FCC WIRELESS BUREAU REJECTS DELAY OF 700 MHZ AUCTION
FCC Wireless Bureau Wed. turned down CTIA request for delay of 700 MHz auction that’s scheduled for June 19. In denying petition, Wireless Bureau Chief Thomas Sugrue cited steps that agency already had taken to alleviate uncertainties involving that spectrum through policies such as voluntary clearing alternatives. “The current statutory scheme, which directs the Commission to conduct these auctions a number of years in advance of the end of the digital television transition period, ensures that uncertainties about the availability of certain portions of these bands may continue for some time,” Sugrue said. FCC faces statutory deadline of Sept. 30, 2002, for depositing proceeds from Chs. 52-59 auction in U.S. Treasury, and earlier statutory deadline for Chs. 60-69 already has been missed in postponements. “Although Congress is aware of this situation, it has not acted to address it by, for example, moving the auction deadlines back or moving the DTV transition forward,” Sugrue said. Congress also hasn’t acted on Administration budget proposal that would delay auctions, he said.
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Sugrue said bureau had adopted reserve price of $2.6 billion for upper 700 MHz band. “Accordingly, if a high degree of uncertainty or other factors depress bidding for these licenses to a level below the reserve, the licenses will not be awarded and the auction will be rescheduled,” he wrote. He said bureau also didn’t agree with CTIA suggestion that holding auction on schedule would be inconsistent with homeland security and public safety goals. Conducting auctions will introduce new stakeholders into bands who “will have an incentive to pursue agreements with incumbent broadcasters for early clearing,” Sugrue said.
CTIA had asked that June 19 auction be postponed, citing continued uncertainty surrounding bidding, in petition that prompted immediate objections from Paxson Communications. CTIA Pres. Tom Wheeler said: “As respectful as we are of the Wireless Bureau’s decision, it is mind-boggling that the FCC would deny an auction delay that was requested in the President’s budget, assumed by the Senate Budget Committee and that would help provide better public safety.”
Meanwhile, back-and-forth had continued in docket over whether auction should be delayed. Spectrum Exchange opposed CTIA request. Last year, Paxson Communications said it was working with Spectrum Exchange and investment bankers Allen & Co. as part of Spectrum Clearing Alliance, which planned to negotiate with 700 MHz bidders on compensation for broadcast incumbents. Spectrum Exchange said in April 4 letter to FCC Chmn. Powell that it was working on “private market mechanism” for clearing Chs. 60-69. It said most uncertainties on band clearing in upper band had been resolved by previous FCC actions that laid out voluntary mechanisms. But some “major uncertainties” remain for lower channels of band, where FCC hasn’t extended same voluntary band-clearing regime as it has for Chs. 60-69, Spectrum Exchange said. “Public policy might be served by waiting to hold Auction No. 44 [lower bands] until after Auction No. 31 [for upper band] has concluded, and if the voluntary band- clearing regime and package-bidding procedures are judged to be successful, to extend these to the lower 700 MHz band,” Spectrum Exchange said. “If Section 309(j) of the Communications Act required auctions to be postponed whenever there was any uncertainty about future spectrum supplies, then it would never be permissible for spectrum auctions to be held,” it said, urging that upper band auction remain scheduled for June 19.
Council Tree Communications also urged FCC to keep that date. That company said that although broadcast incumbency in 700 MHz bands indeed presented planning challenge for potential bidders such as Council Tree, “that challenge was not all insurmountable, as CTIA suggests,” it said. It’s investor in AT&T Wireless-financed designated entity Alaska Native Wireless, which won spectrum in NextWave re-auction, and Council Tree holds full voting rights in that entity. It said in April 9 letter that continued presence of broadcasters at 700 MHz should encourage FCC to keep auction on track, “particularly for the benefit of smaller bidders.” It said: “Frequent delays in conducting the upper 700 MHz band auction and the current stalemate regarding broadband PCS licenses creates the impression that the Commission’s competitive bidding processes cannot be relied upon.” That makes it harder for potential bidders to make plans to participate in auctions and for potential small bidders such as Council Tree to find financial backers. “Delay in auctioning the upper and lower 700 MHz band licenses at this point, therefore, will frustrate the ability of smaller entities actually to participate in the auctions in the long run,” Council Tree said. It said lower bands in some cases contained licensing areas that were less dependent on band- clearing process: “So long as the availability of redeployed 700 MHz spectrum remains a fiction, there will be little incentive for vendors seriously to develop equipment for this spectrum, thus aggravating 700 MHz valuation issues.”