Why commercial auctions matter to public safety, government and enterprises

We’ve recently been including articles about FCC auctions of radio spectrum to commercial wireless carriers as part of Newscan. A reasonable question to this inclusion is, “Why?”

Sure, our target readers—public-safety, government and enterprise personnel—are wireless-carrier customers. However, based on the outcome of past FCC spectrum auctions, the fact is that bidding on this spectrum may not be a practical option for these groups. Commercial spectrum is licensed to the highest bidder, and, not surprisingly, the highest bidder in most cases has been a wireless carrier.

But spectrum auctions are crucial to our readership for another reason, thanks to the 2012 legislation that reallocated the 700 MHz D Block to public safety. The legislation established FirstNet as the entity tasked with building and maintaining a nationwide broadband network for public safety. That law also earmarked $7 billion in federal funding to FirstNet—a $2 billion loan to get started, and another $5 billion scheduled to be available later.

None of this money will come from traditional tax revenue. Instead, all of the financial support is slated to come from revenue generated by the FCC from a series of spectrum auctions. The first of these auctions for the 10 Mhz of spectrum in the 1900 MHz band known as the H Block began last week.

It’s the first spectrum auction conducted by the FCC since bids for 700 MHz frequencies generated almost $20 billion for U.S. Treasury coffers in 2008. During the six years since that auction, wireless carrier representatives have told policymakers on Capitol Hill and in the FCC that the never-ending demand for mobile bandwidth has created a spectrum crisis. The bandwidth crisis has prompted the FCC to make increased spectrum availability for commercial carriers one of its highest priorities.

Despite this clamor for more spectrum, none of the four nationwide carriers are participating in the H Block auction. Instead, the expected favorite to win the airwaves auction is satellite provider Dish Network, which has been accumulating spectrum through a series of moves in recent years. Dish Network  has promised to bid at least $1.56 billion for frequencies in the H Block . That bid would help the U.S. Treasury recoup the initial $2 billion loan to FirstNet.

Nationwide wireless carriers Verizon, AT&T, Sprint and T-Mobile are expected to participate in some of the FCC’s future auctions. For example, sometime during the next year, the FCC is expected to auction 50 MHz of AWS-3 spectrum, which will pair 1755-1780 MHz airwaves currently used by the federal government with 2155-2180 MHz frequencies that have been fallow for some time.

In addition, the FCC plans to auction an unknown amount of prime 600 MHz spectrum through an incentive-auction process that is designed to encourage broadcasters in the band to clear the airwaves they now use to transmit television signals to over-the-air consumers. This auction has been delayed until at least mid-2015.

Industry analysts indicate that revenues from both of these latter auctions could be huge, but the amount of money that eventually will be directed to FirstNet will be complicated by the need to compensate/relocate incumbents. Still, most believe that these auctions will generate enough revenue to cover the $7 billion that Congress has promised FirstNet. In fact, T-Mobile representatives have told the FCC that this figure will be reached before the incentives auctions even take place. Hopefully, that will be the case. In the meantime, IWCE’s Urgent Communications will work to help our readers monitor the situation.