The FCC's incentive auction of 600 MHz broadcast TV spectrum is scheduled to start in a little under year from now, and many technical rules need to be resolved between now and then. However, wireless carriers and broadcasters seem to be unified on one key issue: They want the FCC to change its plans for dealing with "impaired" spectrum, or spectrum that will have too much interference to be used.
Specifically, carriers, CTIA and broadcasters alike are taking issue with the FCC's proposal to impair up to 20 percent of the spectrum that carriers will bid on. The FCC will impair the spectrum on an aggregated, weighted and nationwide basis.
"There is a striking consensus, cutting across all stakeholders, that the placement of TV stations in the 600 MHz LTE band will spread impairment throughout the national band plan, with impairments especially likely (and especially extensive) in the largest markets that are key to the success of the auction," AT&T noted in its comments. "The commenters broadly recognize that such impairments will reduce the quality, usefulness, and quantity of the auctioned spectrum."
The larger issue, according to AT&T, is that carriers bidding on the spectrum will not know how impaired the spectrum they may win will be, or in what way it will be impaired. That will force bidders to reduce the amount they will bid to account for the possibility that they will end up with spectrum that is less usable. That, in turn, will further reduce the amount of spectrum that the FCC can clear in the auction.
To fix this, AT&T wants the FCC to keep TV stations "out of the 600 MHz band plan to the maximum extent consistent with reasonably high clearing targets (e.g., 84 MHz)" or do something more radical along the lines of what Sprint has suggested and require frequency specific bidding. "The first option is vastly preferable, because it would allow the Commission to return to its original framework and auction spectrum of uniformly high quality," AT&T said.
For its part, Sprint wrote that the FCC should "review and balance the benefits of producing the largest number of spectrum blocks possible for the forward auction with the benefits of producing unimpaired or only lightly impaired blocks--all while promoting bidder confidence." However, Sprint wants the FCC to make sure that smaller carriers with little or no low-band spectrum will be able to win spectrum in the auction.
The incentive auction will consist of two main parts: The first is a "reverse" auction, in which broadcasters agree to sell their spectrum rights. After the reverse auction, the spectrum will then be moved around or "repacked" based on which stations relinquish their spectrum. Then the FCC will conduct a more traditional "forward" auction in which carriers and other entities bid on the spectrum licenses.
Broadcasters are also up in arms about the impairment issue. "Although commenters disagreed about the appropriate level of impairment, they were uniform in the belief that the 20 percent impairment threshold proposed by the Commission is too great and could harm broadcasters while, at the same time, devaluing the spectrum that the FCC is attempting to reallocate," wrote the Expanding Opportunities for Broadcasters Coalition. "Commenters were particularly troubled by the Commission's proposal to use 'dynamic reserve pricing' as a blunt tool to drive down broadcaster prices and, in the process, create potentially substantial amounts of additional impairment." The Coalition has been pushing the FCC to abandon dynamic reserve pricing.
However, the EOBC wants the FCC to distinguish between some impairment that may be necessary and artificial impairment. For instance, if the FCC gets lots of broadcasters to give up spectrum in major markets like New York City and Los Angeles, then some impairment is going to be inevitable elsewhere. "This necessary impairment is the result of domain constraints that apply to only a limited number of stations as a result of border or other issues," the group wrote. "The only alternative to this necessary impairment is a lowest common denominator clearing target that would allow one constrained market to dictate spectrum reallocation nationwide, leaving a substantial amount of spectrum 'on the table' in the largest markets, where demand for wireless spectrum is the greatest."
The EOBC said the FCC "should not allow the benefits of spectrum reallocation to be so constrained. Instead, the Commission should focus on reducing artificial impairment by reallocating as much unimpaired spectrum as possible in the markets where it is valued the most. This approach will maximize consumer welfare and spectrum value nationwide."
CTIA wrote that it agrees that the FCC's proposed rules "could lead to highly undesirable results that would nonetheless satisfy the Commission's 20 percent 'near-nationwide' standard." The trade group wants the FCC to "closely consider the submissions of commenters in this proceeding and determine a means of accommodating a minimal amount of market variation while adopting a band plan that is as consistent as possible."
- see this AT&T blog post
- see this AT&T filing
- see this EOBC filing
- see this CTIA filing
- see this Sprint filing
- see this T-Mobile filing
- see this Verizon filing
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