FCC pushing 600 MHz broadcast incentive auction to mid-2015

FCC Chairman Tom Wheeler said the commission is moving the start of the 600 MHz broadcast TV spectrum incentive auctions to mid-2015 from a previously scheduled start of sometime in 2014 to make sure the agency gets the technology and policy correct. The decision could have major ramifications for how other spectrum auctions scheduled to take place before the incentive auctions proceed.  

Wheeler, who took office in early November, wrote in an FCC blog post that he has been consumed with the incentive auctions since coming on board and that "managing a complex undertaking such as this also requires an ongoing commitment to continuously and honestly assess its readiness and its project plan. "

"I believe we can conduct a successful auction in the middle of 2015.  To achieve that goal, there will be a number of important milestones along the way," he wrote.

Wheeler wrote that to make the incentive auction a success the FCC "absolutely must make fact-based policy decisions in an open and transparent manner.  Beyond the policy issues, however, we must also exhaustively test the operating systems and the software necessary to conduct the world's first-of-a kind incentive auction. This includes ensuring that such systems are user-friendly to both broadcasters and wireless carriers who will participate."  

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 and uncertainty over how much money they will ultimately receive.

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 wireless carriers will bid for the freed spectrum. There is an ongoing debate over what the "band plan" should be for the spectrum once broadcasters are repacked. The final rules for the auction have not been set.

Under the new plan, the FCC staff will present policy recommendations in a proposed Report and Order for the commission's consideration early next year. The FCC would then vote on those recommendations the spring. At the same time, while it is developing the final auction rules, the FCC will develop procedures for how the auction will be conducted, Wheeler wrote. In the second half of 2014 the FCC's incentive auction task force plans to release a public notice on auction procedures "that will provide additional details and seek comment on how the specific parts of the auction will actually function."

Perhaps mindful of the problem-plagued launch of Healthcare.Gov, the website at the heart of President Obama's health care law, Wheeler wrote that "for the incentive auction to be a success, we must also ensure that the operating systems and software to run it work from the moment the first bid is placed, until the final broadcast station is relocated or 'repacked.'"

"I have often defined the complexity of this multi-part simultaneous process as being like a Rubik's cube," Wheeler wrote.  "As part of our auction system development, we will check and recheck the auction software and system components against the auction requirements, and under a variety of scenarios replicating real life conditions.  Above and beyond our normal auction preparation procedures, our project plan for the incentive auction includes several software demonstrations for potential users in addition to the 'mock auction' we typically hold to ensure the software and system performance.  Only when our software and systems are technically ready, user friendly, and thoroughly tested, will we start the auction."

Wheeler wrote that the whole FCC knows that the incentive auctions are designed to help fund the nationwide, broadband public safety network known as FirstNet, but that "these imperatives are balanced with the recognition that we have but one chance to get the incentive auction right." 

The FCC is conducting several auctions before the broadcast incentive auctions. The FCC will auction the 1900 MHz PCS H Block on Jan. 22, with Dish Network (NASDAQ: DISH) seen as the lead bidder and most likely winner of that 10 MHz block of paired airwaves.

Meanwhile, as part of the auction of AWS-3 spectrum, Congress has directed the FCC to allocate and license the 2155-2180 MHz band by February 2015. The Department of Defense and the broadcasting industry recently struck a deal that will clear the way for the FCC to auction the 1755-1780 MHz band, under which the Defense Department will move its operations off the 1755-1780 MHz band to the 2025-2110 MHz band. The thinking is that the 1755-1780 MHz band could be paired with the 2155-2180 MHz band.

Multiple carriers are expected to bid for the AWS-3 airwaves, and how that bidding plays out could determine which carriers line up to bid for the broadcast TV spectrum. Getting more money from earlier auctions as down payments for FirstNet's construction could also put less pressure on the FCC to get more money from the incentive auctions, analysts have said.

The response from industry players to Wheeler's plan seems to be that while the demand for more spectrum is high, they recognize the need to get the incentive auctions right. "While AT&T is eager to see new spectrum allocations brought to market as soon as practical, we appreciate the enormity of the task the commission faces and believe that it is essential that time be taken to get it right," Joan Marsh, AT&T's (NYSE:T) vice president of federal regulatory, said in a statement. "The schedule the chairman announced today to develop a robust policy and systems framework for the auction is both prudent and reasonable and AT&T looks forward to continuing to work with the FCC on this important proceeding."

"Today, the FCC sent a clear message regarding the importance of moving forward with predictability regarding our nation's spectrum assets," Jonathan Spalter, chairman of technology policy group Mobile Future, said in a statement. "Getting the spectrum incentive auction right is as important as getting it done.  One of the keys to getting it right is to ensure open participation for all interested bidders committed to making this significant investment in our nation's mobile future."

"Designing rules for the auction is no easy task, but the FCC can get it right.  I strongly encourage the Commission to utilize smaller license sizes, along with appropriate spectrum aggregation limits, to encourage greater participation," Competitive Carriers Association President Steve Berry said in a statement. "No carrier should be discouraged or prevented from participating--the result would certainly be a loss for consumers, industry, and the economy."

Wheeler indicated in a Dec. 2 policy address that one of the agency's key goals is ensuring that all carriers have enough spectrum to compete and operate their networks.

For more:
- see this FCC post
- see this Broadcasting & Cable article

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