FCC: AWS-3 rules will favor both small and large carriers

FCC ignores Dish request to mandate AWS-3 interoperability with AWS-4
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The FCC voted to move forward with rules for the auction of AWS-3 spectrum later this fall, in what will be the most significant and sizable auction of airwaves since the 700 MHz auction in 2008. Wireless carriers have been clamoring for years for the spectrum, but many technical rules for how some spectrum will be shared with federal users still need to be worked out. And though Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T) are likely going to be major bidders in the AWS-3 auction, smaller carriers could grab some airwaves as well.

The FCC is proposing to auction the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands, collectively known as AWS-3. Congress has mandated the spectrum be auctioned by February 2015.

The FCC said its AWS-3 band plan "makes spectrum available in a mix of spectrum block and geographic license area sizes to meet the needs of large and small wireless providers." AT&T and Verizon had been pushing for large, 10x10 MHz license sizes, while smaller carriers had asked for smaller blocks and license areas.

T-Mobile did not seem too disappointed: "T-Mobile lauds the decision of the FCC today to modify the proposed AWS-3 band plan to create more 5x5 MHz spectrum blocks," the carrier said in a statement. "This pro-competitive decision will provide carriers of all sizes an opportunity to win this valuable spectrum."

However, as Commissioner Jessica Rosenworcel hinted, there could be a silver lining for smaller carriers. If the AWS-3 auction produces a significant amount of revenue to fund the FirstNet public safety broadband network, that could relieve pressure on the FCC to craft rules that maximize revenue for the 2015 incentive auctions of broadcast TV spectrum. That then could allow the FCC to place restrictions on how much spectrum Verizon and AT&T can bid on in the incentive auctions; rules for those auctions are expected in May.

Apart from the license sizes, the FCC also chose to require that AWS-3 spectrum be interoperable with AWS-1 spectrum, which many carriers already use for LTE services. AWS-1 runs from 1710-1755 MHz and 2110-2155 MHz.

The FCC also left it up to carriers to voluntarily have AWS-3 be interoperable with AWS-4 spectrum, which Dish Network (NASDAQ: DISH) controls.

Dish's 40 MHz of AWS-4 spectrum specifically runs from 2000-2020 MHz (for the uplink) and 2180-2200 MHz (for the downlink). Dish argued to the FCC earlier this month for an interoperability requirement for AWS-4, which it said would allow it to deploy its spectrum more easily and enhance its desire to bid for AWS-3 spectrum. Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T) pushed back on that proposal by Dish, saying that the 3GPP was the best forum to tackle interoperability with AWS-4.

Commissioner Michael O'Rielly, a Republican, said that because the FCC gave itself leeway to step in and regulate if the carriers cannot come up with a solution on their own, the AWS-4 interoperability provision amounted to "stealth regulation."

According to FCC staff, the 1695-1710 MHz and 1755-1780 MHz bands will be made available on a shared basis with federal spectrum users and will be used for uplink operations.

Rosenworcel warned that, although the Department of Defense has agreed to move its operations off the 1755-1780 MHz band to the 2025-2110 MHz band, much work still needs to be done to coordinate federal and commercial use of the spectrum. Doing so will require intensive coordination between the National Telecommunications and Information Administration (NTIA) and the FCC.

"The fact that NTIA has yet to publicly determine that clearing these bands is not feasible puts us in a tight spot," Commissioner Ajit Pai, one of two Republicans on the five-member panel, said at the commission's open meeting. "We have a statutory deadline to auction and license the AWS-3 band, so we need to move forward with service rules so that wireless operators can begin planning their bids. But coming up with service rules requires a fair degree of clarity on the status of federal holdings. Getting that clarity, in turn, requires extensive communications with federal users, with NTIA as the go-between. So we end up in a game of telephone, made worse because we typically have to accept the government's say-so on the details of federal use. I hope we may find a better way, but for now we must muddle through."

FCC Chairman Tom Wheeler acknowledged the tough road ahead but said he is confident the FCC can work with the NTIA to figure out the thorny spectrum-sharing issues. "We begin a process today that allows the industry, the bidders, to prepare for an auction," he said. "Our executive branch colleagues and we must quickly resolve the all-important technical details that must be finalized before that auction can actually take place."

CTIA praised the FCC's action on the AWS-3 auction. "Bringing this spectrum to market will play a key role in meeting demand for mobile broadband services, driving investment and innovation and fulfilling the goals of the National Broadband Plan," Scott Bergmann, CTIA's vice president of regulatory affairs, said in a statement. "Although more work remains to be done to maximize commercial access to this band and make available information about the band to potential bidders, the AWS-3 Report and Order is an important step toward bringing this spectrum to market."

For more:
- see this FCC page

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