Report: Bidding rules clearing up for spectrum auction

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FCCFederal officials plan to reserve up to a third of licenses sold in a TV airwaves auction next year for smaller wireless carriers under a plan floated recently by FCC Chairman Tom Wheeler.


“While it allows all wireless carriers to bid for airwaves in an effort to drive up revenue from the sale, the plan also potentially sets aside licenses for smaller carriers. And it creates a new standard for how many licenses a wireless company can hold, which could make it easier for Verizon Wireless and AT&T to acquire more airwaves in the future, but hurt Sprint’s ability to do the same,” notes a re/code story. “Details of Wheeler’s plan began leaking out Friday evening after FCC staff and company lobbyists were briefed on some details. Wheeler aides began briefing some lawmakers and staff on Capitol Hill earlier this month. The FCC could vote on the plan and release details to the public as soon as mid-May, although some details may change in the coming weeks as industry lobbyists swarm the agency.”

“All who want to participate in the auction will be able to bid,” Wheeler said in a written statement. “In order to assure coverage and competition in rural America it may be necessary to assure no one can monopolize the bidding.”

Adds re/code: “The rules are for an auction of airwaves set to be reclaimed from TV stations. The FCC is trying to convince station owners in urban markets to give up their airwaves for an undetermined amount of money and either go out of business or share another station’s airwaves. According to four people briefed on the plan, the agency would create two separate classes of licenses for sale in the TV airwaves auction next year, restricted and unrestricted. All wireless companies could bid for the licenses, which would be mostly paired in 5 megahertz blocks in markets across the U.S. If bidding reaches a to-be-determined threshold price, the agency would set aside up to 30 percent of the licenses for companies that don’t currently hold a lot of nearby airwaves.”

That would prevent AT&T and Verizon Wireless (as well as U.S. Cellular, which dominates certain markets) from winning those so-called restricted licenses. It could also pit the two wireless giants against each other in a battle for the unrestricted licenses.

Currently, the agency thinks it will have about 85 MHz of airwaves from broadcasters in urban areas to auction off, sources told re/code. There could be more licenses available in rural areas.

What’s more, the agency has proposed setting limits on restricted licenses so the winners couldn’t immediately flip them and sell them to the larger wireless carriers, sources said.

Wheeler is also talking about adopting new rules, called a “spectrum screen,” which generally limit how many licenses a wireless carrier can hold. Wireless carriers have been arguing for several years about how to set the limits. Under Wheeler’s plan, airwaves held by Sprint and Dish Network that were previously excluded from the screen would now be factored into the calculation.

The agency uses its screen on a case-by-case basis when companies try to buy licenses from other carriers. The new limits wouldn’t be used to hinder carriers from acquiring spectrum in the TV airwaves auction next year, but would apply in the future.

See the full re/code story here.

RBR-TVBR asked Francisco Montero, Managing Partner, Fletcher, Heald & Hildreth, P.L.C., for his thoughts: “Having brushed past the JSA issue for now, the Chairman appears to have returned, full speed on his primary course of holding the spectrum auctions by 2015. With so much attention focused on the “reverse” auction for broadcasters, it is easy to forget that there will be an entirely separate battleground between the wireless carriers for the spectrum that is reclaimed from television stations. Crafting the rules for that portion of the auctions will be no easy task. Amidst all the controversy, It is good to see that the Chairman intends to give smaller carriers an opportunity to vie for the repurposed spectrum.”


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Carl has been with RBR-TVBR since 1997 and is currently Managing Director/Senior Editor. Residing in Northern Virginia, he covers the business of broadcasting, advertising, programming, new media and engineering. He’s also done a great deal of interviews for the company and handles our ever-growing stable of bylined columnists.