The FCC's decision to license AWS-3 spectrum bands in more 5x5 MHz blocks than originally contemplated has generated praise from smaller carriers, though Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T) are still likely going to be the major bidders in the spectrum auction scheduled for this fall.
The FCC this week voted on rules to auction the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands, collectively known as AWS-3. The auction will be the most consequential since the 2008 auction of 700 MHz spectrum.
The AWS-3 auction will have two sub-bands, each with its own band plan:
- One of the sub-bands consists of one unpaired 5 MHz block (1695-1700 MHz) and one unpaired 10 MHz block (1700-1710 MHz), licensed in Economic Area (EA) geographies.
- The other sub-band consists of paired spectrum. It includes one 5x5 MHz block (1755-1760 and 2155-2160 MHz) licensed in Cellular Market Area (CMA) geographies, and two 5x5 MHz blocks (1760-1765 and 2160-2165 MHz, and then 1765-1770 and 2165-2170 MHz) licensed in EA geographies. And finally there is one 10x10 MHz block (1770-1780 and 2170-2180 MHz) licensed on an EA basis.
The FCC also mandated interoperability between AWS-3 and AWS-1.
Originally, the FCC had contemplated more 10x10 MHz blocks for the 1755-1780 and 2155-2180 MHz bands, but changed its position sometime in the past few weeks. T-Mobile US (NYSE:TMUS) had argued strenuously for more 5x5 MHz blocks--and the carrier seemed pleased with the ultimate outcome.
"T-Mobile lauds the decision of the FCC today to modify the proposed AWS-3 band plan to create more 5x5 MHz spectrum blocks," Kathleen Ham, T-Mobile's vice president of federal regulatory affairs, said in a statement. "This pro-competitive decision will provide carriers of all sizes an opportunity to win this valuable spectrum."
A T-Mobile spokesman declined to comment directly on whether T-Mobile will participate in the AWS-3 auction, but said the carrier looks at spectrum auctions "opportunistically."
While Steve Berry, president of the Competitive Carriers Association, said the final band plan for AWS-3 was a "significant improvement" over the original one floated a few weeks ago, he was not entirely satisfied. "The Wireless Bureau previously proposed to license the spectrum in only one 5x5 MHz block, and we are pleased the FCC restructured the band plan to promote greater participation in the auction and ensure a device ecosystem," he said in a statement. "Unfortunately, the FCC did not go far enough. The FCC's decision today to license only one paired 5x5 MHz block in smaller Cellular Market Areas (CMAs) is certainly disappointing for most competitive carriers. The use of the larger Economic Areas (EAs) will likely curtail participation among smaller carriers, who have neither the resources nor the scale to bid on license areas of that size and could ultimately reduce revenue from the auction."
U.S. Cellular (NYSE:USM) said it was pleased with the AWS-3 rules. Grant Spellmeyer, the carrier's vice president of federal affairs and public policy, said the band plan "will facilitate the participation by wireless carriers of all sizes, including U.S. Cellular. This will yield additional revenue for FirstNet. In addition, the requirement for interoperability between AWS-1 and AWS-3 will drive handset ecosystem development for the benefit of all consumers, especially those in rural America. We appreciate the FCC's thoughtful response to the concerns we raised."
Other smaller carriers also seemed happy with what the FCC ultimately decided on.
"The availability of multiple paired 5 MHz blocks and a single paired 10 MHz block should encourage auction participation," a spokesman for C Spire Wireless said. "The order's interoperability provision will ensure that carriers of all sizes will have an opportunity to deploy on the spectrum. This is good news for consumers and taxpayers. While we would have preferred not to see the use of legacy CMA license sizes, their utilization for this auction is understandable given the AWS-3 relationship to the AWS-1 spectrum."
C Spire has not yet decided whether it will participate in the AWS-3 auction, but the spokesman said the FCC's order "certainly encourages us and other competitive carriers to participate in the AWS-3 auction."
For its part, AT&T complained that the FCC's final AWS-3 band plan will make it more difficult for bigger carriers to amass wide swaths of spectrum via carrier aggregation technology. Instead, under the new band plan, the FCC has pursued "carrier disaggregation, dividing one proposed 10x10 block of spectrum into two 5x5 blocks."
AT&T had argued for larger carrier blocks and license sizes. "The disaggregated blocks will still draw significant interest at auction, I'm sure," Marsh wrote. "Spectrum after all remains a scarce resource, and this order represents important progress in bringing this valuable spectrum to market. Any fragmentation driven by the auction design will no doubt be fixed in the secondary market--history shows us that this is inevitable (see AWS-1). But secondary market fixes means money was left on the table. And where revenue is essential to pay for relocation costs and to meet other U.S. priorities, that should matter."
Sprint declined to comment on the AWS-3 rules and Verizon said in a statement that the auction is crucial for meeting mobile broadband demands.
"This AWS-3 spectrum will enable wireless companies to meet consumer expectations, particularly those using 4G LTE networks," Kathleen Grillo, Verizon's senior vice president of federal regulatory affairs, said in a statement.
- see this AT&T blog post
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