Waxman, Now T-Mobile Consultant, Makes Late Proposal for 'Compromise' on Incentive Auction Rules

Under Waxman’s proposal, the FCC would impose different rules depending on whether it's able to clear 84 MHz or more of spectrum as a result of the reverse auction in which broadcasters will put their licenses for sale. “At spectrum-clearing targets of more than 84 megahertz, the Commission will have more options to address competing priorities,” Waxman wrote. “The higher-clearing targets will allow the Commission greater latitude to expand opportunities for unlicensed operations in the duplex gap. It will also allow the Commission to do more to protect competitive carriers against a lengthy delay in activating the spectrum reserve that is necessary to prevent foreclosure pricing.”

Under the Waxman proposal, if 84 MHz is cleared the FCC would be able to prohibit the relocation of broadcast stations into the 600 MHz duplex gap, reportedly the issue creating the biggest fight at the FCC headed into the meeting (see 1507090044). The FCC would also be able to adopt a single spectrum-reserve trigger of $2 per MHz/POP in the top 40 markets. But if less spectrum is cleared, the FCC must put more focus on making the low-band spectrum available to competitors, Waxman said. Under the scenario, the FCC should put TV stations in the duplex gap and let the reserve kick in when prices hit an average of $1.25 MHz/POP in the 40 biggest markets and are enough to pay for the actual costs necessary to close the auction.

The proposed compromise “offers something for everyone, but gives everything to no one,” Waxman wrote. “I believe the Commission should make every effort to promote unlicensed interests at higher clearing targets. If no more than 84 megahertz of spectrum is available, however, the Commission should prioritize the needs of licensed spectrum holders whose bids will enable the auction to satisfy its revenue goals and encourage robust broadcaster participation.”

The FCC has offered no justification for a proposal to place TV stations in the 600 MHz duplex gap, NAB said in a Friday ex parte filing on a meeting between its General Counsel Rick Kaplan and Commissioner Mignon Clyburn. The issue has been hotly contested as the FCC moves toward a vote on incentive auction rules Thursday. Kaplan cites reports that the FCC is leaning on carriers to support this change of direction by the FCC (see 1507090044). “The late-breaking changes of heart on the part of one or two stakeholders, reportedly as a result of Commission staff arm-twisting, does little to undermine the substance of the unified opposition,” NAB said in a footnote.

“Even if the Commission happened to stumble upon new information suggesting that it was important, let alone critical, to place TV stations in the duplex gap, it has kept the public in the dark,” Kaplan wrote. “The lone indication that a new approach to the duplex gap was being seriously considered was in the form of limited simulations the incentive auction task force released in a May 20 Public Notice.” Kaplan also said the FCC should ignore Waxman’s proposal to put stations in the gap if less than 84 MHz of spectrum is available for auction. “This proposal has not been publicly vetted, and in fact cannot be, as it was submitted into the record with no time for parties to meaningfully respond,” he said.

Public Knowledge Senior Vice President Harold Feld made that group’s closing arguments in a call with an aide to FCC Chairman Tom Wheeler. The FCC must keep TV stations out of the duplex gap, Feld said, according to an ex parte filing. “Even if the total number of markets impacted is relatively low, this will deprive millions of Americans of the full benefits of next generation Wi-Fi devices that will exploit this band,” he said. “The loss of this market may also reduce investment and delay deployment, contrary to the public interest.” Feld also focused on the reserve trigger, urging a single trigger of $2 MHz/POP in the top 40 markets. If the FCC gets the trigger wrong “it is likely that the reserve will trigger sufficiently late in the auction that competitive carriers may be priced out entirely,” Feld warned.

Verizon took T-Mobile to task over its proposal to increase the size of the spectrum reserve from 30 MHz to 40 MHz. There’s a better case to be made for getting rid of the reserve entirely than for making it bigger, Verizon said.