An FCC report to Congress Thurs. said 800 MHz rebanding proposals that involved relocation scenarios for 700 MHz spectrum would be difficult to implement because statutory changes would be needed. When delaying 700 MHz auctions last year (CD June 20 p1), Congress directed the Commission to return a year later with a report on the progress of the DTV transition and the assignment of additional spectrum for advanced wireless services. It also sought information on the implications of the 800 MHz public safety interference proceeding. “Although some commenters in the 800 MHz public safety interference proceeding have suggested the possibility of using some 700 MHz spectrum to address public safety interference issues, any such proposal would be difficult to implement because legislation would likely be required to amend the 24 MHz/36 MHz public safety/commercial split required by Section 337 of the Communications Act,” the FCC report said. “Pursuant to our existing statutory authority, we do not believe the 800 MHz proceeding should implicate the timing of the 700 MHz auctions, because substantial steps in that proceeding will be taken well before any auction date, and certainly within the next several months.” Last year’s legislation delaying the auctions also directed the FCC to specify when it planned to reschedule the lower and upper 700 MHz auctions. The agency said it planned to do so “upon or near” the completion of proceedings on advanced wireless services (AWS) and the DTV transition. “Barring unexpected circumstances, we anticipate announcing new 700 MHz auction schedules near or upon completion of the AWS and DTV proceedings,” the report said. Such rescheduling would have to keep in mind the current expiration of the FCC’s auction authority on Sept. 30, 2007, the report said. The agency told Congress it anticipates adopting service rules for the initial 90 MHz that had been made available for AWS “in the coming months.” As for 800 MHz, the FCC said some commenters, including CTIA and Cingular, had suggested that rebanding could involve removing public safety systems from 800 MHz to the nonpublic safety portion of the upper 700 MHz band. Under that scenario, the upper 700 MHz band wouldn’t be subject to competitive bidding and incumbent TV stations would be required to vacate the spectrum by a date certain. The 800 MHz public safety systems would be relocated to the upper 700 MHz and the remaining 800 MHz spectrum would be subject to competitive bidding. The report said it wasn’t prejudging the outcome of the proceeding but such a plan would require legislative action. Another plan, backed by Nextel, public safety and private wireless groups, involves rebanding at 700, 800 and 900 MHz, in part by Nextel’s giving up some spectrum in return for capacity elsewhere. The carrier also would pay $850 million to help relocate displaced incumbents. An alternative backed by CTIA, the United Telecom Council and others would rely on best practices and enforcement measures rather than relocating incumbents.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
Qualcomm was by far the highest bidder in the FCC’s lower 700 MHz auction that closed Fri., with the wireless equipment-maker submitting $38.03 million in high bids for all 5 economic area group (EAG) licenses. The nearly 2-week auction, after 86 rounds, generated $56.8 million in high bids, with 35 participants winning 251 licenses. The EAG spectrum covers regional areas of the Southeast, Northeast, Central/Mountain areas, Great Lakes and Mid-Atlantic. The licenses make up the D-block of unpaired spectrum at 716-722 MHz. Other spectrum included 246 C-block licenses. Both the C- and D-block spectrum involve licenses that remained unsold in an auction in Sept. 2002. Far behind Qualcomm, the 2nd highest bidder was Aloha Partners, with $5.8 million, followed by Cavalier Group with $2.1 million and LIN TV with nearly $2 million. The FCC’s Wireless Bureau earlier had granted Qualcomm an extra year to use the remainder of an auction discount voucher that had been set to expire June 8. Qualcomm had told the FCC it was considering using the $114 million voucher in the lower 700 MHz bidding.
The House overwhelmingly passed the Commercial Spectrum Enhancement Act (HR-1320), with 406 members approving the bill that would create a trust fund for govt. spectrum relocation, and only 10 members against the bill, 9 of them Republicans. The bill was widely expected to pass after appropriators dropped their concerns.
After 15 rounds of bidding, Qualcomm was top bidder in FCC’s lower 700 MHz auction as of the end of the day Mon. with 5 high bids with a combined value of nearly $38 million. The auction of 256 licenses in the lower 700 MHz C- and D- block has generated $56.6 million in high bids so far. The licenses include 251 C- and D-block licenses that remained unsold in an auction that closed in Sept. 2002. Qualcomm is vying for licenses that for economic area groupings (EAGs) covering regional areas of the Southeast, Northeast, Central/Mountain areas, Great Lakes and Mid-Atlantic. The EAG licenses comprise the D-block spectrum of unpaired spectrum at 716-722 MHz. Qualcomm’s highest bid for the Southeast license was $8.5 million, followed by $8.2 million for the Northeast, $7.8 million for Central/Mountain, $6.6 million for the Great Lakes and $5.9 million for the Mid- Atlantic. Aloha Partners was a distant 2nd to Qualcomm with $6.5 million in bids for 89 licenses. The Commission’s Wireless Bureau recently granted Qualcomm an extra year to use the remainder of an auction discount voucher that had been set to expire June 8. Qualcomm had told the FCC it was considering using the $114 million voucher in the lower 700 MHz bidding. On Mon., bid rounds increased to 6 from 2 per day.
NextWave sought approval from a bankruptcy court Fri. for a $150 million partnership agreement with investment firm Clarity Partners to work on new spectrum acquisitions. The proposed acquisition venture, called IPCom, which Clarity would form and fund, came amid continued speculation that NextWave was nearing a deal to sell Cingular Wireless 20% of its PCS licenses for nearly $1.4 billion. Clarity is a Beverly Hills-based private equity firm that focuses on media and telecom investments and has holdings in Oxygen, PrimeCo and MetroPCS.
NextWave and Cingular Wireless reportedly are in talks for latter to acquire 20% of NextWave’s PCS licenses in a deal that’s still coming together but is expected to be close to $1.4 billion. Reuters reported Tues. the transaction wouldn’t include NextWave’s valuable N.Y.C. spectrum. The deal apparently would allow NextWave to keep a national wireless footprint by offering for sale 10 MHz of the bankrupt carrier’s 30 MHz C-block licenses in more than 30 markets, a source said. In Jan., the U.S. Supreme Court upheld a U.S. Appeals Court, D.C., ruling that reversed the FCC’s cancellation of NextWave’s PCS licenses for nonpayment. NextWave has been expected since that ruling to file another plan of reorganization with the U.S. Bankruptcy Court, White Plains, N.Y., and it told the court earlier this year that it was in discussions with 3rd parties on financing and strategic relationships. The potential $1.4 billion price tag would be the latest indication of what NextWave’s spectrum was worth now. A Jan. 2001 re-auction of the NextWave spectrum generated nearly $16 billion from carriers such as Verizon Wireless for licenses for which the carrier originally had bid $4.7 billion. The Commission had returned the licenses to NextWave after the D.C. Appeals Court in June 2001 reversed the agency’s decision to cancel those PCS licenses for nonpayment. Some analysts had estimated earlier this year that the spectrum could be worth close to $6.45 billion based on recent wireless transactions such as the Verizon Wireless-NorthCoast PCS deal. NextWave Deputy Gen. Counsel Michael Wack declined comment and a Cingular spokesman wasn’t available for comment.
The FCC denied Banks Bcstg.’s request for a waiver allowing it to receive 4 Boise area licenses it said it should have received after Vulcan Spectrum dropped out of the lower 700 MHz C- and D-block auction that ended in Sept. Banks had withdrawn from bidding on the Boise-area licenses after Vulcan became the high bidder. Banks eventually won 2 other licenses, one in Wichita and a Boise-area license not among the 4 subject to the waiver request. Vulcan later also withdrew from the bidding and the 4 Boise licenses were unsold at the end of the auction. In a May 16 letter to Banks Vp Gregory Schmidt, Margaret Wiener, chief of the FCC Wireless Bureau’s Auctions & Industry Analysis Div., concluded: “We do not agree with Banks’ claims that the public interest would be served by granting Banks’ request and offering the Boise licenses to Banks.” She said the Commission’s rules permit the award of a license to a next- highest bidder only in “a narrow circumstance that is not present here -- namely a bidder’s default after the close of the auction.” She said the agency also has stated “as a general rule that the best course of action would be to reauction the spectrum.” Licenses that remained unsold in the earlier auction will be on the block again in Auction 49, set to start May 28. The FCC also denied as moot Banks’ request that the 4 Boise licenses be removed from that auction.
The FCC Wireless Bureau announced an additional delay in the multichannel video distribution & data services (MVDDS) auction (Auction No. 53), with the new date not announced. The auction will follow resolution of 2 issues presented in the 2nd further notice of proposed rulemaking, a spokeswoman confirmed: (1) The duration of the build-out requirement for MVDDS. (2) Whether the use of designated market areas (DMAs) or component economic areas (CEAs) was better for defining the geographic service areas (GSAs). The auction, originally scheduled for Feb. 12, has been rescheduled twice -- for Aug. 6 and June 25. Northpoint Vp Toni Cook-Bush said the latest delay made sense because “you can’t have an auction until you know what the license areas are. We're a big supporter of using DMAs, so we're so happy to know the Commission will be making this decision.” Northpoint has lobbied Congress heavily on providing MVDDS exclusively and a bill was introduced recently proposing a licensing process for the spectrum instead of an auction. It was unclear how the auction delay would affect the legislation (S-564), introduced by Sen. Landrieu (D-La.). An industry official said the delay might give Northpoint additional lobbying time, but it might not gain enough momentum to overturn the FCC’s decision. Satellite Bcstg, & Communications Assn. (SBCA) Pres. Andrew Wright said the decision didn’t change the organization’s position, “which is that terrestrial sharing of the DBS band should not be permitted because of harmful interference.”
The FCC said Thurs. it had adopted an exemption for rural telephone cooperatives from a revenue attribution requirement for small business preferences in Commission auctions. Chmn. Powell and Comr. Adelstein said the changes were designed to cure the “mistake” of rural cooperatives’ not being carved out from the auction attribution rules. Those rules were designed to bar large companies from manipulations so they could qualify as small entities for certain benefits, such as bidding credits. The agency said the step was designed to “increase the ability of rural telephone cooperatives to participate in spectrum auctions and provide service in rural areas.” The exemption involves the requirement that the gross revenue of entities controlled by an applicant’s officers and directors be attributed to the applicant when determining eligibility for small business preferences, such as bidding credits. The exemption is available to prospective auction participants under certain conditions: (1) The applicant is “validly organized” as a cooperative under state law. (2) The gross revenue and other financial and management resources of the affiliates of the applicant’s officers and directors aren’t available to the applicant. (3) The applicant is a rural telephone company as defined by the Communications Act. (4) The applicant is eligible for tax-exempt status under the tax code. Powell and Adelstein said: “Unfortunately, our rules have not always appreciated their unique structures and roles.” They said the FCC’s attribution rules, which require that gross revenue of entities controlled by an applicant’s officers and directors be attributed to the applicant, are important. Those rules bar applicants from obtaining bidding credits that are more favorable than justified, they said. “The rule as crafted, however, had the unintended consequence of attributing to rural telephone cooperatives the gross revenues of the outside business interests of its officers and directors even though these officers and directors do not control the cooperatives,” they wrote. Such cooperatives usually are controlled by member-subscribers and are nonprofit entities, Powell and Abernathy said. Comr. Martin in a separate statement said: “I am hopeful that this will enable greater participation in spectrum auctions by rural cooperatives and will provide greater rural deployment of wireless services.”
MONTEREY, Cal. -- The DBS industry is looking to sweeten slightly its position under the Satellite Home Viewer Improvement Act when it comes up for review next year, Satellite Bcstg. & Communications Assn. Pres. Andrew Wright said Wed. “We're looking for reauthorization with just a few little technical improvements, to make us a little more competitive with cable,” he said in an address to a Satellite Entertainment conference here. He said he wasn’t ready to disclose the changes.