectrum auction to more technology companies would lower the value of the licenses and "deprive taxpayers of billions of dollars."

In a filing dated July 12, AT&T also said the proposal - advocated by Google Inc. (GOOG) - also exposes the FCC to a "reversal in the courts" and delay in the auction, suggesting AT&T may look to legal alternatives.

"The filing should definitely make Kevin Martin take a step back," said Patrick Comack, an analyst at Zachary Investment Research & Management LLC. "If the order comes out as rumored, the FCC will get sued by AT&T."

The San Antonio telecommunications giant, however, said it was merely pointing out the problems with Google's proposals in its filing.

"Our filing simply pointed out delays in the process if any part of Google's proposals are adopted," said AT&T spokesman Mike Balmoris. "Until the rules are final, we're not going to speculate on actions we will or will not take."

Other analysts believe AT&T is merely making noise before the FCC makes up its mind. "While I wouldn't dismiss the idea of a lawsuit, I'd consider these initial comments to be part of their lobbying efforts, as opposed to the first steps towards a lawsuit," said Stefan Bewley, an analyst at consulting firm Altman Vilandrie & Co.

AT&T said in the filing that the proposals to carve out part of the radio spectrum for discounted rates would lower the amount of revenue the government could generate from the potential sale. The spectrum being auctioned is estimated to bring in $15 billion to the Treasury.

"Google's 'Corporate Welfare' proposal defies the commission's and Congress's goals in the 700 Mhz auction," AT&T said in the filing. The conditions also go against a decade of wireless deregulation and would hinder the buildout of higher speed networks.

If the proposals go into the auction rules, telecom companies would lose their grip on the spectrum that allows them to run their wireless cellular networks. The telcos are often accused of stockpiling spectrum, which AT&T denied in the filing. The slice being held for open access is enough to create a national network. The trade group for the wireless industry, CTIA, filed its own opinion on Monday, urging the FCC to reject the proposal. CTIA argued that reserving a sliver of the spectrum for open access conditions would hinder the ability of smaller carriers to participate in the auction, which in turn would hurt the deployment of such services in rural and small markets.

While the open-access proposal is meant for all technology companies, Google is seen as the primary interested party.

-By Roger Cheng, Dow Jones Newswires; 201-938-2020; roger.cheng@dowjones.com

(END) Dow Jones Newswires