FCC sets bidding rules for spectrum sale

FCC sets bidding rules for spectrum sale
© Greg Nash

The Federal Communications Commission (FCC) on Thursday set the stage for next year’s spectrum auction, approving the bidding procedures for the sale of airwaves that carry signals to wireless devices.

Under the rules, approved along party lines, television stations that no longer fit into the dedicated band of spectrum for broadcasters can be distributed elsewhere. The commission will be allowed to place them in the areas used for downloading and uploading wireless data, or in the band that sits between the two — called the “duplex gap” — to prevent interference.

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The commission will also seek public comments on whether to dedicate an empty channel to devices that might be displaced by moving television stations into the duplex gap.

The FCC set the point at which smaller carriers will be able to bid on a block of spectrum set aside to bolster competition. The reserve is triggered in a certain market when the auction reaches a certain price and volume threshold. Some had hoped the thresholds would be lower.

The procedures also include other items governing the complicated sale, which is the first of its kind. Commissioners who backed the procedures hailed their approval as a crucial step forward toward the historic auction.

“So today, we move from talk, lots of talk, to action,” said FCC Chairman Tom Wheeler.

Opponents of the rules contested the way that television frequencies would be relocated after the auction, which they said would cause interference.

“This is an extraordinary amount of impairment,” Republican Commissioner Ajit Pai said.

“Not only does the commission permit far too much impairment, it concentrates those impairments in the wrong part of the wireless band,” he said. “Specifically, the commission decides to place broadcasters primarily in the downlink wireless portion of the 600 megahertz band, with some inserted into the duplex gap and a smattering in the uplink.”

Wheeler accused the plan’s foes of dealing in worst-case scenarios.

“But it is a good, balanced, logical solution to an incredibly complex, never-tried situation,” Wheeler said, arguing the team that put the rules together was not able to meet many requests for specific policies. “And to assault that activity by bringing up a constant litany of worst-case scenarios is to assault having to deal with reality.”

Industry’s reaction to the vote was mixed, reflecting the complicated dynamics of an auction with high stakes for both broadcasters and wireless providers.

"Today’s FCC vote is a major setback for stakeholders eager for a successful incentive auction,” said Dennis Wharton, the executive vice president for communications at the National Association of Broadcasters, in a statement. "The Commission’s order undermines certainty for reverse and forward auction bidders and irresponsibly undercuts the ability of broadcasters to keep local communities safe and informed.”

Wireless trade group CTIA’s vice president of regulatory affairs, Scott Bergmann, said the vote on the procedures was an “important milestone” but criticized the commission for ignoring “the Spectrum Act’s mandate to protect licensed services from harmful interference.”

In a blog post, AT&T executive Joan Marsh said that the commission’s actions "are a mixed bag and leave significant wireless industry concerns unanswered."

During a marathon meeting with a five-item agenda, the commission also approved another measure aimed at helping industries that use spectrum deal with the way the airwaves will be organized after the auction. The other measure approved Thursday deals with clarifying how devices that use unlicensed spectrum — or airwaves available to everyone — will operate after the auction.

The commission announced earlier in the day that it had approved an order protecting wireless microphones that use licensed spectrum, where users must have permission to access the airwaves. Such systems are frequently deployed at large-scale events, such as a football game where coaches and broadcasters all use microphones or a Broadway show with many performers.

Some worry that as television stations on spectrum bands are rearranged, microphone users might be forced to occupy a smaller amount of space, which could increase interference. The new rules clarify how the FCC will open new airwaves for use by microphones.

Wheeler must still convince broadcasters to put their valuable low-band spectrum up for sale. He has called this a “once-in-a-lifetime” opportunity for the stations, but some wireless providers have expressed reservations about participating. The auction is slated for March 2016.

The value of spectrum has increased as smartphones have become more common. An auction covering a different band of spectrum that closed earlier this year netted the government close to $45 billion.

--This report was updated at 6:47 p.m.