The FCC approved 5-0 an NPRM that proposes to bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain, as expected (see 1804110032). Commissioners said the NPRM was expanded while on the eighth floor to ask additional questions, including on what the FCC could do beyond the USF. Small carriers, especially members of the Rural Wireless Association, expressed concerns because many use devices and equipment provided by Chinese suppliers Huawei and ZTE. For other ZTE news Tuesday: 1804170018.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
FCC Commissioner Mike O'Rielly said rural telco subsidies could be increased somewhat while better fiscal discipline is brought to the overall USF mechanism. The "real issue" for USF is the budget, he said, and while the high-cost program has been relatively "stagnant," other programs have grown over the years. "We can't constantly double" funding for E-rate, Lifeline and rural healthcare, he said at an NTCA policy conference Monday, noting he was pushing for a hard Lifeline budget. O'Rielly, who was interviewed by NTCA CEO Shirley Bloomfield, wants a "happy medium" for high-cost funding: rural telcos may not get everything they want but "hopefully" regulatory changes could "get you most the way there" and remove "barriers to your offerings."
On the eve of the FCC vote on an NPRM on the security of U.S. communications networks, CTIA warned in a report Monday that the U.S. has fallen behind China in the race to 5G. Commissioners also will vote Tuesday on a public notice on the first auctions of millimeter-wave spectrum for 5G. The auction notice appears likely to get a 5-0 vote, industry and agency officials said Monday.
CTIA officials urged the FCC to provide additional clarity in its public notice, set for a vote by commissioners Tuesday, on rules for upcoming 24 and 28 GHz auctions (see 1803270052). CTIA met Monday with Wireless Bureau staff, said a filing in docket 18-85. “CTIA urged the Commission to consider the implications for the agency and auction participants if the Commission’s anti-collusion rules apply across the two auctions and include applicants in both,” the group said. “We also discussed opening bids and reserve prices, incumbent licenses in the 28 GHz band, and encumbered licenses in the 24 GHz band, urging the Commission to ensure that the Draft Spectrum Frontiers Auctions Public Notice is sufficiently clear for the public to respond to the questions raised therein.” CTIA also urged the FCC to start auctioning other high-frequency bands needed for 5G, especially the 37, 39 and 47 GHz bands. The Competitive Carriers Association, meanwhile, reported on a meeting with Will Adams, aide to Commissioner Brendan Carr. As the FCC takes up the auction notice it “must protect against the anti-competitive effects of a first-mover advantage in critical [millimeter-wave] bands, and ensure that all carriers are afforded an opportunity to access 5G spectrum at auction,” CCA said. CCA also “encouraged the FCC to expeditiously address remaining barriers to infrastructure siting processes to further deployment of next-generation and 5G technologies.”
LAS VEGAS -- Life for wireless mic operators may grow more complex once TV stations reshuffle frequencies, an engineer at a maker of mic systems said at the NAB Show. Spectrum for such transmissions may grow more scarce and there may be more competing uses, these and other comments Tuesday suggested.
AT&T defended its December proposal for a temporary, voluntary repack of the 38.6-40 GHz band (see 1712120010). Verizon in January told the FCC it supports AT&T’s goal of a timely auction of the spectrum but opposes AT&T's proposed solution (see 1801260041). AT&T reported on a meeting with staff from the Wireless Bureau, including Chief Donald Stockdale, and from the Office of General Counsel. The FCC’s current band plan “is complex with multiple license boundaries and holders, even over the same geographic area,” AT&T said in an accompanying presentation. “Auction with separate assignment round maximizes potential for contiguity across the entire band in a faster and fairer manner to advance the delivery of 5G services for the U.S. Prior to auction, a temporary repack solution is required to create larger, contiguous blocks to support rapid 5G deployments.” The filing was posted in docket 14-177.
The FCC Wireless Bureau sought comment Friday on whether it should extend by up to three years 12-year license terms and associated build-out requirements for AWS-3 licenses. It cited “complexities and timing of clearing Federal government operations” from the spectrum. The bureau asked if extension is warranted for all licenses or only those issued the earliest. “If a blanket extension for all AWS-3 licenses is not appropriate, is an extension warranted for AWS-3 licenses in specific geographical area(s) or spectrum band(s) (1695-1710 MHz or 1755-1780 MHz or specific blocks therein) in light of the status of Federal relocation?” the public notice asked. “If an extension is warranted, how long should it be? ... Bear in mind the Commission’s previous indication that it would consider extensions up to 3 years.” Comments are due June 5, replies July 5, in docket 18-104. The auction ended in January 2015 and set records for an FCC spectrum auction with almost $45 billion in provisionally winning bids (see 1501290059).
Dish and designated entities Northstar Wireless and SNR Wireless amended their agreements, with Dish loosening its control of those companies. The renegotiated DE agreements came after the U.S. Court of Appeals for the D.C. Circuit's August ruling that upheld the FCC withholding the DEs' AWS-3 auction bidding credits due to their too-close connections to Dish (see 1708290012). In an SEC filing Wednesday, Dish said its amended Northstar agreement says Northstar no longer has to consult with it about budgets and business plans and removed the requirement that its systems be interoperable with Dish's. Dish also agreed to exchange $6.87 billion in Northstar debt for 6.87 billion nonvoting shares. It said Dish also agreed to lower the interest rate on $500 million in Northstar debt still outstanding from 12 percent annually to 6 percent, to eliminate the higher interest rate that would apply in a default and to modify or remove some obligations for Northstar to prepay the loan. The satellite service provider said the amended SNR agreement has the same terms, though with Dish exchanging $5.065 billion owed for 5.065 billion nonvoting shares. Dish also said it agreed on identical terms modifications for $500 million in SNR shares still outstanding. The company said that other issues related to the remand remain in negotiation. The satellite-TV provider said SNR and Northstar have put in multiple requests with the FCC for meetings to discuss a cure to the DE control issue but that the agency hasn't granted an audience. The agency didn't comment. The agreements put Dish and the DEs "one step closer" to regaining the $3.3 billion AWS-3 spectrum discount, ultimately giving Dish close to 200 more spectrum licenses atop its close to 100 MHz, which would point to an IoT partnership or M&A, Maquarie analyst Amy Yong wrote investors. She said with negotiations ongoing, the process could run through the second half of this year or into 2019.
The FCC should tee up for auction all five of the millimeter-wave bands it has approved for 5G (see 1804040042) and not just the 24 and 28 GHz bands, T-Mobile officials said in a meeting with FCC staff, including Wireless Bureau Chief Donald Stockdale. “T-Mobile recently announced its plans to deploy 5G infrastructure in 30 markets this year using both 600 MHz and millimeter wave band spectrum,” said a filing posted Wednesday in docket 18-85. “Yet, more spectrum is required to realize the full potential of 5G networks and to promote competition. That is why the Commission should make millimeter wave band spectrum available, as quickly as possible, in a manner that best encourages competition and will produce the most pro-consumer impact.” Commissioners are to vote at their April 17 meeting on a public notice that will move the agency toward an auction of the 24 and 28 GHz bands (see 1803270052). Of the two bands, only 24 GHz “presents any meaningful opportunity for new entrants,” T-Mobile said: The 28 GHz band “is already heavily encumbered based on acquisitions by Verizon.”
The Competitive Carriers Association has major concerns about an NPRM set for a vote at the April 17 commissioners’ meeting proposing to prevent use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain, President Steve Berry told us Tuesday. “The FCC has injected uncertainty at a time when carriers need certainty most,” as they are getting set for the Connect America Fund Phase II and Mobility Find II auctions and “building out 600 and 700 MHz spectrum,” Berry said. “This will most certainly impact the United States’ efforts to win the global race to 5G.” The Rural Wireless Association and NTCA also expressed concerns (see 1804020054). CCA was preparing for its spring meeting last week when FCC Chairman Ajit Pai circulated the draft NPRM. “CCA and its members care about national security and support prosecution of those who violate known national security policy,” Berry said. “Nevertheless, the FCC’s proposal to prohibit the use of USF to purchase any equipment or services produced or provided by any company posing a national security threat is incredibly broad and could impact every aspect of the communications supply chain with or without ever taking USF or purchased Chinese or Russian equipment and/or services.” Berry conceded the NPRM raises complicated issues. “CCA members care deeply about the security of their customers and the country and are focused on working towards comprehensive solutions,” he said. “I would hope any action taken by the FCC will move our nation to a broad solution and not a half measure that unduly paralyzes consumers in rural America.” Many smaller carriers have cut deals with Chinese equipment makers Huawei and ZTE, which worked hard to penetrate the U.S. market (see 1803260037).