FCC approves broadcast spectrum auction rules
| 17 May 2014
The Federal Communications Commission has voted 3-2 to approve a framework for its coming broadcast spectrum auction, with caps in place to ensure that the two largest providers – AT&T and Verizon – can't snag all the new capacity.
The FCC is preparing for a two-sided auction for local broadcasters' unused analogue TV signals, to kick off in late 2015. The first auction will ensure that participating broadcasters get a fair market rate for their assets, and then the FCC will turn around and re-auction the airwaves to mobile carriers.
The spectrum sits in the 600MHz band and is particularly attractive because signals can propagate over longer distances and it allows signals to penetrate through obstacles more effectively. In turn, that makes 4G LTE more cost-effective to deploy and improves in-building coverage.
The original idea was to set aside 50% of the spectrum for rural operators and smaller national wireless companies like Sprint and T-Mobile to bid on, excluding the Big Two. The FCC has decided to reduce that amount, while preserving some capacity for competitors.
The Expanding Opportunities for Broadcasters Coalition (EOBC) and the Consumer Electronics Association (CEA) had called for a framework that supports "open participation by all wireless firms while meeting the price expectations of potentially-willing TV broadcast sellers for their spectrum as repurposed for wireless broadband, maximising the benefits for consumers and public safety."
They argued that bidding restrictions could reduce incentive auction revenues by nearly $5.8 billion, because it's called an incentive auction for a reason: TV stations need a reason to put the airwaves up for sale. Larger players in the mix foment higher bids, the reasoning goes, reducing the incentive for those with "reserved" capacity forego participation in the auction and pursue alternative options in the marketplace. They also said that such moves have failed to spur widespread, long-term participation by small firms in the wireless industry as originally intended. In addition, they said that such restrictions could delay the provision of new wireless services to 68% of the public by a weighted average of nearly seven years.
"New options are emerging for TV stations to use their existing spectrum licenses," said Preston Padden, executive director, EBOC. "To attract the critical mass of broadcasters necessary to make the auction a success, we need competitive bidding among all wireless carriers for every license and the assurance that every TV station will be fully compensated for its spectrum rights."
The National Associations of Broadcasters meanwhile accused the FCC of jeopardising hundreds of TV stations and millions of over-the-air-TV viewers by requiring some non-participating translators and stations to shut down their OTA feeds or move as the FCC consolidates or packs the adjacent auctioned spectrum.
"We are disappointed that today's vote fails the mandate of Congress to hold harmless those broadcasters who choose not to participate in the spectrum auction," NAB executive vice president of communications Dennis Wharton. "Simply put, a deeply-divided Commission chose not to fulfil required obligations under the Spectrum Act."
Those on the competitive telecom side of course applauded the move.
"I commend chairman Wheeler for his leadership on the Broadband Television Incentive Auction," said Chip Pickering, CEO of COMPTEL. The Commission has adopted a balanced set of rules that will raise the necessary funds for FirstNet and help our nation achieve its first, nationwide advanced public safety network. In addition, this action will promote competition in the wireless marketplace and ensure a competitive bidding process where companies of all sizes will have an opportunity to acquire the valuable spectrum needed to supply American consumers with the broadband mobile services they desire."
The Competitive Carrier Association, which represents rural wireless operators, was also pleased.
"Creating a spectrum reserve will allow every carrier, large and small, the opportunity to bid in the auction, which is critically important given the superior propagation characteristics of low-band spectrum," Steven Berry, head of the association, said.
And T-Mobile was of course happy. "T-Mobile appreciates the FCC's vote today moving ahead with the incentive auction and spectrum aggregation proceedings," said Kathleen Ham, vice president of federal regulatory affairs for T-Mobile. "While we would have preferred the FCC to reserve more spectrum for competitive carriers, we are hopeful the auction rules will enhance competition and benefit consumers."