Commenters Disagree on Latest FCC Proposal for 2.5 GHz Auction

The FCC asked earlier this month for comment on an ascending-clock auction as an alternative to sealed-bids or a simultaneous multiple-round (SMR) format (see 2202090068). Commissioner Brendan Carr telegraphed last week he's leaning against a single-round auction (see 2202180054). T-Mobile is expected to dominate the auction.

Verizon said an ascending clock auction “has become the preferred format for Commission spectrum auctions -- with good reason.” Clock auctions are “faster and more efficient than a traditional SMR auction because bidders do not need to bid iteratively across rounds on several similar blocks,” the carrier said: “At the same time, multiple-round ascending clock auctions, like SMR auctions, provide bidders with flexibility to engage in price discovery and adopt effective bidding strategies.”

The Competitive Carriers Association said a clock auction is less burdensome than SMR for smaller providers. An ascending clock format “permits price discovery, increases global efficiency, and is well-understood by potential bidders,” CCA said: “These enormous benefits far outweigh any concerns about the length of a multi-round auction and the number of licenses available, both of which will not negatively affect the auction in any material way.” Under a single-round auction “bidders would lack sufficient information on how to value 2.5 GHz licenses,” CCA said.

“While each potential bidding format has its own benefits and drawbacks … an ascending clock format, together with the ability to submit intra-round bids and availability of proxy bidding, offers a reasonable alternative,” said the Blooston Rural Carriers. The carriers noted the auction of priority access licenses in the citizens broadband radio service band attracted more than 270 qualified bidders: A clock format “provides for multiple bidding rounds and will thereby promote price discovery in an auction where the overlay licenses being offered for bid vary significantly from market to market due to varying levels of incumbency and where there is a limited amount of publicly-available information regarding license/lease valuation.”

UScellular endorsed a clock auction. "First and foremost, in contrast to a single-round auction, a multiple-round auction … permits bidders to engage in price discovery, which results in a more efficient auction and helps to level the playing field for smaller bidders,” the carrier said.

T-Mobile urged a “quick and efficient bidding schedule” for the auction. “Utilizing a high initial increment, and maintaining that increment where appropriate, along with establishing a rigorous bidding round schedule will ensure that Auction 108 moves quickly,” the carrier said. The FCC should also allow bidders to switch demand from one category to another category within the same county, it said: “With a supply of only one block in each license category, employing switch bids … would be particularly helpful to bidders because it would provide some protection against a reduction in a bidder’s eligibility if the bidder’s request to reduce demand cannot be applied during bid processing.”

Sealed Bids

Proponents of a single-round auction aren’t backing down. AT&T said a clock auction has the same problems as SMR. “Although AT&T agrees that a multiple-round auction format is almost always superior, here the single-bid format is the only way to counteract the enormous ‘structural advantages’ T-Mobile would otherwise have,” the carrier commented. Any multiple-round auction format “would give T-Mobile an overwhelming advantage that would enable it to win the vast majority of licenses at prices well below its own -- and often other potential bidders’ -- valuations for those licenses,” AT&T said.

T-Mobile has an advantage if the FCC doesn’t take sealed bids, the Wireless ISP Association said. “By virtue of its control over thousands of encumbered licenses in the band, a single multi-billion dollar company, which already controls more than 80% of all 2.5 GHz licenses, will cost-average its bids across a large number of licenses and use its cost savings to outbid small competitors and inevitably secure a large number of auctioned licenses with little or no competition,” WISPA said.

Many WISPs already hold 2.5 GHz leases, emailed Louis Peraertz, WISPA vice president-policy: “They help serve the hardest to reach with needed and evolutionary internet access. Given the smaller geographic license areas for sale at this auction, the 2.5 GHz auction represents a unique opportunity for WISPA members to add substantial amounts of spectrum in their target markets.”

New America’s Open Technology Institute and the Schools, Health & Libraries Broadband Coalition agreed a single-round auction is preferable for smaller providers. “The largest national carriers generally dominate the Commission’s spectrum auctions absent aggressive, proactive measures aimed at leveling the playing field and promoting competitive entry,” they said: While “marginally better” than SMR, a clock auction “is still needlessly costly and complex.”

“A single-round format with pay-as-bid pricing will promote diverse participation and give smaller providers a chance to get the spectrum they need,” Dish Network said.