The FCC may have to backtrack on proposed rules for the citizens broadband radio service band after getting essentially no support in the record for cellular market area-level bidding in June’s auction of priority access licenses (PALs). Only T-Mobile backed CMA-level bidding but not using the FCC-proposed scheme (see 1911130056). Commissioners approved a notice in September that proposes to allow bidding on a CMA-level basis, rather than just by counties, in the top 172 CMAs. Commissioners Jessica Rosenworcel and Geoffrey Starks voted for the notice, though with reservations on CMA-level bidding (see 1909260040).
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.
FCC Chairman Ajit Pai will circulate an order seeking approval of a public auction of 280 MHz of C-band spectrum in 2020, for a vote early in the new year, FCC officials said Monday. The order won't be on the agenda for the Dec. 12 commissioners’ meeting. The decision is considered a huge loss for the C-Band Alliance, which pressed for a private auction (see 1911150046). President Donald Trump called Pai Oct. 30 to find out more about the C band but didn’t express a view the FCC should hold a public auction, FCC officials said. Pai unveiled the decision in a letter Monday to leaders in Congress.
The FCC is seeking comment on what constitutes a small business when determining a company’s eligibility for bidding credits in the 2.5 GHz auction. The FCC agreed in July to a still-unscheduled auction of the spectrum, over partial dissents by Commissioners Jessica Rosenworcel and Geoffrey Starks (see 1907100054). That auction is expected in late 2020 (see 1909300064). The Wireless Bureau and Office of Economics and Analytics sought comment Friday, with due dates to come in a Federal Register notice. “We seek comment on the definitions of a ‘small business’ as an entity that, together with its affiliates, its controlling interests, and the affiliates of its controlling interests, has average gross revenues that are not more than $55 million for the preceding five years, and a ‘very small business’ as an entity that, together with its affiliates, its controlling interests, and the affiliates of its controlling interests, has average gross revenues that are not more than $20 million for the preceding five years,” said a notice in docket 18-120.
Huawei is winning the battle on 5G worldwide, Rivada Networks CEO Declan Ganley said at a Hudson Institute lunch Thursday. Ganley said cheap financing backed by the Chinese government has led to Huawei success. China’s goal is “dominating the cyber domain by 2025,” he said. Rivada backed a push for a national, wholesale 5G network, which got early support from the White House (see 1904120065).
The C-Band Alliance told the FCC its proposal has broad support. “As the record makes clear, a diverse set of entities and interests, spanning a variety of industries and immediate economic interests, have come together to support the market-based approach," said a filing in docket 18-122, posted Thursday. Supporters include carriers, aerospace manufacturers, video programmers, wireless equipment makers, broadcast station operators and free market organizations. CBA filed a report by Brattle Group’s Coleman Bazelon. A “market-based mechanism, such as the consortium proposed by the C-Band Alliance, can overcome market failures that lead to significant holdout problems, solve issues of informational complexity that lead to regulatory failures, maximize the amount of spectrum available in the marketplace while protecting incumbent operations, and ensure that the spectrum is put to its highest valued use,” the report said: “This approach, which is applicable in incentivizing incumbents to discover value creating spectrum repurposing well beyond the C-Band, fits in well with the FCC’s light-touch approach to regulating the mobile market.” AT&T said the FCC should reallocate the C band, and ensure its order would survive legal challenge. “Modify the satellite operators’ authorizations under Section 316 of the [Communications] Act to add a terrestrial use component, but specify that those flexible use rights would have to be collectively assigned, within a stated period, through an auction process in order to, among other things, fund the transition of existing C-band users,” AT&T asked. The carrier met with Chief Donald Stockdale and others in the Wireless Bureau.
Virtually every commenter opposes cellular market area-level bidding in next June’s auction of priority access licenses in the citizens broadband radio service band (see 1910290046), Verizon told the FCC on bidding rules. Replies were posted through Wednesday in docket 19-244. “CMA-level bidding is not package bidding and would reduce bidder flexibility, while adding unnecessary complexity to an already-complex auction,” Verizon said. Verizon identifies T-Mobile as the lone CMA bid supporter. T-Mobile fired back, urging instead that the FCC allow just CMA-level bidding in the top 172 markets incorporating multiple counties and only county-level bidding in remaining areas. “That approach would: (1) eliminate the complexity of allowing both CMA-level and county-level bidding in the same area; and (2) balance concerns that CMA-level bidding may inhibit some bidders from securing licenses against the potential for interference and need for coordination the Commission identified when it decided to consider package bidding,” T-Mobile said. There's “overwhelming opposition” to CMA-level bidding, so drop that and package bidding, said the Rural Wireless Association. RWA noted 126 of the 663 counties in the 172 markets are rural “based on the Commission’s own definition.” CMA-level bidding “would produce unintended, detrimental consequences that would jeopardize the auction’s success,” NCTA said. CMA bidding “adds a bewildering level of complexity to the auction process that, by itself, eliminates any realistic possibility of auction success for smaller commercial and business enterprise entities,” the Enterprise Wireless Alliance filed: “It would undo the very compromise that the Commission achieved.” A broad group opposes CMA-level bidding “largely because the proposal will exclude all but the largest mobile wireless carriers from having access to PAL-protected spectrum wherever CMA-level bidding applies,” said the Industrial IoT Coalition.
Beyond whatever steps the FCC takes to open up the C band to other uses, spectrum issues will become more complicated and challenging, and incentive mechanisms are needed for incumbents, said Office of Economics and Analytics acting Chief Giulia McHenry at an FCBA CLE Tuesday evening. For auctions, take the prohibited communications rule very seriously, said Jonathan Cohen of Wilkinson Barker, who when at the FCC co-wrote rules for the agency's first spectrum auctions. "It would be a death sentence" for a lawyer to be a conduit for prohibited information, he said.
Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., told us Thursday he now expects a planned second hearing on his concerns about a potential private auction of spectrum on the 3.7-4.2 GHz C band to happen Nov. 20. Kennedy grilled FCC Chairman Ajit Pai in October on whether he favors a private auction similar to what the C-Band Alliance proposes (see 1910170038). Pai's expected to propose a private auction plan for a vote at commissioners' Dec. 12 meeting (see 1910100052). The C-Band Alliance countered what it believes are other stakeholders' “misstatements” about its private auction proposal, writing House Communications Subcommittee leaders.
The 2019 World Radiocommunication Conference almost immediately got down to business this week, with FCC Chairman Ajit Pai there. But officials at the WRC, in Sharm El-Sheikh, Egypt, said a letter that President Donald Trump sent Monday (see 1910280054) likely raised question. This is considered potentially the most important WRC because of its focus on 5G and harmonizing bands.
The FCC got pushback on a proposal to allow license sizes larger than counties in the priority access licenses that will be sold to provide more protected use of the 3.5 GHz citizens broadband radio service band. Even larger carriers consider the plan flawed and sought changes. With a C-band auction looming, questions emerged on how likely carriers are to pursue the PALs during next June’s auction (see 1910170045). Many filings talked about the impact on rural areas and bidders.