Spectrum Aggregation Order Released Almost Three Weeks After FCC Approval
The FCC Monday quietly released the last of the big items approved at the FCC’s May 15 meeting -- new mobile holdings rules (CD May 16 p5). The FCC posted the item on its Web home page Tuesday. The FCC previously had released only a short fact sheet explaining the order (http://fcc.us/1h5tojV).
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Part of the delay in releasing the order (http://bit.ly/1nLUujl) was a back and forth between Chairman Tom Wheeler and Republican Commissioner Ajit Pai, industry and agency officials told us Tuesday. Pai dissented and various changes were made to the order to respond to his comments at the May 15 meeting, officials said. Pai then further revised his dissent to address changes made to the item. The Memorial Day break also added to the delay, agency officials said. One FCC official said Tuesday the bigger mystery is when the FCC will release an order making changes to the Connect America Fund (CAF), approved at the commission’s April 23 meeting.
Pai made a few changes from his initial dissent. The bidding restrictions in the order “are not rationally related to the purported objective of ‘ensur[ing] against excessive concentration in holdings of low-band spectrum,'” he argued in one change. Pai said a company with 40 MHz of low-band spectrum in a market could buy up all the spectrum sold, while a carrier with 45 MHz would be limited to 40 MHz in the auction. The restrictions are also inconsistent on purchases made on the secondary market, Pai said. The order allows a carrier to buy “far more” than one third of all low-band spectrum in a market in the auction, but requires “enhanced scrutiny” and “case-by-case review” for any secondary market deals above the threshold, he said.
The mobile holdings order clarifies that it adds 40 MHz of AWS-4, 10 MHz of H block, 65 MHz of AWS-3, 12 MHz of Broadband Radio Service and 89 MHz of Educational Broadband Service spectrum to the screen.
The BRS/EBS spectrum changes had been closely watched, since Spring owns much of the spectrum. “We find that it is necessary to modify the amount of 2.5 GHz spectrum we currently include in the screen to reflect today’s marketplace realities,” the FCC said. The order said the screen previously included no EBS spectrum. The 89 MHz added is most of the EBS spectrum “adjusted to reflect white space and education use elements,” the FCC said. On BRS, the FCC said it decided to add 12 MHz of middle band segment spectrum, but not BRS Channel 1. The order acknowledges Sprint arguments that Channel 1 is not contiguous with the other BRS channels “and therefore is not conducive to the provision of mobile telephony/mobile broadband service.”
The FCC withdrew 12.5 MHz of the 26.5 MHz of Specialized Mobile Radio that was included in the screen on the grounds that it’s no longer “suitable and available for the provision of mobile telephony/mobile broadband services.”
The order also clarifies one of the biggest policy calls the FCC made at the May 15 meeting -- allowing AT&T and Verizon to have a shot at winning as much as 20 MHz of spectrum in each market. Commissioner Mignon Clyburn had objected to the way the FCC handled bidding limits, saying she favored tougher restrictions originally proposed by Wheeler.
The order explains why the approach the FCC takes is superior to other approaches advocated by carriers large and small. “We conclude that our market-based spectrum reserve, particularly in the amounts and under the rules we adopt today, is unlikely to reduce competition among bidders and in fact, will encourage competition among bidders,” the order said. But the order also warns the rules could change if the industry undergoes further consolidation. The warning comes among reports that SoftBank has not given up on its pursuit of T-Mobile. “If significant changes in the marketplace structure occur or a proposed transaction is filed” the FCC “will revisit our decisions here regarding the reserved spectrum provisions for the 600 MHz Band that we adopt today,” the order said.
Many broadcast attorneys and associations told us they have yet to read the entirety of the commission’s 400-plus-page auction report and order, also released Monday (CD June 3 p1). The Expanding Opportunities for Broadcasters Coalition called it a “reminder of the enormity and complexity” of the auction. One broadcast attorney told us that his firm had so far found few surprises in the order.