WASHINGTON--The FCC voted to begin setting rules that will govern voluntary incentive auctions of broadcast TV spectrum for mobile broadband use.
The FCC voted 5-0 to begin the march toward the auctions and opened the proposed rules for public comment, a process that is expected to draw heavy comments from wireless carriers and broadcasters. The final rules are expected in 2013.
FCC Chairman Julius Genachowski said that the incentive auctions will be the first of their kind in the world. He called the proposed rules a "strong, thoughtful, thorough and pathbreaking" effort.
The auctions, which CTIA and the wireless industry have been advocating for years, were authorized in legislation Congress passed and President Obama signed in February. The auctions are expected to take place in 2014 and will be the first major auction of spectrum since the 700 MHz auction in 2008. The incentive auctions are a major piece of the FCC's goal of freeing up 300 MHz of spectrum by 2015 and 500 MHz by 2020 to meet increasing mobile data demands; the FCC's national broadband plan called up for up 120 MHz of broadcast spectrum to be auctioned.
The rulemaking seeks comment on plans for the auction of broadcast spectrum as well as rules for how wireless carriers will bid on the spectrum. Additionally, the proceeding outlines specifics on how remaining broadcasters will be moved off the spectrum, a process often referred to as "repacking." Broadcasters are expected to have significant input on the plan.
Under the FCC's proposed rules, broadcasters will submit bids to relinquish their 6 MHz pieces of spectrum in a reverse auction where the FCC will pay them. The FCC's band plan for the broadcast spectrum carriers would use calls for 5 MHz blocks. The process is voluntary for broadcasters, but many worry that broadcasters might not give up their spectrum based to their previous resistance to the auctions.
After broadcasters give up their spectrum, it will be "repacked" so that broadcasters that do not give up their spectrum can stay on the air. Then the FCC will conduct a traditional "forward" auction in which carriers will bid for the freed spectrum.
The FCC anticipates that there will be 6 MHz guardbands to separate spectrum blocks used by carriers, and that the "white space" between the blocks will be open for unlicensed use.
"Since spectrum is a finite resource, we're pleased the Commission has begun the process of establishing the rules that will fulfill the goals of the recently adopted, bipartisan spectrum legislation," said CTIA President and CEO Steve Largent. "While spectrum fuels the wireless industry's 'virtuous cycle' of innovation and competition, its impact on the nation's economy is also significant. Analysts estimate that bringing 500 MHz of spectrum to market will increase U.S. GDP by $166 billion, add at least 350,000 new U.S. jobs, generate an additional $23.4 billion in government revenues and result in a $13.1 billion increase in wireless applications and content sales."
In the legislation passed in February, Congress said that $7 billion raised from the auction should be used to help construct a nationwide, interoperable broadband network for public safety, meaning the FCC will try and design an auction that raises more money than that.
Republican FCC Commissioner Robert McDowell urged "regulatory humility and restraints" for what he said was the most complex undertaking the FCC has started since he came to the FCC. "It's like moving from 2-Dimensional chess to 3-Dimensional chess and perhaps 3-Dimensional chess while blindfolded," he said. McDowell said the FCC should be mindful not to impose spectrum caps that might prohibit certain carriers--likely a reference to AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ)--from participating in the auctions.
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