WASHINGTON-Most of the wireless industry still has not seen the entire Federal Communications Commission report to Congress on spectrum auctions, released Oct. 9, but those who have agree the commission is pushing for additional powers.
Eighteen companies and organizations-including most of the industry’s associations, a few telcos, Iridium L.L.C., Motorola Inc., Nextel Communications Inc. and some smaller concerns-submitted comments regarding spectrum auctions, but apparently not many of them listed burning issues that need to be solved.
While using the document to tout the successes of competitive bidding, the FCC also forwarded an upcoming plan to implement combinatorial bidding-offering packages of licenses in certain circumstances. A consultant currently is evaluating scenarios regarding its best use. Another congressional idea-minimum bids for a license-will be used for the first time during the 800 MHz specialized mobile radio service auction later this month.
The commission wants more, though. Because C-block personal communications services licensees that don’t want to take any of the four financial restructuring options offered may opt for filing for bankruptcy protection, the FCC wants Congress to rule that licenses are not “property” and cannot be tied up for years in court.
The commission also would like an exemption from the congressional 60-day review of “major rules,” especially when they include changes to auction rules. “A reduction in the time period required before rules become effective is important when the industry believes that it is critical that a particular auction be conducted quickly, when congressionally mandated deadlines must be met or when the commission revises rules just before an auction,” it wrote. Such a provision, if granted, may not sit well with wireless-industry players opposed to 11th-hour rule changes without benefit of a review period.
The FCC has hosted 14 auctions and has given out more than 4,300 licenses totaling $23 billion; some $12 billion already has been collected for deposit into the U.S. Treasury. Auctions now will continue as an allocation scheme until at least 2007.
The commission’s first quadrennial report to Congress (42 pages) is sprinkled with pull quotes and graphics hailing the auction process as the be-all and end-all of allocation devices. The FCC includes the announcement of a Smithsonian Institution award earlier this year that cited the FCC’s automated auction system as a “cutting edge contribution to the information technology revolution.”
Other nations also have adopted some of the FCC’s auction concepts to disseminate their spectrum, with Mexico using the copyrighted system and Guatemala putting it under consideration. Other countries that have seen an FCC auction demonstration include Argentina, Australia, Brazil, Canada, Hungary, Peru, Russia, South Africa and Vietnam.
“Overall, the commission believes that its auctions have successfully met the goals mandated by Congress and in some instances may have exceeded expectations,” the FCC wrote. “A significant number of those who won spectrum licenses were designated entities … 484 out of a total of 608 license winners were designated entities.”
According to the commission, auctions also have cut the time from application to award down to 233 days, compared with comparative hearings (720 days) and lotteries (412 days). Auctions have reduced the number of aftermarket resales, due to sufficient distribution of licenses, it wrote.
The commission did admit having to take a few steps back in the evolution of its auction process, like its decision to suspend installment payments for licenses following the problems encountered in the aftermath of the C-block PCS licenses. Two upcoming auctions-one for the 800 MHz SMR service and one for the local multipoint distribution service-will require all fees be paid in full following the close of bidding, which could prove to be a problem for some smaller players. Looking ahead to the 220 MHz auction tentatively scheduled for first-quarter 1998, it is unknown whether the commission will resume installment payments for these much-smaller operators.
Except for a few C-block winners, installment payments have worked well for the rest of the wireless companies that have participated in auctions. The commission commented, “Overall, only a minimal number of licenses have been retained by the commission for nonpayment of auction down payments. Of the 4,368 licenses the commission has offered in its 14 auctions to date, only 3.3 percent have been unassigned due to nonpayment.”
