FCC Chairman Tom Wheeler envisions offering two classes of licenses in the upcoming auction of TV broadcast spectrum, reports technology news website Re/code. These would include restricted and unrestricted licenses, with restricted licenses reserved for “companies that don’t currently hold a lot of nearby airwaves,” Re/code says.
In referencing “nearby airwaves,” the author likely is referring to low-frequency spectrum such as spectrum in the 700 MHz and possibly the 800 MHz range. The TV broadcast spectrum slated for auction is in the 600 MHz band – and many industry stakeholders argue that such low-frequency spectrum is more valuable than higher-frequency spectrum because it has better propagation characteristics. Those characteristics enable the low-frequency spectrum to provide better in-building coverage and to support communication over longer distances.
According to the Re/code report, Wheeler proposes reserving 30% of auction spectrum for the restricted licenses, which would include limits so that winners would not be able to immediately sell them to AT&T and Verizon, who would not be able to bid for the restricted licenses. Potentially U.S. Cellular also would be restricted from bidding on the restricted spectrum – at least in certain markets, the author says.
The FCC anticipates that about 85 MHz of spectrum will be voluntarily relinquished by broadcasters for the spectrum auction, Re/code reports. Potentially more licenses will be available in rural areas, according to Re/code.
The report also indicates that licenses will be comprised primarily of spectrum paired in 5 MHz blocks and that Wheeler is suggesting imposing a spectrum screen post-auction that would limit how many licenses a carrier can hold. “Under Wheeler’s plan, airwaves held by Sprint and Dish Network that were previously excluded from the screen would now be factored into the calculation,” the report states, adding that such a plan would be bad for Sprint. As Telecompetitor has previously reported, Sprint has substantial spectrum holdings, which would grow even larger if the company were to merge with T-Mobile.
The Re/code report does not touch on another important issue that must be resolved before the 600 MHz auction can proceed. The report doesn’t indicate whether 600 MHz spectrum will be auctioned on an economic area (EA) basis, a cellular market area (CMA) basis or some other basis.
An EA approach favored by larger carriers would divide the U.S. into 176 licenses while a CMA approach favored by smaller carriers would create 734 licenses. Some smaller carriers have said they would not be able to afford to participate in an EA-based auction and the Competitive Carrier Association, which represents smaller carriers, has proposed a partial economic area (PEA) band plan that offers a compromise between the two options.
If the restricted licenses are being fashioned to attract smaller carriers, it would seem to make sense for those licenses to be auctioned on a CMA or PEA basis.
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Amy Schatz, author of the Re/Code article, has corrected her article to state that 30 MHz, rather than 30% of licenses, may be designated as restricted. If the amount of spectrum is 85 MHz, this would represent about 35% of licenses.