FCC releases new auction rules

The FCC this week released new auction rules that are expected to be effective for an anticipated June auction of spectrum in the 1.7 GHz and 2.1 GHz bands to commercial wireless carriers, which are expected to use the airwaves to enhance advanced wireless services offerings targeting enterprise customers.

These rules were needed to make FCC guidelines align with the Commercial Enhancement Spectrum Act passed by Congress in 2004, an FCC source said. That law calls for federal-government entities clearing airwaves for a commercial auction to be reimbursed for relocation costs with proceeds realized from the auction of the spectrum. A recent government report indicated that the 1710-1755 MHz band cleared by the government for the expected June auction would involve $936 million in relocation costs.

Copies of the new auction rules can be obtained on the FCC Web site.

One notable aspect of auction rules not addressed by the report and order was the matter of designated-entity bidding, said Rebecca Arbogast, a wireless analyst for Stifel Financial. In previous auctions, large wireless carriers like Cingular Wireless typically have had small companies that receive designated-entity credits bid for spectrum and effectively pay less for the airwaves.

“There is a petition to restrict whether large entities can, in effect, back smaller entities,” Arbogast said. “The issue is [whether to tighten rules regarding] who can participate in connection with getting the credits for the designated-entity status.”