FCC Commissioners L to R: Commissioner Jessica Rosenworcel, Commissioner Robert M. McDowell, Chairman Julius Genachowski, Commissioner Mignon Clyburn and Commissioner Ajit Pai.
(Credit: FCC )The Federal Communications Commission has begun the long process of reclaiming broadcast TV spectrum.
On Friday the five FCC commissioners unanimously supported a proposal that will free up spectrum held by TV broadcasters and auction it to wireless broadband providers. The complicated process, which is the first of its kind, has three components.
First there is the reverse auction, where TV broadcasters will voluntarily sell their spectrum back to the government. Then there is a "repacking" or re-allocation of broadcasters, who didn't participate in the auction to make sure the spectrum is being used efficiently and there are big enough blocks to sell to wireless operators. And finally, the plan calls for a forward auction, in which the wireless broadband providers would bid on available.
The commission has set a goal of having all of this completed by 2014. It's an ambitious goal, which will require that the agency conduct the auction forward auction without bidders knowing in advance of the auction exactly which specific frequencies or geographic locations they will be bidding on.
The two Republicans on the Commission expressed concern over how much unlicensed spectrum was being set aside. And they also worried that the auction would be able to cover the cost of the auction, while also satisfying Congress's intent of using the proceeds to pay for a new public safety wireless broadband network.
Commissioner Ajit Pai was particularly concerned about the cost of the auction. And he asked a series of questions that he thought should be part of the rulemaking. Specifically he wanted to know if the FCC had considered what would happen in the $1.75 billion set aside to compensate broadcasters for repacking the spectrum did not cover all those expenses.
Democratic Commissioner Jessica Rosenworcel called for fairness in the auction process. She explained that not only should broadcasters who do not wish to give up spectrum be treated fairly, but she asked broadcasters evaluating the option of selling spectrum to make a "fair assessment" of the opportunities for selling the spectrum.
FCC Chairman Julius Genachowski called the proposal the world's first incentive spectrum auction. And he acknowledged that when it was first proposed by the committee that put together the National Broadband Plan in 2009 that no one thought it could work. But now the idea has become law, he believes it offers broadcasters and wireless broadband providers a great opportunity.
Verizon Wireless, the nation's largest wireless carrier, applauded the FCC for its efforts on this auction.
"Consumer demand for advanced wireless services is growing rapidly, and more spectrum must be made available for mobile services in order to meet consumers' needs," Tom Tauke, Verizon's executive vice president for public affairs said in a statement. "Today's action by Chairman Genachowski and the Commission is an important step toward achieving a successful incentive auction."
But some people in the industry wonder how the FCC will be able to pull off this daunting task. Earlier in the week, Steve Berry head of the Competitive Carrier Association said he was unsure that the FCC would be able to meet its aggressive 2014 target for holding these auction.
"If they hold both the reverse auction and the forward auction at the same time, I'm just not sure how it can be done," he said. "I'm not sure who will be able to bid on spectrum without knowing how much they will get and whether or not the spectrum is contiguous."
The FCC's proposal is not the final word on the auction. And the agency has asked the industry to comment on the proposal and offer suggestions. Commissioner Mignon Clyburn said she was happy to see the proposal included questions pertaining to interoperability. In her prepared remarks, she discussed how interoperability issues in the lower 700MHz block of spectrum is "impeding competitive options for consumers." And she called on the FCC to examine whether the agency should mandate interoperability as a requirement in the rules for the incentive auctions.
The agency also opened another rule making process to examine the FCC's current spectrum screen. The agency has used this loose screen when evaluating mergers and spectrum transactions to determine of a single carrier has too much wireless spectrum. The evaluation is done on a case-by-case basis. And the proposal voted on and approved by the FCC will look at whether the rules need to be more firm.
Both Republican commissioners McDowell and Pai expressed concern that a strict spectrum cap could harm growth in the wireless market. Still, Commissioner Pai said the current way that the FCC evaluates spectrum holdings is flawed and there is too much uncertainty in the market. But he, along with Commissioner McDowell, cautioned against enacting strict measures that would keep some players from participating in the incentive auctions.
"I am skeptical of any steps that would depress participation in the auction, such as tightening the spectrum screen, adopting a hard cap on spectrum holdings, or imposing requirements that would enable the Commission to second-guess how wireless operators run their networks and thus reduce the value of spectrum," Pai said.
The next step in the process is that both of these items will be opened to the public for comment. And at the end of the comment period, the FCC will evaluate the information and draft a formal proposal that will be voted on by the commission.
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