FCC Grants B-Block Build-Out Extension but Not for Everyone

Two months after giving holders of 700 MHz A-block spectrum more time to build out their networks, the FCC yesterday granted an extension for 700 MHz B-block licensees as well. Both types of licensees now could have until at least December to complete construction to at least 35% of their coverage area.

The B-block deadline extension does not apply to carriers that already have filed construction notices for any of their B-block holdings, which would include U.S. Cellular and some other carriers. It also may not apply to larger carriers that have resisted efforts to increase interoperability in the lower 700 MHz band. Details on that later in this post.

AT&T didn’t immediately respond to an inquiry about its B-block construction status, but if it’s not disqualified from the deadline extension on that basis, it would appear that the company would be disqualified for the second reason.

Deadline rationale
Licensees who won 700 MHz spectrum in the original auction have held it for approximately four years and were to have reached the 35% milestone by June of this year. But construction on A-block and B-block networks has lagged behind other 700 MHz bands auctioned at the same time.

A considerable amount of A-block and B-block spectrum is in the hands of small rural carriers who have had difficulty obtaining handsets to work on their networks. Because none of the large national carriers have built out the A-block and the volumes that the small carriers require are so low, the small carriers have had difficulty obtaining devices — particularly the most popular devices — at reasonable prices, if at all.

Theoretically B-block license holders should be able to ride a larger carrier’s coattails in obtaining devices – and perhaps that is why the FCC initially granted a deadline extension only for the A-block. But it’s quite common for B-block license holders to also hold A-block spectrum — and it would be impractical for those carriers to use different devices for the different spectrum blocks.

The FCC has been exploring lower 700 MHz band interoperability issues for several months and could take action before the year is over to address the situation. Actions could include requiring carriers with holdings in the A, B or lower C-band to use devices that use common electronic components. Initially that was the plan for the entire lower 700 MHz band but AT&T, citing interference concerns, persuaded international standards bodies to create a separate band that omitted the A-block. Rural telcos dispute AT&T’s interference claims.

In granting the B-block extension, the FCC said it would not apply to carriers that already have filed construction notices for spectrum in that block. In addition the commission said the extension would not apply to lower 700 MHz B-block licensees who filed comments or reply comments about 700 MHz interoperability issues but “did not claim that a lack of interoperability has impeded their ability to take advantage of the benefits of economies of scale in order to build out their networks.” That comment appears aimed at AT&T.

AT&T won some of its B-block spectrum holdings in the initial auction, which would mean the original June 35% build-out deadline would apply to those holdings. Recently AT&T acquired some additional B-block spectrum from Verizon Wireless and build-out deadlines for that spectrum may have been pushed out as a result.