FCC’s H-Block Auction Scheduled to Start Jan. 14 as a Stand-Alone Auction
The FCC Wireless Bureau scheduled an auction of the H-block for Jan. 14, closing off the possibility it will be paired with the AWS 3 M-block for a bigger auction later in the year. The move Friday came after Dish Network offered assurances that it would offer a $1.6 billion bid for the band (CD Sept 13 p13), FCC sources said. FCC Commissioner Jessica Rosenworcel had repeatedly urged the FCC to delay the sale, while Commissioner Ajit Pai pushed for a Jan. 14 auction to put the spectrum in play (CD Aug 19 p1). The H-block is adjacent to the PCS band and the auction is widely expected to produce significant carrier interest.
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Acting FCC Chairwoman Mignon Clyburn said she’s pleased that the commission is moving expeditiously to auction the spectrum, “and that we are doing so in a way that ensures substantial revenues will flow to FirstNet.” In a statement she added, “This will be the first major spectrum auction since 2008, and will help close the spectrum gap as well as contributing to the goal of making mobile broadband available to our nation’s first responders” (http://fcc.us/13Y76rI).
Rosenworcel issued a statement repeating her concerns that by selling the H-block on its own the FCC will raise less money and thus make a smaller down payment on the cost of building FirstNet, which is to be paid for through auction proceeds, including from the H-block auction. But since the disagreement became public, FCC officials have said Rosenworcel faced an uphill fight to get her colleagues to agree on the wisdom of delaying an H-block auction. The order ultimately was issued by the bureau on delegated authority without a commissioner vote.
"More than twelve years after the horror of 9/11, it is essential that we make smart spectrum choices so that our first responders have the support they need to communicate in times of crisis,” Rosenworcel said (http://fcc.us/1gbpT5g). “I fear this approach fails that test. That is because holding a single auction of all 65 megahertz at once is bound to yield more interest, more bidders, and more revenue than dividing this spectrum up and holding an auction of the 10 megahertz H block alone. As Wall Street analysts have noted, splitting this spectrum up for auction will likely limit interest in the H block to only one, or possibly two bidders. If that is true, we will have a retail sale -- not an auction. Moreover, it will mean reduced revenue from this spectrum -— and less support for our nation’s first responders.” Rosenworcel said she had a “principled” disagreement with her colleagues. “I understand and respect that my colleagues feel differently,” she said. “I sincerely hope that the approach announced today does not fall short and miss the mark.”
Pai said he asked for the auction to start Jan. 14. “Bringing this valuable 10 MHz of paired spectrum into the commercial marketplace as soon as possible will benefit Americans in two ways,” he said (http://fcc.us/162zmqC). “First, it will help deliver bandwidth-intensive mobile services and applications. Second, the proceeds of the auction will provide much-needed revenue for the First Responder Network Authority to build out a nationwide, interoperable broadband public safety network."
Under the rules published by the bureau Friday (http://fcc.us/1esKcQ6), the spectrum will be sold on an Economic Area basis with one license for each of the 176 EAs. The spectrum will be sold in paired 5 MHz blocks, with 1915-1920 MHz set aside for uplink and 1995-2000 MHz for downlink operations.
The FCC adopted Dish’s suggested reserve price calculated at a minimum value of 50 cents per MHz per population. Dish’s waiver request last week asked the FCC for flexible use of AWS-4 spectrum and a one-year extension of its terrestrial buildout requirement (CD Sept 13 p13). Dish agreed to bid the reserve price if the waiver is granted by Dec. 14. “We believe this amount will appropriately recover for the public a portion of the value of the spectrum,” especially in light of the Spectrum Act’s requirement to deposit auction proceeds into the fund for FirstNet, the FCC said.
The commission adopted a standard simultaneous multiple round (SMR) auction format without hierarchical package bidding. The commission concluded that a standard SMR auction format will offer adequate opportunity for bidders to aggregate licenses “to obtain the level of coverage they desire consistent with their business plans,” it said. The commission also will implement anonymous bidding to “help protect against potential anticompetitive behavior such as retaliatory bidding and collusion,” it said. Minimum opening bids range from $1,000 to $37.5 million, it said (http://fcc.us/18jGgOa).
In a separate public notice, the bureau is seeking comment on Dish’s waiver request. Comments are due Sept. 30, with replies due Oct. 10, it said (http://fcc.us/18ZYFuh). ,