Incentive Auction Rules Expected to Get Vote at May FCC Meeting, But Controversy Looming
FCC Chairman Tom Wheeler is expected to tee up an order on the TV incentive auction for the commission’s May 15 meeting, agency and industry officials told us, as what is expected to be a busy couple of months at the FCC on wireless issues seems to be developing.
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The commission likely will be asked to vote at the meeting on both the auction rules and a separate order on mobile spectrum holdings, these sources said in interviews last week. The latter order addresses rules that could limit bidding by the nation’s two largest carriers, Verizon Wireless and AT&T, in the incentive auction, though likely not the AWS-3 auction, the other big auction on the FCC’s mid-range agenda, sources said. If Wheeler, as expected, proposes some restrictions, that would likely mean a dissent by Republicans Ajit Pai and Mike O'Rielly, industry and FCC officials said.
The actual auction rules won’t be complete and will raise other issues to be resolved most likely by staff acting on delegated authority in a series of public notices, agency officials said. While less potentially explosive than spectrum aggregation, one potentially divisive issue is what will trigger the end to the auction and whether the main goal should be to free up spectrum for wireless broadband or to raise revenue, including to help pay for FirstNet.
Also raising some concerns on the eighth floor is the idea that key auction questions will be addressed on delegated authority rather than in a series of NPRMs inviting further action by the full commission. Use of delegated authority “is causing a lot of problems on the eighth floor right now,” an FCC official said. “What was done on the E-rate [public notice], I think, was an abuse of process.” (See related report below in this issue.)
"A big issue is when to close the auction,” said a lawyer who has clients who plan to participate in the auction. The spectrum law says the FCC can close the auction “when they have enough money to pay the exiting broadcasters, pay the cost of the auction and one or two other minor things,” the lawyer said. “It doesn’t say anything about funding FirstNet or deficit reduction. The debate is: ‘When do we close the auction?’ What is our objective? Raising the most money? Is our objective achieving perfect competitive parity among carriers? Is our objective reallocating the most spectrum? All of those would suggest different thresholds for closing the auction."
"We are on track for [a report and order] in the spring, as the Chairman stated in his December blog, and, as we noted at the January meeting, the R&O presented to the Commission will make decisions on the major policy areas,” an FCC spokesman said in an email Friday. “That will be followed, as always, by an auctions Comment and Procedures PN to fill in details prior to the auction. We also understand the desire for certainty in our mobile spectrum holdings proceeding well in advance of AWS-3 and the incentive auction."
BTIG analyst Walter Piecyk said in a research note Friday spectrum screen questions raised by Verizon about Sprint’s 2.5 GHz spectrum have bigger implications (CD March 6 p4). “The stakes are high as the new FCC guidelines could open up spectrum acquisition opportunities for Verizon and AT&T and in our view Dish could be one of those options,” Piecyk wrote. “In addition, if Sprint’s 2.5 GHz is counted in the screen, it could have impact [on] the level of divestitures required if it bought T-Mobile.”