Phoenix Center Says FCC Needs to Get Tough With Spectrum Holdouts
The FCC should get tough with spectrum holdouts -- licensees standing in the way of repurposing spectrum to a higher use -- the Phoenix Center reported Wednesday. The document mentions the C-band, expected to be a major focus of the FCC next year (see 1812190048), but only in a footnote.
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The report offers a “sensible solution” for addressing holdouts. It includes compensation of incumbent licensees with a new license, in the same or otherwise compatible band, providing an equivalent level of service, with all relocation costs paid by the band's new user. “Such a program sends a clear signal that holdouts will not be tolerated, thereby encouraging market transactions early in the repurposing process,” it said.
“The issue of holdouts is a well-known problem in property aggregation, both generally and with respect to spectrum repurposing,” said Phoenix Chief Economist George Ford, report co-author. “If incumbents can be accommodated by retuning their networks to new frequencies, then the FCC should make clear early in its process that this solution is more a presumption than an option. Doing so will discourage holdouts and encourage good faith negotiations for the market-driven repurposing of spectrum for broadband uses.”
The general idea “is relevant in any instance where multiple licenses have to be aggregated together to create a large enough band for broadband service, and the logic is most relevant when a contiguous block is needed,” Ford told us. The FCC has used it before in the 800 MHz band retune, clearing the AWS band in the TV incentive auction, he said. “The most obvious case” is the 900 MHz band, “where pdvWireless and the Enterprise Wireless Alliance want to repurpose some portion of a 10 MHz block from narrowband to broadband uses,” Ford said. “It’s an interesting and socially valuable repurposing, but the holdout problem in that band is very real given that contiguous licenses are needed and there are a large number of and variety of incumbent license holders in that band.”
The C-band is a less obvious case, Ford said. Incumbents there “are ready to surrender huge swaths of spectrum for cash and repack their services using less spectrum," he said. "There may be a risk of holdouts there, too, but in that case it is the sellers that are organizing the repurposing themselves, not the buyer.”
“Our voluntary alliance of the only four C-band carriers with U.S. customers and revenues avoids the holdout problem in C-band,” said Preston Padden, C-Band Alliance head-advocacy and government relations. The Satellite Industry Association didn’t comment.