Incentive-auction rules could impact FirstNet funding, unlicensed use

In the middle of next year, the FCC plans to conduct a commercial auction of valuable 600 MHz spectrum that is now controlled by television broadcasters. Whether it is successful or now, this incentive auction promises to have wide-ranging repercussions on the wireless-communications markets, including the commercial, public-safety and unlicensed sectors.

Given this, the wireless industry—as well as TV broadcasters, who must be willing to clear their spectrum, so it can be subject to bids—is anxiously anticipating the release of incentive-auction rules associated with the incentive auction. FCC Chairman Tom Wheeler wrote in an April 18 blog he has distributed draft FCC commissioners are expected to vote on the rules on May 15.

There are a few known pieces of the incentive auction. By statute, TV broadcasters are not required to vacate spectrum; their participation is voluntary, hence the need for “incentives” to persuade them to move their operations. Participating in the process does not mean that a TV station has to leave the broadcasting business, because they have the option of moving to a VHF channel or taking advantage of spectrum-sharing technologies that allow more than one broadcaster to operate on the traditional 6 MHz swath used by a TV channel.

How much money does a TV broadcaster need to make moving from its current spectrum worth the trouble? No one knows for certain now, but the broadcasters will be able to declare this as part of the “reverse auction” component of the incentive auction. As the same time, a more traditional “forward auction”—commercial entities submitting bids for spectrum—will be conducted.

If everything goes right, the mobile wireless operators’ bids will be great enough to pay the costs associated with the incentives noted in the reverse auction and relocating incumbent broadcasters that want to remain on the air. There are lots of nuances involved, but the more that wireless operators bid in the forward auction, the more airwaves can be made available to support mobile broadband services.

Conventional wisdom is that opening the bidding process to all potential participants without limitation would be the best way to ensure that the greatest amount of spectrum is made available and the greatest amount of revenue is raised. But FCC officials have indicated that they are considering rules that would prohibit certain carriers with large spectrum holdings—namely, AT&T and Verizon—from bidding on certain spectrum in the incentive auction under certain circumstances.