Interest in Incentive Auction Seen Much Higher Than in AWS-3 Sale at CTIA, CCA

Among the four national carriers, AT&T, Verizon and especially T-Mobile are expected to be big players in the AWS-3 auction, while Sprint will wait for the low-band spectrum in next year’s incentive auction, industry officials said in interviews. Many small carriers are partnered with Sprint and most of them probably won’t bid in the AWS-3 auction, industry lawyers said. With short-form filings in the AWS-3 auction due Friday, numerous lawyers at CCA and CTIA spent a large part of their time in their rooms getting the preliminary filings ready to go, industry officials said.

Skeptics said many smaller carriers may sit out the auction because it offers mid-band spectrum, in which there is less interest in general than in the 600 MHz spectrum for sale in the incentive auction. The AWS spectrum has strings attached -- any carrier that buys the spectrum will have to work with government agencies to clear the agencies from the band, a long, complicated process following the AWS-1 auction. A lawyer who works with small carriers said many traditional carriers may sit out the AWS-3 band, but the FCC could see some nontraditional players, with venture capital backing, making a play in the auction.

CCA President Steve Berry told us he expects some smaller carriers will bid in the AWS-3 auction, especially those that bought AWS-1 spectrum in the auction that closed Sept. 18, 2006. In that auction, 104 bidders won 1,087 licenses. The top bidders were T-Mobile, Verizon and cable consortium SpectrumCo.

"It still is an internationally harmonized, 4G, LTE platform,” Berry said. “If you don’t have low-band spectrum, this mid-band spectrum is pretty good. Plus, you have devices. A lot of our carriers do have AWS.” It also helps that the FCC will offer part of the band in small, Cellular Marker Area licenses, of interest to smaller players, he said. Smaller carriers have a history of working with government agencies in the service territories and often have a good relationship with the commander of the local military airfield or Army facility, he said.

"I don’t think any of us think it’s prime, beachfront property,” said Terry Addington, CEO of SI Wireless. “Some folks may see it as an opportunity and pursue it, because spectrum is so scarce and it’s so valuable and it’s so needed.” Small carriers are much more “energized” about the incentive auction spectrum, Addington said.

"We're looking at it, but we have not made a final decision,” Hu Meena, CEO of C Spire, said of the AWS-3 spectrum. “This week, I've heard a lot more about the 600 MHz spectrum than I have the AWS-3. That’s been the talk in the hallways, around the coffee pot.”

CTIA Panel

During a panel at CTIA Wednesday, industry and government officials said AWS-3 is an important band. Also Wednesday, NTIA made available updated information from the Department of Defense on systems that will have to be moved from the AWS spectrum (http://1.usa.gov/Zi7IJT) (http://1.usa.gov/1oxriaP).

"There’s a lot of information out there that says this is a lot more complicated than AWS-1 was,” said Steve Sharkey, director-engineering and technology policy at T-Mobile. “There are a lot more systems and aeronautical systems that we didn’t have to deal with in AWS-1.” Sharkey is also a member of the Commerce Spectrum Management Advisory Committee.

Ultimately, “the coordination process is going to be critical and cooperation is going to be critical,” Sharkey said. One complication is that unlike during the AWS-1 transition, there is no provision for government agencies to share sensitive information on a confidential basis with licensees, he said. One lesson from CSMAC is that “sharing sensitive information is often very difficult,” he said. But Sharkey also said T-Mobile is “very excited” about the auction and adding the AWS-3 spectrum to its portfolio.

The Defense Department will do everything it can to make the auction a success, said Fred Moorefield, director-spectrum policy and programs for the office of the DOD Chief Information Officer. DOD wants to make the transition “as expeditious and seamless and smooth and efficient as possible,” he said.

Moorefield conceded that clearing the AWS-3 band will be “significantly more complex” than clearing the AWS-1 band after the 2006 auction. DOD will make available a portal with clearing information, similar to a portal available after the AWS-1 auction, to go live about 90 days after the auction closes, he said. “The key to success is communications and people willing to work together,” he said. “We plan to continue that until the transition is complete.” Moorefield said DOD is open-minded about nondisclosure agreements that would give auction winners more access to confidential information about government users in the band. But if there are a large number of winners, 100 or more, such agreements would be “very difficult” to work out, he said.

"What I've learned this week is most people have been obsessed with another auction and another band lower down in the spectrum,” conceded Peter Tenhula, senior adviser at NTIA.

"It’s a great band” and an extension of the AWS-1 band, “which has been a workhorse and capacity band for years,” said Brian Regan, senior legal adviser in the FCC Wireless Bureau.