The FCC released an order early Tues. conditionally approving the merger of Cingular and AT&T Wireless. However, Comrs. Copps and Adelstein issued vigorous partial dissents, saying the order fails to address the effect on intermodal competition between wireline and wireless markets.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
The Justice Dept. approved Cingular Wireless’ (CW) acquisition of AT&T Wireless (AWS) on Mon., on the condition that Cingular divest holdings in 13 markets. The license transfers still require FCC approval, but the DoJ decision marks a big step forward in the process. The DoJ said CW agreed to the conditions, which require Cingular to sell AWS mobile voice assets in some areas and to sell AWS mobile broadband assets in other areas.
AirCell warned the FCC in a letter sent to the 5 Commissioners that indications from the FCC are that the Commission staff is recommending a single 4 MHz license, which AirCell warned would effectively hand Verizon AirFone a continuing monopoly in commercial aviation communications. The item is scheduled for a vote at the Nov. meeting but could still fall off the agenda. An official with Verizon questioned the AirCell arguments, saying all his company has asked for is an auction, not to be the winning bidder.
The Wireless Bureau is conducting a mock spectrum auction today (Thurs.) for students at McKinley Technology High School in D.C. “The students participating in the mock auction will better understand software development processes and also how auctions impact their daily lives (e.g., mobile phones, eBay auctions),” the bureau said. “The auction will also give them the opportunity to ask candid questions about potential careers.”
Wireless carriers led by CTIA are weighing a petition seeking reconsideration after the FCC issued an order late Fri. denying 3 carrier petitions seeking an end to designated entity (DE) set-asides for small players in the upcoming Auction 58. In a positive note for carriers, the FCC delayed the critical PCS auction 2 weeks to Jan. 26.
Chmn. Powell said Thurs. he hasn’t decided whether the Commission should take steps on its own to clear the 1.7 GHz spectrum occupied by the Dept. of Defense if Congress fails to pass the spectrum relocation trust fund bill (HR-1320). The comments came after the Commission approved 5-0 a “clean up” order that addresses some of the remaining parts of clearing the spectrum, which ultimately is to be auctioned for advanced wireless services (AWS).
The FCC’s Advisory Committee on Diversity for Communications in the Digital Age approved a resolution supporting a designated entity set-aside in upcoming Auction 58. The set-aside is controversial, with wireless carriers mounting a campaign to open up auction rules. “The often times capital-intensive nature of communications businesses and the difficulties experienced by entrepreneurial companies in accessing capital make it virtually impossible for entrepreneurial companies to secure valuable spectrum licenses when bidding against well-capitalized incumbents,” the committee said. “Entrepreneurial companies will be successful in raising the capital needed to acquire and build out valuable spectrum licenses only if the capital markets perceive that the FCC’s Designated Entity eligibility rules will remain stable and certain.”
Wireless carriers acknowledged Fri. they seem to be making little progress on getting the FCC to change course on upcoming Auction 58, the major PCS auction slated for Jan. Carriers led by CTIA have been pushing the Commission to changes the rules of the auction to eliminate the set-aside for “designated entities” of more than 1/2 the 234 10-MHz licenses up for sale.
CTIA said in an ex parte filing at the FCC the Commission should change the rules for Auction 58 scheduled for Jan. to move away from the designated entity set-aside since that spectrum is within the small amount that will likely be made available to carriers soon. The ex parte noted that spectrum scheduled to go for advanced wireless services is “unlikely to be fully cleared or available for auction in the next few years.” Meanwhile, “substantial time” will be required to implement the transition to a new bandplan to open up 2.5 GHz spectrum. And 700 MHz spectrum bands “remain heavily encumbered by incumbent broadcast operations; FCC is unlikely to conduct another auction.”
The Minority Media & Telecom Council said in an FCC filing that while the designated entity (DE) set-aside in spectrum auctions isn’t a perfect mechanism, it mustn’t be scrapped. “Like most federal programs, the DE program is imperfect and can be improved,” the group said in an ex parte filing at the FCC, in a docket exploring a wireless carrier proposal to eliminate such set-asides: “If a ‘compromise’ is to be struck, then, it should be for the Commission to continue the DE program in its present form, while at the same time taking note of legitimate criticisms… raised by both its supporters and opponents.” CTIA and T-Mobile met with Comr. Adelstein last week to lobby him to back an end to set-asides. T- Mobile argued: “An analysis of the top auction winners demonstrates that the DEs overwhelmingly either are in financial distress or have sold their licenses.” T-Mobile said at a minimum the licenses returned by NextWave should be sold without set-asides. “FCC has fiduciary responsibility to ensure that the NextWave licenses are open to all bidders to maximize the benefit to U.S. taxpayers,” T-Mobile said. CouncilTree, a leading DE, met with Chmn. Powell last week to urge the FCC to “stay the course” on the auction. “Any further weakening of the DE rules/closed licenses denies broadband PCS entry opportunities for: small businesses; new entrants; minority and women-owned businesses.”