Spectrum Auction Item May Get Booted From FCC Agenda

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By Lydia Beyoud

July 14 — The FCC might postpone its scheduled July 16 action on spectrum incentive auction procedures because of major pushback from stakeholders and lack of support by a majority of commissioners, multiple telecommunications industry sources told Bloomberg BNA.

An official from the Federal Communications Commission told Bloomberg BNA late July 14 that deliberations on whether to keep the item on the agenda were ongoing.

Broadcasters, tech and wireless companies, and public interest groups are all deluging the agency in the run-up to its July 16 meeting. Unless the FCC postpones action, that lobbying could continue until the evening of July 15, after the agency announced late July 10 that it would waive its usual rules on contacts in the days before a meeting.

A proposal to place broadcasters who would be repacked after the auction into a portion of spectrum intended for use by Wi-Fi and other unlicensed users, known as duplex gap guard bands, is proving to be one of the most contentious issues the commission faces. Placing some broadcasters into the duplex gap would help the FCC achieve its spectrum-clearing targets and help bring in more revenue during the auction. Opponents of the measure said the proposal would introduce too much interference for unlicensed users and others in the duplex gap.

Multiple industry sources, speaking on condition of background, said FCC Chairman Tom Wheeler did not have enough support early on July 14 to push that provision through.

Top House Energy and Commerce Committee Republicans wrote to Wheeler on July 14 urging him to postpone a vote on the item to allow for more public comment on new information released by the Incentive Auction Task Force.

“Releasing data of this complexity and importance in such close proximity to the open meeting impairs the ability of the public and industry to provide meaningful and considered feedback to the commission,” Committee Chairman Fred Upton (R-Mich.) and Communications and Technology Subcommittee Chairman Greg Walden (R-Ore.) said in the letter.

The National Association of Broadcasters met with staff in each commissioner's office and with Howard Symons of the Incentive Auction Task Force to ask for significantly more data on the task force's clearing target determination simulations, according to a July 14 ex parte.

The FCC had provided over 100 repacking simulations in June 2014, but on July 10 the agency provided only six simulations for three spectrum clearing targets, NAB noted. “In this instance, releasing only two simulations per clearing target is akin to asking a person to accurately predict the National League pennant winner by watching only two games from the 162-game Major League Baseball schedule,” NAB said.

The trade association also pointed out what it called “a serious flaw in the current auction design” evidenced in the appendix released July 10 by the task force to provide additional details on target clearing and repacking scenarios.

AT&T OK With Broadcasters in Duplex Gap

AT&T Inc., however, said the incentive auction task force's approach for broadcaster relocation in the guard bands in order to achieve a specific clearing target, while not ideal, could be “the approach that best minimizes in-band impairments,” according to a July 10 agency filing.

AT&T said it was taking that stance in the belief that downlink transmission only requires a minimum of 5 megahertz of separation, rather than the 10 MHz that is the industry standard.

More important to AT&T is reducing the amount of overall wireless band impairment the FCC simulation study contemplates, particularly along border areas, the carrier told the Republican commissioners' legal advisors, according to the filing.

“The FCC should commit to keeping the aggregate impairment threshold at no more than the quantifiable border impairments at the time of auction plus an incremental 3 percent,” AT&T said, according to the agency filing.

“It’s important in the border markets as well as in the largest markets to get as much spectrum to sell to the wireless companies, even though it may be impaired,” Mark Fratrik, vice president and chief economist for BIA/Kelsey, told Bloomberg BNA.

At stake in the incentive auction is arguably some of the best spectrum for wireless carriers: an estimated 100 megahertz (MHz) of “beachfront” airwaves in the 600 MHz band, which the commission will try to reclaim from television stations and then sell to wireless carriers, with a portion of the proceeds to be paid back to the broadcasters. The mobile industry is expecting valuable, low-band spectrum prized because of its ability to travel through buildings. Congress is expecting billions of dollars in revenue for the Treasury. Broadcasters that choose to stay in business will have their signals repacked into different spectrum bands, with the potential for spectrum sharing. But the proposal to relocate some broadcasters into the duplex gap threatens many of the policy goals that have been advanced for the auction, commenters have said.

Public Knowledge proposed other options to the duplex gap relocation proposal, according to a July 13 ex parte. “Doing so does not invariably mean that the Commission would give up the possibility of recovering 84 MHz or more of spectrum,” PK Senior Vice President Harold Feld told the task force on July 9.

“The duplex gap is the means to the end of securing three channels in every market. To the extent that the Commission expands the vacant channel capacity post-repacking, this would mitigate the loss of the duplex gap in the specific markets in question,” Feld said.

Tech giants Broadcom Corp., Google Inc., and Microsoft Corp. jointly spoke or met with the staff from four commissioners' offices on July 6 and 7 to make the case for keeping broadcasters out of the duplex gap, according to their July 8 ex parte. Such a decision would detract from the goal of identifying three TV white space channels per market for consumers, the companies said.

DE Credit Cap Dispute

Another battle is brewing among groups concerned with the FCC's competitive bidding rules for designated entities. While the Rural-26 DE Coalition has asked Commissioner Mignon Clyburn to approve a $10 million cap on bidding credits awarded to any qualified bidding in a partial economic area with a population of 500,000 or fewer, the Auction Reform Coalition raised concerns with that figure with the chairman's office.

ARC is specifically concerned with the number of markets which might be subject to the lower $10 million cap, according to a July 10 agency filing. The group said it understands Wheeler's office is considering a definition that would define “smallest markets” as those with a population of less than 500,000. By that definition, “more than 70 percent of all PEAs (297 out of 416) would be subject to the cap,” ARC said.

A $10 million cap in a majority of PEAs “would mean that a very small business qualifying for a 25% bidding credit would reach the cap spending $40 million dollars in these markets,” the group said. That result would “completely defeat the statutory requirement that the Commission avoid an undue concentration of licenses and foster the broad dissemination of licenses to DEs,” ARC said.

If the FCC adopts a separate cap on bidding credits based on market size, “the rule must be sufficiently narrow so as not to limit the ability of legitimate small businesses to implement flexible business plans that provide them the opportunity to compete effectively, by both acquiring multiple licenses within a market and acquiring spectrum across a broad cross section of markets, small, medium and large,” ARC said.

Rural-26 said in its ex parte that the $10 million cap would help small, facilities-based telecom providers to compete in the auction in their rural markets and would protect “bona fide DEs and rural telecommunications providers from potential abuse of the DE program.”

The group said the FCCs should create two equal, non-cumulative 25 percent bidding credit options, one for non-revenue-based rural communications companies in addition to the proposed 25 percent revenue-based small business bidding credit. The additional credit option would help “close the gap between large and small auction participants,” Rural-26 said.

U.S. Cellular Corp. told Commissioner Ajit Pai that the proposed revisions to the competitive bidding rules “would create a variety of issues with respect to the future participation” of the company and similar entities in the DE program and U.S. Cellular's ability to participate in future auctions, according to a July 9 agency filing.

“In particular, we noted that limiting the amount of spectrum a DE may lease to its disclosable interest holders, but not to other entities, would uniquely disadvantage entities that have invested in DEs,” the company said.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

Text of the Republicans' letter is at http://op.bna.com/der.nsf/r?Open=jkid-9yet3h.

Text of the NAB ex parte is at http://www.nab.org/documents/newsRoom/pdfs/071415_duplex_gap_exparte.pdf.

Text of the FCC's July 10 repacking simulations letter is at http://apps.fcc.gov/ecfs/document/view?id=60001114811. Text of the appendix is at http://apps.fcc.gov/ecfs/document/view?id=60001114812.

Text of AT&T's ex parte is at http://apps.fcc.gov/ecfs/document/view?id=60001114736.

Text of the Broadcom, Google, Microsoft filing is at http://apps.fcc.gov/ecfs/document/view?id=60001113687.

Text of the Public Knowledge filing is at http://apps.fcc.gov/ecfs/document/view?id=60001115065.

Text of the Rural-26 filing is at http://apps.fcc.gov/ecfs/document/view?id=60001114771.

Text of the ARC filing is at http://apps.fcc.gov/ecfs/document/view?id=60001114722.

Text of the US Cellular filing is at http://apps.fcc.gov/ecfs/document/view?id=60001114532.