Carriers Still Have Big Concerns Over Impairments Seen in Incentive Auction Spectrum, AT&T Says

“The way this will look in the auction … is there will be a number of blocks that won’t be sold at all, the impairments will be so great,” she said. “The potential is these blocks will be in major markets.” An FCC simulation found that of seven blocks that would be available in Los Angeles, five couldn't be sold because of broadcaster interference, she said. “These things are, I think, of great concern to our company.”

Marsh noted that on Wednesday Apple said it was releasing an iPhone (see 1509090050) that supports the 700 MHz A-block, auctioned by the FCC eight years ago. Apple waited so many years because of the impairment problems with the block, especially from broadcasters in adjacent channel 51, she said. The A-block in Chicago still isn't deployable “to the best of my knowledge” because of a Fox station in Channel 51 there, she said. The lesson from the 700 MHz band is that impairments can make “beachfront” spectrum “swampland,” she said. “We know that to be true from 700,” she said. “The biggest concern we have is that we are preparing to repeat that at 600 MHz.”

Another big question is when the wireless industry will actually get access to the 600 MHz spectrum, Marsh said. “We don’t get access until the broadcasters have been repacked down band.” While there's a 39-month transition period, analysis by NAB suggests the process could take longer, she said. “We’ve got to keep nailing these details down.” AT&T is interested in “test driving” the auction software before the auction starts and is putting together a proposal for testing the software first, she said.

U.S. Cellular Vice President-Federal Affairs Grant Spellmeyer has battle scars from the fight over interoperability following the 700 MHz auction, he said. The carrier never wants to see the kind of problems again that followed that auction, he said. “Impairments are a challenge,” he said. “We share concern about how that all plays out.”

Spellmeyer said many questions remain. Some at CTIA suggest the auction could take nine months, he said. “Then I heard somebody else last night say, ‘I think it’s over in three weeks.’ There’s an immense disconnect" between those two extremes. Bidders need certainty, he said.

FCC Priorities

While the FCC understands industry has concerns, the agency also has its priorities, said the commission's auction point man. Gary Epstein, chairman of the FCC Incentive Auction Task Force, said he "would be shocked if Joan didn’t continue to express her concerns." The commission’s big concern remains that “we do not want to be driven to the lowest common denominator,” he said. If in a couple of markets only 42 MHz of spectrum is available for sale, “we don’t want to be driven to that on a nationwide basis,” he said. “That leads you to the concept of broadcasters in the wireless band in isolated circumstances.” The FCC cut in half, from 20 percent to 10 percent, the amount of permissible interference at the 136 MHz level, he said. The FCC got rid of the concept of dynamic reserve pricing, which also cuts impairment, he said.

The FCC also is being very careful in its adoption of inter-service interference (ISIX) methodology for predicting interference between broadcasters and base stations, Epstein said. In response to complaints from the wireless industry, “we said we would get the impairment data out in enough time before the forward auction so that the wireless providers could look at it,” he said. The FCC has had a “really productive” period in recent months, with the agency adopting five items setting key rules and policies for the auction, Epstein said. “The rules are basically in place now.” Epstein credited CTIA for holding numerous discussions of the auction at the annual meeting. There is still “a fair amount to do” before the auction, he said.

Epstein said he's pleased with the attitude expressed by industry. “We had our battles, we went back and forth,” he said. “Everyone -- the commissioners, the stakeholders -- appears to be focused on making it work.”

“The auction design will lead to an unappealing band plan for everyone,” Rick Kaplan, NAB general counsel, told us Friday. “While variability was pitched as necessary for border markets and a market or two where you might have a lowest common denominator issue, the FCC has adopted a way forward that ensures significant variability and likely interference issues for years to come.” NAB on Thursday sought reconsideration of parts of the auction procedures public notice (see 1509110050).

Band Plan Under Attack

The FCC created a repacking plan that “neither the broadcasters nor the carriers believe they can live with,” said Richard Bennett, network architect and visiting fellow at the American Enterprise Institute. “Industry would rather have TV repacked into less valuable uplink frequencies than the downlink and duplex gap assignments the agency prefers,” he said. “By crippling downlink in the auction, the FCC increases the friction between Wi-Fi and [LTE-unlicensed] and makes overall sharing less efficient. The FCC should respect the logic of the auction participants, which has the virtue of being right as well as popular.”

The 700 MHz auction offered some valuable lessons, said Roger Entner, analyst at Recon Analytics. The “interference-ridden” A-block sold for $3.875 billion, compared with $4.7 billion for the C-block and $9 billion for the B-block, neither of which had the same interference problems, he said. “The decision of the FCC to put the interference free spectrum in the set-aside spectrum will reduce the auction results.” Carriers have struggled for years to deploy the A-block, he said: “In hindsight, one could argue that the 57 percent lower result for the A-Block was still not enough due to the lost time and additional effort that was required to make the spectrum workable after the spectrum had been awarded. If we do not learn from the past, we are doomed to relive it in the future.”

It's no surprise some TV band spectrum won't be auctioned in an urban border like Los Angeles, said Michael Calabrese, director of the Wireless Future Project at New America's Open Technology Institute. That is “the logical result of accommodating local TV stations that remain on the air” as the law provides, he said. “The biggest avoidable impairment is the one that four commissioners opposed and only AT&T supported, which is placing high-power TV stations in the duplex gap between LTE downlink and uplink,” Calabrese said. “This is very likely to create another 700 MHz A-block fiasco, interfering with the more valuable LTE downlink blocks, and causing carriers in the end to run to the FCC and demand that the TV stations be relocated all over again. AT&T should focus on that problem rather than whine about statutory protections for local TV stations.”

The FCC has made progress in reducing impairments, said Steve Berry, president of the Competitive Carriers Association. “The commission should be applauded for both reducing the level of acceptable aggregate interference, and for its negotiations with Canada and Mexico on border impairment issues.” The FCC adopted “rigorous interoperability requirements for the 600 MHz spectrum, ensuring that no one dominant bidder is able to bifurcate the ecosystem like AT&T did for years in the lower 700 MHz band,” he said. “I understand the FCC’s simulations produced more than 93 percent of licenses available with low impairment, under any clearing target. Of course, the FCC should strive to clear at least 84 MHz of spectrum and offer as much of it impairment-free as possible, but we are pleased with the work it has done thus far to balance the many competing interests implicated by this first-of its-kind auction.”

“The FCC has done a great job of balancing competing considerations and that strong broadcaster participation will make it not necessary for the FCC to reach problematic levels of impairment,” said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition.