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The FCC on Thursday tied up the enormous complexities of the upcoming broadcast spectrum incentive auction into a very tangled bow. Though the Commission still has to work out some of the technical details before the auction kicks off next year, potentially repurposing a good chunk of the UHF TV airwaves for mobile broadband use. But the basic framework of the auction is now in place, and the two largest mobile carriers aren’t pleased with the results.
Both AT&T(s t) and Verizon(s vz) will face restrictions on how much 600 MHz spectrum they can bid on in major markets. Those rules are put in place to ensure Sprint(s s), T-Mobile(s tmus) and rural and regional carriers won’t get drowned out by Ma Bell and Big Red’s enormous bidding power.
Specifically, the FCC will create reserve a chunk of spectrum up to 30 MHz in size in markets where competition for spectrum is particularly intense. Carriers who already own a lot of low-band spectrum — i.e. Verizon and AT&T, which own the majority of the country’s 700 MHz airwaves — won’t be able to bid on those licenses.
As for the auction itself, I went into detail about its complexities in an earlier post, but here are the basics: TV stations can opt to sell off their broadcast channels, naming their own prices in a reverse auction, and choose either to go off air or share channels with other broadcasters. The FCC will repackage those frequencies into licenses usable for cellular services and auction them to the highest bidder in a forward auction.
Who else is POed?
AT&T and Verizon aren’t the only ones who left the FCC’s open meeting Thursday feeling short-shrifted. You can count the FCC’s two Republican commissioners — who voted against the order — as well as Sprintand National Association of Broadcasters (NAB) among those displeased with how the rules turned out.
Though Sprint got the auction rules it wanted, it found itself facing big obstacles to any future spectrum deals. The Commission revised its rules about how much spectrum any one carrier can hold in any given market to include the large swaths of airwaves Sprint holds in the 2.5 GHz band. Now, when weighing any possible spectrum deal, Sprint will look a lot more frequency-rich than it has in the past. That will make it much more difficult for Sprint to buy T-Mobile, which is exactly what Sprint’s new corporate owner SoftBank hopes to do.
The NAB panned the auction rules, claiming they don’t adequately protect broadcasters who choose not to participate in the auction. Even if TV stations sit it out, they’ll still be crammed into the same overhauled UHF band as those who stations who choose to consolidate into shared TV channels.
“The FCC cavalierly concluded that broadcasters forced into a shrunken TV band won’t be guaranteed full compensation for this disruptive move – as was the express intent of Congress,” said NAB Executive Vice President of Communications Dennis Wharton in a statement.
As for who came out of the process pleased, there’s the Competitive Carriers Association (CCA), whose rural and regional carrier members will now have a leg up in bidding for spectrum. In addition, the advocates for more unlicensed airwaves scored a victory.
One of the results of that reconfiguration of the 600 MHz band will be a lot of leftover scraps of spectrum that the FCC plans to lasso together and turn into unlicensed bands, which can be used for white space broadband and other free-to-access wireless technologies. After much lobbying from groups like WiFiForward, the FCC will allocate more spectrum to those bands. A full 20 MHz is being designated unlicensed in every market, and depending on how the spectrum repacking process works out, the FCC could increase that number to as much as 34 MHz.
So what’s next? There is still plenty of debate waiting to happen over the details of the auction process, and the FCC could even revise today’s rules before the auction is scheduled to take place next year. And if it all works out we might have to wait a while before seeing any mobile services use these frequencies. The FCC is giving broadcasters up to 39 months to vacate their airwaves after the auction concludes. That would put us well into 2018 for any stragglers.