Multiple stages of the incentive auction are seen as a near certainty and the process could last into 2017, broadcast attorneys, analysts and broadcasters told us after the release of the $86.42 billion clearing cost of the reverse phase of the auction after it ended at round 52 Wednesday. With auction costs and the $1.75 billion relocation reimbursement fund added on, forward auction bidders would have to more than $88 billion to prevent the auction from going to a second stage.

The FCC offered details on rules opening high-frequency bands for 5G, scheduled for a vote at its July 14 meeting. The FCC said in a fact sheet that the order adds a huge amount of spectrum to what's now available for licensed and unlicensed use, a point Chairman Tom Wheeler made in a major policy speech June 20 at the National Press Club (see 1606200044). The agency said it will impose limits on high-frequency spectrum holdings -- imposing restrictions limiting carriers to buying 1250 MHz of spectrum in the bands in the initial auctions and a threshold of 1250 MHz for case-by-case review of secondary market transactions. Satellite interests were at the commission last week to seek changes.

Sharing the 28 GHz band between fixed satellite service (FSS) and upper microwave flexible use licensees requires restrictions on UMFU skyward emissions to protect satellite broadband service, satellite industry representatives told Edward Smith of Chairman Tom Wheeler's office, according to an ex parte filing Thursday in docket 14-177. The restrictions would either put an aggregate cap on skyward equivalent isotropically radiated power density or require the FCC to codify and monitor UMFU device certification matters such as off-axis EIRP, power control and antenna down-tilt, they said. The commission as soon as next month may vote on rules helping 5G use the 28 GHz band already occupied by FSS (see 1606070059). The satellite representatives also said any rules need to prevent interference to satellite receivers, protect existing FSS earth stations "and allow reasonable deployment" of new co-primary FSS earth stations. Meeting with Smith were officials from EchoStar, OneWeb, O3b, ViaSat, Inmarsat and SES. In a separate meeting with International and Wireless bureaus and Office of Engineering and Technology representatives and with eighth-floor staffers, Nextlink Wireless said if the agency changes the geographic areas for UMFU licensees in the 28 GHz band, those licenses should be based on partial economic areas (PEA), the end result being harmonized license areas for all new 5G licensees. County-based licensing "present[s] many financial and technical challenges for incumbents and new operators alike," such as requiring investments in additional radios, construction, fiber backhaul and location rents, meaning bigger challenges for licensees in deployment and possible inadequate populations to support ongoing activities, Nextlink said in a filing in the docket Thursday. It also said. with the FCC planning to license 600 MHz spectrum, which will likely be used for some 5G services, based on PEAs, that would create greater uniformity among 5G licensees' license areas.

Key Commerce Department challenges include addressing FirstNet’s “adequacy of funding, effective consulting, internal control, and staffing and other organizational issues” and addressing an increasing demand for spectrum, Deputy Inspector General David Smith said in his office’s semiannual report to Congress, released this week (see 1605310058). Smith is now the acting inspector general, and the Senate Commerce Committee held a nomination hearing last month for the administration’s nominee for a permanent IG (see 1605100057). The IG’s report referred to President Barack Obama’s directive to make 500 MHz of spectrum available by 2020. “To meet the 2020 deadline, NTIA needs to incorporate the lessons learned from its research and development activities into actual strategies that lead to results -- as well as identify the availability of, and more efficient use of, radio frequency spectrum,” the 64-page IG report said. “Also, the termination of the Federal Spectrum Management System presents a challenge to NTIA’s capability to manage spectrum, it will still be in need of a technological system that can modernize, automate, and integrate key spectrum management functions.” In the course of an audit, the IG “found FirstNet’s process to inform federal agencies about the benefits” of its network “and its initial efforts to address federal agency challenges reasonable given the limitations on federal consultation mentioned throughout our report.” The IG recommended the FirstNet CEO “identify and document non-subjective performance indicators and milestones and define and document how each will be measured”; “identify steps to mitigate the risk of low federal participation in FirstNet’s Federal Stakeholder Engagement Plan,” and “perform and document analysis of federal consultation and outreach efforts, including analyses specific to the 14 agencies that compose the Emergency Communications Preparedness Center.” There's an ongoing audit of FirstNet’s “processes for entering into, monitoring, and closing its interagency agreements,” the IG noted. Five of nine broadband stimulus grant recipients IG reviewed “had excess equipment, $3.5 million in total, including equipment outside the needs of completing the grant projects,” the report said. “Also, we found that NTIA’s processes for identifying and disposing of [Broadband Technology Opportunities Program]-funded excess inventory were inadequate for effective management of these awards.” It found that $600,000 “may have been improperly disposed,” it said. The IG report also said five entities were debarred for three years after allegations that an unnamed stimulus grantee “misused and mismanaged grant funds and that a whistleblower employee of the subrecipient was terminated for disclosing the misuse and mismanagement.”

The FCC needs to carve out an exception to Section 15.201 of its rules for unlicensed wireless microphones “in light of the unique applications of microphones compared to other types of devices for which the rule was created,” Sennheiser said in a filing at the FCC. The wireless mic maker reported on a meeting with officials from the FCC Office of Engineering and Technology. The FCC approved new rules for wireless mics last August tied to the TV incentive auction and 600 MHz band repacking (see 1508060050). “Sennheiser discussed possible scenarios for modifying existing equipment to ensure operations would meet the new rules, and the equipment certification implications, using the clearing target band plan as an example,” Sennheiser said. The company said professional productions require interference protection from white space devices. “A pathway for this needs to exist for legitimate performing arts companies that do not meet the 50 microphone threshold for licensed operation,” it said. Sennheiser also said it proposed alternate frequencies in the 169-172 MHz band that could be used for wireless mics. "With regard to the 1.4 GHz band, Sennheiser noted that the 30 MHz spectrum limit was unexpected and not needed." the company said. "Use is limited to specific licensees and circumstances, and the frequency coordinator is well-situated to determine whether the number of channels requested by [a] licensee is necessary and appropriate." The filing was posted Wednesday in docket 12-268.

FirstNet’s concurrent pursuit of a partner to build a network using 700 MHz spectrum is likely to have an effect on the TV incentive auction because AT&T and Verizon are likely contenders for the FirstNet contract, said Wells Fargo analyst Jennifer Fritzsche Wednesday in a research note. Responses to the FirstNet request for proposals are due May 31, just as the reverse part of the auction gets started. Other analysts and observers disagreed whether Fritzsche is on target in her warning.

Parts of the rules for the TV incentive auction could make it less likely that small carriers will bid for 600 MHz spectrum once the forward auction gets underway, industry officials said. One complication for competitive carriers interested in bidding for reserve spectrum set aside for them in some markets is that they won’t know until the final stage of the auction whether a spectrum reserve will be available, officials said. A second challenge is that bidding is more complex than in past auctions, with a “no excess supply” rule that could prevent a company from exiting a market after making a bid. The FCC didn't comment.

Citi Research said the 126 megahertz clearing target for the TV incentive auction (see 1604290048) is higher than it had predicted. “More spectrum is available for sale than we previously expected, perhaps creating an opportunity for carriers to aggregate more spectrum or pay a lower price than we had estimated,” Citi wrote investors. “This is especially positive for Buy-rated T-Mobile.” Other stock analysts made similar comments late last week and so far this week. The high clearing target means the 600 MHz band will likely emerge as a very valuable band for the wireless industry, emailed Jim Patterson of Patterson Advisory Group. “More spectrum, combined with 5G and other network developments, should be enough to tip the scales in favor of new bidders or challengers looking for nationwide differentiation,” Patterson said. “The implications of this are very positive for bidders such as Comcast, T-Mobile, America Movil and NTT DoCoMo. It could place competitive pressures on Sprint, who has not selected to bid, as equipment and device manufacturers choose to move their development efforts to 600 MHz use cases.”

With the initial spectrum clearing target for the auction set at 126 MHz (see 1604290018), questions remain about the TV incentive auction. Analysts and other industry observers said Friday the outlook is improving. The FCC said Friday that, as some expected (see 1604270053), the 126 MHz is enough for the FCC to offer 10 paired blocks in most markets. The FCC also said the clock phase of the reverse auction will start May 31, the day after Memorial Day. A senior FCC official said the high target should ensure the supply of spectrum will meet demand. The official said the reverse auction is likely to run four to six weeks and is limited to 52 rounds.

The FCC Friday announced a 126 megahertz initial spectrum clearing target for the TV incentive auction, a figure on the high end of possible targets. As a result, 100 megahertz, or 10 paired blocks, of 600 MHz spectrum will be offered in the forward auction on a “near-nationwide” basis, the FCC said Friday in a public notice. The FCC also said the reverse clock auction will start May 31.