The FCC unveiled rules on Friday that will guide its upcoming auction of broadcast airwaves for wireless use, a complex plan that nevertheless promises to remake the channel lineup.
The details for an incentive auction are a key part of FCC chairman Tom Wheeler’s efforts to get enough stations to participate. Success of the auction depends on enough channels voluntarily deciding to give up their spectrum and, if they choose, go dark, share with another station or move to the VHF band.
Wheeler wrote in a blog post that the auction is “a once-in-a-lifetime opportunity to expand the benefits of mobile wireless coverage and competition to consumers across the nation — particularly consumers in rural areas — offering more choices of wireless providers, lower prices and higher quality mobile services.”
The biggest impact will be on many stations in the UHF band, where the FCC plans to clear away each broadcasters’ 6 MHz allotments of spectrum and assemble contiguous spectrum to create uplink and downlink bands for wireless services. Wireless firms will bid on 5 MHz blocks of spectrum.
The purpose of the auction is to meet the increasing demand for wireless devices, such as smartphones, with the so-called “low-band” spectrum. That spectrum held by broadcasters is regarded as the most valuable because it can increase the reach of mobile networks over long distances at far less cost.
The transition, however, is a complicated task. The auction plan includes two parts: A “reverse auction” in which broadcasters will compete against one another to give up some or all of their spectrum. The price will start high and then descend, with stations given the option of dropping out at any point.
The FCC will then hold a “forward auction” in which wireless firms will bid to buy spectrum relinquished by broadcasters.
The commission will use the proceeds from the auction to pay broadcasters for giving up their spectrum, as well as to “repack” stations that chose not to give up their airwaves, yet have to be moved to a new channel to clear the way for wireless use. And an estimated $7 billion of the proceeds is slated to be used to create a new emergency communications network called FirstNet.
FCC members will vote on the guidelines for the auction at an upcoming meeting on May 15. The auction is expected to take place in the middle of 2015, after which there will be 39 months for the spectrum to be cleared.
Broadcasters have been wary of the plans for the auction, arguing that it is being conducted in too hasty a timeframe. They are also worried about whether stations that remain on the air will retain their coverage area in their new assignments, the details of which have created some friction between industry and government officials.
The FCC’s plan calls for retaining the coverage area as of Feb. 22, 2012. An FCC official said that the contours will retain the same households as of that date.
Another issue has been whether there will be limits on the amount of spectrum that one company can buy, as smaller firms have been worried that big carriers like AT&T and Verizon will quickly gobble up the airspace. That issue was not addressed in the roadmap unveiled by the FCC on Friday, but Wheeler has said that he wants to reserve a “modest amount” of “low band” spectrum for carriers that don’t have it. The idea, he has said, is to boost competition.
That plan has triggered opposition from AT&T, which even suggested that it may not participate in the auction with such restrictions on bidding. Joan Marsh, VP of federal regulatory for the telecom, earlier this month wrote that the FCC would have to raise $30 billion to”close” the auction and make it a success. But she wrote that their interest would be diminished if a restriction on bidding in turn drives up their costs for spectrum.
The auction also is expected to free up additional spectrum for unlicensed use, something that Wheeler says will alleviate congestion with the growth of Wi-Fi. The plan is to make it available via a “guard band” — or the gap between the spectrum allocated for broadcasting and that allocated for wireless use. In addition, the FCC plans to make it available on channel 37.