With the Federal Communications Commission’s planned AWS-3 auction expected to begin later this year, wireless carriers are getting out ahead of proposed rulemaking in hopes of influencing those plans.
AT&T this week again got in on the lobbying, throwing its support behind rumored plans to include up to 40 megahertz of a planned 50 megahertz of paired spectrum set to be auctioned in the 1.7/2.1 GHz advanced wireless service band in economic area-sized chunks. The remaining 10 megahertz of paired spectrum is reportedly set to be set aside in commercial market area chunks.
In commenting on a proposed draft order reportedly circulating at the FCC, AT&T VP of federal regulatory Joan Marsh said in a blog post: “Incorporation of the large block and license sizes will not only ensure that the FCC drives the greatest efficiencies out of this spectrum, but also that it attracts the most revenue at auction.”
The FCC’s plans for EA licenses currently splits the country into 176 markets, while the CMA license plan counts 734 markets. The recently completed H-Block auction relied exclusively on the EA license size for the 10 megahertz of spectrum in the 1.9 GHz band up for bid.
AT&T cited results from the FCC’s Auction 66 in 2006 that included 90 megahertz of spectrum in the 1.7/2.1 GHz band spread across CMA, EA and larger regional economic area groupings that it said showed a greater return per megahertz/per potential customers covered by the larger license sizes. Marsh notes that the 20 megahertz REAG licenses produced the largest price at 73 cents per megahertz/pop, followed by smaller REAG licenses. The CMA-based licenses received winning bids equaling 39 cents per megahertz/pop.
Marsh added that in looking at supplying the EA-sized licenses with the greatest amount of spectrum “we think the FCC staff got this band plan exactly right. And the proposed [10×10 megahertz] EA licenses may be the last big opportunity for the commission to drive spectral efficiencies through auction structure, as the 600 MHz auction structure demands five-megahertz fungible blocks.”
Smaller wireless carriers have been pressing the FCC to provide CMA-sized spectrum licenses, claiming they need access to licenses that cover their smaller markets and to not include larger cities that they have no interest in competing against larger operators in. Speaking at last fall’s Competitive Carriers Association event, Cellcom CEO Pat Riordan explained that if the FCC goes with EA-sized licenses, it would be forced to bid on a license encompassing Green Bay, Wisc., which is a market that will garner intense interest from larger rivals and may not be a market it’s interested in entering with that spectrum.
A similar argument was put forth by Ron Smith, CEO of Kentucky-based Bluegrass Cellular, who noted EA-based license sizes would force the carrier to acquire spectrum in larger markets outside of its current rural footprint.
“The license sizes have to be at a level where I can at least participate,” Smith said. “I serve between large markets. If we go with EAs, I just can’t afford to buy or enter large markets. … We all want to participate and are just asking for auction rules that will allow that.”
Riordan also noted that he was not buying claims by larger rivals that the number of licenses put forth by CMA rules would be too complicated, explaining that if a small carrier could handle the process, he was pretty sure larger carriers would be able to manage.
“This is not too complicated for Verizon or the FCC,” Riordan said.
Bigger challenges for 600 MHz licenses
Most of the concern regarding spectrum license sizes has been targeted at the FCC’s planned 600 MHz incentive auction, which is scheduled for mid-2015. Dealing with license sizes in that auction is expected to be more challenging as the amount of spectrum up for bid will only be determined by the voluntary participation level of television broadcasters that currently control that spectrum.
The FCC has warned that “we will not know in advance the amount of spectrum we can make available in the forward auction, the specific frequencies that will be available and, perhaps, the geographic location of such frequencies.”
Instead of the traditional auction model that relies on a single band plan with identified frequencies, a set number of spectrum blocks and a uniform set of geographic area licenses, the new auction framework must be flexible enough to accommodate varying amounts of spectrum in different locations, the commission added.
CCA sponsored a report late last year touting benefits of CMA-sized licenses for that auction.
In addition to license sizes, the 600 MHz auction has seen considerable debate regarding the participation level of carriers. Verizon Communications noted in a filing last week that proposed plans by smaller rivals for a potential spectrum screen to limit bidding by carriers with substantial holdings below the 1 GHz band needed to be adjusted to account for all spectrum controlled by carriers. The claim was targeted at Sprint, which holds considerable spectrum in the 2.5 GHz band, but wants the FCC to “weight” that spectrum differently from spectrum below 1 GHz.
Carriers are expected to show significant interest in the AWS-3 auction as the licenses are adjacent to current AWS-1 licenses that a number of carriers are using to support or bolster their LTE networks. Tuning equipment to work in the AWS-3 band or getting devices to support that band is not expected to be a significant challenge and that band could be a compelling slice of airwaves to support broader LTE roaming capabilities between small and large carriers.
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