Oct 1, 2008 12:00 PM, By Donny Jackson

Multitiered auction to separate national WiMAX, regional licenses

Six months after failing to attract a qualifying bid for the 10 MHz D Block in the 700 MHz band, FCC officials last month proposed multiple changes in rules governing the spectrum, which is expected to be combined with an adjacent 10 MHz of public-safety spectrum to form the foundation of a shared network.

FCC commissioners were scheduled to vote on a notice of proposed rulemaking for the D Block during a meeting on Sept. 25, after press deadline. However, FCC Chairman Kevin Martin and FCC Public Safety and Homeland Security Bureau Chief Derek Poarch unveiled many key components of the proposed rules earlier in September.

Potential bidders in the first D Block auction told federal officials that the auction failed because the rules attached to the spectrum made it economically unviable — most wireless operators were not in a financial position to bid on a nationwide license, particularly at the 99.3% population coverage requirement set by the FCC and the ill-defined hardening of network components desired by public safety.

To avoid a similar fate next year, Martin said the FCC plans to take a multitiered approach to the next D Block auction. While continuing to pursue a nationwide commercial partner, the FCC also would conduct two technology-based auctions — one for WiMAX and one for LTE — in which 58 regional licenses would be available.

“In effect … the commission would be conducting almost three auctions and comparing the bottom line of those three auctions,” Martin said during a conference call with reporters.

In choosing among the winners of these three simultaneous auctions, the FCC would focus on coverage, Martin said. As a result, the winning bidder of the nationwide license — which would require a reserve-price bid of $750 million under the new proposal, about $600 million less than in the first auction — would be chosen over regional-license winners, unless all 58 regional licenses for a particular technology received winning bids. In that case, the combination that earns the most money for the U.S. Treasury would be declared the winner, said Robert Kenny, spokesman for the FCC.

While FCC and public-safety officials have expressed a preference for a nationwide commercial partner, many industry observers believe the nationwide D Block license will not receive much interest from bidders again. If that's the case, the Public Safety Spectrum Trust (PSST) — the licensee for public safety's 10 MHz of nationwide spectrum — likely would have to negotiate a partnership agreement with multiple commercial operators.

“It would complicate things, that's for sure,” said John Powell, chairman of the interoperability committee for the National Public-Safety Telecommunications Council.

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