FCC chairman explains D Block auction plans
Auction of the 700 MHz D Block will provide wireless operators with the option of bidding on the spectrum on a nationwide or regional basis, FCC Chairman Kevin Martin recently said while unveiling tentative agenda items for the commission’s Sept. 25 meeting.
One of the most-anticipated items on the agenda is an expected notice of proposed rulemaking that would detail the rules for auctioning the D Block, a 10 MHz swath of spectrum that the FCC hopes will be paired with an adjacent 10 MHz of public-safety broadband spectrum to form the foundation of a public-private broadband network that could be used by public safety. The FCC attempted to auction the D Block on a nationwide basis earlier this year, but no qualifying bids were received.
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 license would be available, FCC spokesman Robert Kenny said during an interview with Urgent Communications.
“In effect, … the commission would conducting almost three auctions and comparing the bottom line of those three auctions,” Martin said last week during a conference call with reporters, the transcript of which was made available this week.
In choosing between the winners of these three simultaneous auctions, the FCC’s primary focus would be coverage, Martin said. As a result, the winning bidder of the nationwide license—requiring a minimum bid of $750 million, which also is the reserve price—would be chosen over regional-license winners, unless all 58 regional licenses for a particularly technology received winning bids. In that case, the combination that earns the most money for the U.S. Treasury would be declared the winner, Kenny said.
If no nationwide bids are made, the FCC would look at the regional-license bids. At least 50% of the U.S. population would have to be covered by a given technology to declare the auction a success, Kenny said. If this threshold is reached by bidders for both WiMAX and LTE, whichever technology provides the most coverage would be used for the network, he said.
Meanwhile, if regional licenses remain unclaimed within the winning technology, those licenses will be available for auction at a discounted rate—50% less than the normal minimum bid for those regions, Kenny said.
“That does not guarantee that every license would get sold but that would significantly reduce the opening bid for almost any region, and we would only do that after we had reached the point where we would actually be awarding licenses,” Martin said last week. “I think that [would] provide, to the maximum extent possible, the likelihood that we would actually get as much of the country covered.”
In addition to the auction approach, Martin clarified several other matters of interest related to the D Block. Most notably, the Public Safety Spectrum Trust (PSST) would continue to hold the nationwide license for public safety’s broadband spectrum and that potential spectrum lease payments—a source of considerable controversy during the first auction—would be capped at $5 million per year, Kenny said.
PSST Chairman and CEO Harlin McEwen said he has not seen documentation of the FCC proposal yet.
“For the most part, it sounds pretty good, but we don’t know the details,” McEwen said.
McEwen expressed concern about the proposed $5 million cap on the annual spectrum fees that the PSST would be allowed to charge the commercial partner for using public safety’s spectrum. With the PSST lacking any way to generate revenue until subscribers begin joining the network, “we’ve been talking about $12-15 million [per year] during the first few years, until we know where we’re going with this.”
Martin expressed hope that the FCC would be able to approve D Block rules by the end of the year. The auction likely would be conducted three to six months later, to give potential bidders time to prepare strategies and secure necessary financing.
