FCC 2.5 GHz Auction to Start July 29, Will Have a Strong Rural Focus

The FCC said yesterday that the auction of vacant spectrum in the 2.5 GHz band, designated as Auction 108, will begin on July 29. The auction will include approximately 3,000 licenses to be issued by county, with up to three licenses per county.

There are just over 3,000 counties in the country, and available licenses will be primarily in rural areas. T-Mobile holds licenses to the spectrum in many areas and is likely to bid in the auction to expand those holdings.

The ability to obtain a license for a single county should be attractive to smaller entities such as wireless internet service providers (WISPs). Some auctions use larger partial economic areas (PEAs), effectively precluding smaller bidders from participating because they cannot afford and do not need entire PEAs.

Less attractive to the smaller providers is the FCC’s plan to use an ascending clock format for the auction. The Wireless Internet Service Providers Association (WISPA) had favored a sealed bid approach, arguing that a multi-round approach, such as an ascending clock approach, would make it easier for a company like T-Mobile to average its bids across the country.

Smaller providers will have the opportunity to gain bidding credits in the auction, however. In a public notice about the auction, the FCC outlines several types of credits, including:

• A 15% rural service provider credit for companies that have fewer than 250,000 combined wireless, wireline, broadband and cable subscribers and that serve predominantly rural areas, defined as counties with a population density of 100 or fewer people per square mile
• A 15% small business credit for companies with average annual gross revenues that do not exceed $55 million for the preceding five years
• A 25% very small business credit for companies with average annual gross revenues that do not exceed $20 million for the preceding five years

Companies cannot combine credits. If, for example, a company is eligible for the rural service provider credit and the small business credit, they can only claim one of the credits.

Key dates for the 2.5 GHz auction include:

• April 27: Short-form application filing window opens
• May 10: Short form application deadline
• June 23: Upfront payments due
• July 26-27: Mock auction
• July 29: Bidding begins

The three licenses potentially available in a county are of different sizes, as indicated below.

The FCC notes that the total number of licenses available may be adjusted slightly as the commission is still processing some applications for Tribal licenses. Recognized tribes were given the opportunity to obtain licenses for their territories prior to the auction and 335 such licenses have been awarded, according to a press release about the FCC 2.5 GHz auction.