Former Rep. Waxman, now a T-Mobile adviser, proposes compromises on 600 MHz auction

Former Rep. Henry Waxman, now a lobbyist for T-Mobile US (NYSE:TMUS), wrote in a letter to FCC Chairman Tom Wheeler that the agency should strike a compromise on when to trigger the bidding for reserved spectrum in the broadcast incentive auction and on a proposal to relocate TV stations in the duplex gap after the auction.  

Waxman, who retired from Congress this year, served as key architect of the legislation that authorized the incentive auction of 600 MHz broadcast TV spectrum. Smaller carriers like T-Mobile are worried that it will take too long during the auction for bidding on the reserve spectrum to start, and that Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T) will acquire too much spectrum.

Currently, the FCC plans to set aside up to 30 MHz of spectrum in a given market for carriers with less than 45 MHz of low-band spectrum in that market. Verizon and AT&T will not be able to bid on such reserved spectrum in many markets across the country, especially in major cities. However, if certain pricing "triggers" are not met, then the reserve spectrum does not come into being.

A separate issue is whether TV stations will be allowed to move into guard bands in the 600 MHz band after the auction. Last year, the commission decided to dedicate the "duplex gap," also known as the guard band, to Wi-Fi and other unlicensed uses, as well as for licensed broadcast news microphones, but a staff recommendation reverses that.

Recently, the National Association of Broadcasters, the Radio & Television Digital News Association, Microsoft (NASDAQ: MSFT), Open Technology Institute at New America, Public Knowledge, Free Press and Common Cause were among the parties jointly asking the FCC to back off the staff recommendation to relocate TV stations in the duplex gap.

"While the tug-of-war between unlicensed and licensed uses and between competitive and dominant carriers may seem like a zero-sum game, I believe it is not and propose a reasonable compromise to resolve both issues," Waxman wrote. "Put simply, the Commission should adopt a balanced approach to resolving these competing priorities, but alter the balance depending on whether the ultimate spectrum-clearing target falls above or below 84 megahertz." 

The FCC plans to vote on the rules for the incentive auction at its July 16 meeting. 

Waxman noted that the FCC's record has established an 84 MHz clearing target as a clear "break-point" for the auction; the clearing target just means how much spectrum broadcasters relinquish. Waxman noted the FCC and most parties have regarded the 84 MHz threshold as "the most likely, if not the optimum, target for the incentive auction."

If more than 84 MHz is cleared, Waxman wrote that the FCC will have "greater latitude to expand opportunities for unlicensed operations in the duplex gap. It will also allow the Commission to do more to protect competitive carriers against a lengthy delay in activating the spectrum reserve that is necessary to prevent foreclosure pricing."

Waxman proposed that in that scenario, the FCC should prohibit the relocation of broadcast stations into the 600 MHz duplex gap, and also adopt "a simple, single spectrum-reserve trigger of $2 per MHz-POP" for the top 40 markets.

At spectrum-clearing targets of 84 MHz or less, however, Waxman noted the FCC "must, by necessity, focus on low-band spectrum availability. While competitive carriers rightly want the spectrum reserve to be triggered early in the bidding process, securing public access to a reasonably well developed block of less impaired licensed frequencies may be more desirable for all spectrum users--the dominant incumbents, the non-dominant competitors, and the unlicensed community--than having little or no additional low-band spectrum available at all."

According to Waxman, if the FCC clears 84 MHz or less, the FCC could permit the relocation of broadcast stations into the 600 MHz duplex gap and maintain the status quo spectrum-reserve trigger of both an average price of $1.25 per MHz-POP for the top 40 markets, generating enough revenue necessary to pay for broadcasters' relocation costs, meet statutory obligations and close the auction.

"This compromise proposal is not perfect. Truly balanced approaches rarely are," Waxman wrote. "But this solution would do more than any other to offer expanded spectrum access where it is feasible, simplicity where it is practical and competitive safeguards where they are most needed to protect consumers."

For more:
- see this FCC filing

Related articles:
Unlikely allies fight plan to move TV stations into duplex gap
T-Mobile, leaning on economist's arguments, keeps pushing for larger 600 MHz spectrum reserve
T-Mobile, AT&T each worried about bidding manipulation in 600 MHz auction
FCC's Wheeler reaffirms that incentive auction will take place in Q1 2016
T-Mobile's quest for larger 600 MHz reserve gets boost from DOJ
Wheeler shoots down T-Mobile's push for 40 MHz spectrum reserve in 600 MHz auction

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