FCC Approves Initial Rules for First Major Spectrum Auction Since 2008

Dish Network did not get the language it sought mandating interoperability between the AWS-3 spectrum and the AWS-4 spectrum it owns. But the order does mandate interoperability between the AWS-1 and AWS-4 bands. The order mentions but defers any decision on bidirectional sharing of the spectrum with government agencies, the flipside of standard sharing where carriers use government spectrum.

"The Report and Order is the result of years of work across multiple federal agencies and in coordination with industry stakeholders to make 40 megahertz ... of the AWS-3 spectrum available for commercial use,” the FCC said in a news release (http://bit.ly/1mFuGDq). “This is an important piece of spectrum, this is gold coast spectrum that is right next to the AWS-1 band, which is the workhorse of mobility today,” said FCC Chairman Tom Wheeler.

Commissioner Mignon Clyburn, who had pushed to license the spectrum in smaller license sizes, said she was satisfied with the compromise plan. “I appreciate Chairman Wheeler’s decision to propose an alternate plan that better addresses the concerns of small providers,” she said. The order also contains “very strong language promoting a voluntary solution for interoperability” with the AWS-4 band, she said.

The initial proposal circulated by Wheeler was to offer the spectrum in three paired blocks: A 5 x 5 MHz paired block at 1755-1760 and 2155-2160, sold as smaller cellular market area licenses, with the remainder offered in two 10 x 10 economic area-sized paired blocks. Under the revised plan, the FCC will now offer one CMA-sized 5 x 5 block, two 5 x 5 MHz EA-sized blocks and a single 10 x 10 EA-sized block. The auction also will offer 1695-1710 MHz band.

Commissioner Ajit Pai said the order puts too much emphasis on sharing rather than clearing spectrum. “We are not clearing federal users out of the AWS-3 spectrum, and we are giving the government greater access to 85 MHz of prime, commercial spectrum at 2025-2110 MHz,” Pai said. “We do this despite that fact that the federal government is already the sole or ‘dominant’ user of more than half the spectrum ideally suited for mobile broadband.”

Commissioner Mike O'Rielly said many issues remain. “The NTIA and the FCC should continue to decrease the number and the size of the areas where AWS-3 licensees must coordinate during the relocation process and beyond,” he said. Also troubling is that the order does not directly address how the spectrum screen will apply to the auction, potentially limiting bidding by some carriers, O'Rielly said. “The item punts this question to the mobile spectrum holdings proceeding,” he said. The order also is wrong in that it implies the FCC could take action if industry cannot work out interoperability between the AWS-3 and AWS-4 bands, O'Rielly said. “If they do not or if the commission determines that progress on interoperability has stalled in the standards process, the commission may regulate,” he said. “This is nothing more than stealth regulation. It just avoids the notice problems.”

"It was 2008 the last time the commission conducted an auction this significant,” said Commissioner Jessica Rosenworcel. “Our last major auction was conducted when the iPhone was in its infancy.” The AWS-3 auction will also make a major down payment toward the creation of FirstNet, in advance of the TV incentive auction, she said. But the FCC also has to recognize that clearing federal spectrum takes too much time, Rosenworcel said. “That is why it is time for a fresh approach to federal spectrum,” she said. “We need a policy built on carrots, not sticks. We need to develop a series of incentives to serve as the catalyst for freeing more federal spectrum for commercial use.”

The Competitive Carriers Association said the order does not go far enough. “The FCC’s decision today to license only one paired 5x5 MHz block in smaller Cellular Market Areas (CMAs) is certainly disappointing for most competitive carriers,” President Steve Berry said in a written comment. “The use of the larger Economic Areas (EAs) will likely curtail participation among smaller carriers, who have neither the resources nor the scale to bid on license areas of that size and could ultimately reduce revenue from the auction.”

But T-Mobile was pleased with the plan. T-Mobile was the top bidder in the AWS-1 auction. “This pro-competitive decision will provide carriers of all sizes an opportunity to win this valuable spectrum,” said Vice President Kathleen Ham. “As we look forward to an auction, T-Mobile encourages the Defense Department and other federal agencies to continue close coordination with all stakeholders to ensure the smooth transition of this spectrum for commercial use.”

AT&T Vice President Joan Marsh said in a blog post the order promotes carrier disaggregation by dividing one of the proposed 10×10 MHz blocks of spectrum into two 5×5 blocks. “As we previously argued, the AWS-1 auction results demonstrated clearly that both auction demand and auction revenue flows first and most freely to larger blocks with larger license sizes,” Marsh said (http://bit.ly/1fHhOVQ). “For this reason, we supported the band plan as originally proposed by FCC Staff.”

"Today’s action by the FCC lays the groundwork for bringing 65 megahertz of government spectrum to auction for commercial use,” said Verizon Senior Vice President Kathleen Grillo. Various associations hailed the AWS-3 order and 5 GHz order, also approved at the meeting. (See related report in this issue.) “The commissioners’ decision to transition underutilized spectrum to more efficient uses puts a vital public resource to work for U.S. consumers and innovators, while also balancing the interests of incumbent users,” CEA said. “By opening spectrum in the 5 GHz frequency band for unlicensed uses like Wi-Fi and making AWS-3 spectrum available for services like mobile broadband, the FCC is helping to ease spectrum constraints and build a foundation for sustainable spectrum policy.”