600 MHz Auction Should Be Split into Two Phases, Says NTCA, RWA Report
The FCC forward auction of 600 MHz wireless spectrum should be split into two sequential phases, one covering high-demand urban areas and a second for smaller rural markets, suggested a NTCA- and Rural Wireless Association-sponsored report by NERA Economic Consulting (http://bit.ly/1afZ6Ws) filed Wednesday. The proposed plan would auction off urban, high-spectrum use markets under the economic areas licensing structure initially proposed by the FCC and favored by large carriers, while selling off rural spectrum in the smaller, geographically-based lots favored by NTCA and local carriers, called partial economic areas (PEAs), said NTCA Director-Legal Affairs Jill Canfield in an interview. The proposal might be a way to bring more participants to the auction by encouraging smaller carriers, and could be attractive to larger carriers by allowing them to avoid spectrum caps, said Telecommunications Industry Association Director-Regulatory & Government Affairs Mark Uncapher.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
NTCA and RWA commissioned the study to support their arguments in favor of smaller licensing areas in the incentive auction. “To ensure coverage to consumers that live in and travel to rural and remote areas, the FCC must correctly size the 600 MHz license areas and allow rural carriers a meaningful opportunity to participate in the forward auction,” said RWA General Counsel Carri Bennet in a news release. The report also concedes advantages to bigger licensing areas. Allowing big bidders to buy their spectrum in larger lots would mitigate “aggregation risk” to the large companies by ensuring there won’t be gaps in their coverage areas in their highest value markets, the report said. Nearly any proposal that makes room for smaller carriers is better than the FCC’s initial EA proposal, said an attorney who represents a wireless trade association. AT&T and Verizon didn’t comment on the NERA report.
Grouping the high value, urban spectrum most coveted by large wireless carriers into the first phase of the auction would also concentrate the vast majority of the revenue generated by the auction in that phase, said Canfield. The second phase would be run very similarly to previous spectrum auctions and might allow the FCC to make up any distance remaining to its revenue target after the first phase, Canfield said: “It’s a second chance to make it a successful auction."
The proposal in the NERA report might also be attractive to larger carriers because the second phase could satisfy the FCC’s obligations under the Communications Act to “promote economic opportunity for small businesses and rural carriers, and deployment of services to rural areas,” said the report. Proposals to increase participation by smaller carriers by capping the amount of spectrum companies such as AT&T are allowed to buy have been strongly opposed by larger carriers. The NERA report’s proposal might be a way to satisfy that statutory requirement without caps, likely making it more attractive to large carriers, said Uncapher.
Since the plan has concessions for both larger and smaller carriers, it’s likely to increase revenue by “bringing more participants to the table” said Uncapher. That’s likely to make it popular with the FCC, he said. Increasing the amount of buyers in the forward auction is “the most important carrot” the FCC has to get broadcasters to participate in the auction, he said. Canfield said FCC officials’ initial reaction to the proposal has been “positive.” Uncapher conceded that FCC officials might view adding an extra phase to the forward auction as further complicating an already complicated incentive auction. The extra phase is also likely to make the forward auction last longer, though that wouldn’t increase the amount of time any other aspects of the auction take, said Canfield. “It does make it more complicated for the FCC.” -- Monty Tayloe (mtayloe@warren-news.com)