FCC DELAYS 700 MHZ AUCTIONS AS FOCUS TURNS TO SPECTRUM PLANS

President Bush Wed. quickly signed into law bill that would delay bulk of 700 MHz auctions. Auctions were split into 2 parts -- lower band, which included Ch. 52-59, and upper band of Ch. 60-69. Legislation, which passed Senate late Tues. afternoon and quickly moved through House at 6:20 p.m., would delay until at least Aug. 19 bidding for smaller C- and D-block licenses. Larger A-, B- and E-block licenses and upper band auction were delayed indefinitely delayed. Upper band auction had been scheduled to begin Jan. 14. Legislation directs FCC to hold auction for remaining licenses by time Commission’s auction authority expires, which now is in 2007. Law also eliminates legislative deadlines for auctioning spectrum at 1.7 GHz and 2.1 GHz, which have been under consideration for advanced wireless services. Law directs Commission to hold auction for smaller slices of lower 700 MHz band between Aug. 19 and Sept. 19, with proceeds to be deposited in U.S. Treasury by Dec. 31. Within one month, FCC is required to return full amount of upfront payments to bidders on A-, B- and E-block licenses. After delaying start of June 19 auction by one day, Commission moved quickly to comply with law Wed. by postponing lower band bidding further. It said law limited participation in Aug. auction to entities that were qualified to bid in lower band auction. FCC Wireless Bureau plans to release shortly public notice on revised spectrum inventory, timing and other specifics of remaining auction. Commission said notice also would provide details of refund procedures.

Quick congressional action marked significant victory for CTIA, which had lobbied hard for statutory changes that would allow FCC to delay bidding for both bands. Group argued that more time was needed before start of auctions to clear up issues such as incumbent broadcasters and pendency of other spectrum proceedings that could include this band. Passage of bill represented setback for Paxson Communications, which had advocated both auctions’ being held on time. Paxson couldn’t be reached for comment Wed. Attention of Hill leadership to auction delays appeared to have been critical to expediting House and Senate votes, particularly interest of House Commerce Committee Chmn. Tauzin (R-La.). Measure passed in both chambers by unanimous consent, despite threat of holds by several senators. One wireless lobbyist said he tracked down rumors of 30-40 holds, which would have meant that 60 votes would have been needed for passage. Concerns of Sen. Baucus (D-Mont.) appeared to have been allayed by Tues. letter from CTIA, which pledged to not attempt any change in Aug. auction. “Indeed, CTIA will oppose any efforts to change this timeline for this spectrum auction,” CTIA Senior Vp-Govt. Relations Steven Berry said.

At CTIA Wireless Technology Day on Hill Wed., Sen. Brownback (R-Kan.) said that with passage of auction delay legislation, it now was “imperative” that FCC, NTIA and Defense Dept. identify and reallocate additional spectrum for 3G. “Clearly, Congress must assert itself in this process and not wait until next year to do so,” he said. Administration is expected to release later this month 3G viability assessment, including technical feasibility study by NTIA on extent to which govt. incumbents would be able to vacate 1.7 GHz band that now is occupied mainly by military. Band of 1710-1755 MHz already has been reallocated from govt. to commercial use and much of recent industry attention has been focused on 1755-1770 MHz. DoD has raised concerns about its ability to move systems from that remaining 15 MHz, in part because some systems use contiguous, higher spectrum and it wouldn’t be simple task to isolate that sliver of spectrum for relocation. Wireless industry has made case that there aren’t technical obstacles that couldn’t be overcome to move DoD users from that slice of spectrum. Last fall, Administration took off table most of 1755-1850 MHz occupied by DoD that had been under consideration for 3G. Govt. revised assessment of 3G to focus on potential use of 1710- 1770 MHz and 2110-2170 MHz.

One possibility is that final assessment, instead of outlining just ways to make entire 120 MHz of those bands available, instead could focus more on short-term uses of 90 MHz, several sources said. NTIA Dir. Nancy Victory had cautioned CTIA conference in March that it might not be possible to clear all of 120 MHz that was under review (CD March 18 p1) and that one focus of review had been how fast spectrum could be cleared. CTIA’s Berry said group didn’t have position on potential scenario that would free up 90 MHz in relative short term, rather than 120 MHz that has been part of assessment or 180 MHz that had been sought by industry before Sept. 11 attacks altered policy landscape for national security. But he said if govt. opted for near-term release of 90 MHz, it would be important to have certainty about when spectrum would be available, including clearing incumbents, providing them with replacement spectrum, holding auction. CTIA would hope for auction in 2004 time frame, Berry said. That would be in line with Administration budget proposal this year that would move statutory deadline for 1710-1755 MHz bidding to 2004 from 2002. Over longer period, Berry said group would like to see glide path for making spectrum available between 2004 and 2008-2009, by which time industry would have had chance to bid on substantial portion of spectrum it had been seeking for 3G.

While NTIA has purview over govt. spectrum now in use at 1.7 GHz, only FCC has auction authority over bands eventually freed for commercial users. One hope of industry has been that recent increase in cooperation between NTIA and FCC on issues where they share jurisdiction could lead to smooth coordination between band-clearing decisions made by NTIA and allocation policies crafted by FCC. With delay of 700 MHz auctions, policymakers have additional time to focus on more rational, overarching spectrum policy, Berry and others said Wed. “Time is our friend to rationally get this spectrum into wireless CMRS use,” he told reporters. Finding 90 MHz of 3G spectrum that would be “clear and ready to go” is among issues under review in upcoming NTIA viability assessment, which seems to be making some headway on issue of finding comparable spectrum for military users that could be relocated, Berry said. Key issue that wireless industry will be examining when final results of assessment are available is how usable that spectrum was and in what time frame, he said. NTIA report may focus on 2110-2155 MHz and 1710-1755 MHz, with portion of that to be freed in 2004 and rest between then and 2008-2009. Wireless industry hasn’t given up on 15 MHz at 1755-1770 MHz eventually being freed for commercial users or on eventual availability of 120 MHz and more of spectrum being auctioned for 3G services. “We still want 120 MHz -- everybody knows that,” Berry said.

Pickering Sees Time to Study Other Issues

Pickering said 700 MHz delay gives more leeway to lawmakers to examine wide array of spectrum management issues as part of effort overseen by House Telecom Subcommittee Chmn. Upton (R-Mich.). Tauzin recently tasked Upton to organize effort to define spectrum management plan in policy and eventual legislation (CD May 3 p3). Pickering told reporters it was unlikely there was enough time left this year to move legislation that would look at spectrum reform issues such as allocation and auction changes. On relocation fund bill, he said: “We need to get that in this year.” Proposed legislation still is under review at Office of Management & Budget but is expected to be released as early as next week. Pickering called that proposal “linchpin” of pending spectrum management efforts because it would provide incumbent spectrum users assurance that they would be compensated for moving.

NTIA’s Victory lauded legislation, saying it “showed that sound spectrum policy triumphed over counterproductive deadlines.” She said that with additional time, broadcasters and potential bidders for spectrum should “work diligently to remove the uncertainties regarding when the spectrum can best be put to use.” Besides directing FCC to specify when it intended to reschedule auctions, measure called for Commission to report to Congress within one year on progress in DTV transition and assignment of additional spectrum for advanced wireless services. Bill also outlines pending spectrum decisions that are intertwined, including proceeding at FCC to mitigate interference problems for public safety operators at 800 MHz. Proposals submitted to Commission included ones that would reconfigure spectrum at not just 800 MHz, but 700 and 900 MHz, as well. “The Commission should not hold the 700 MHz auction before the 800 MHz interference issues are resolved or a tenable plan has been conceived,” new law says.

While many rural carriers had sought to keep June 19 auction date for entire lower band, carving out C- and D- block licenses was largely seen as compromise because those licenses were configured to cover small areas that would be amenable for rural telcos. Rural Telecom Group Gen. Counsel Carri Bennet said she took “solace” in CTIA’s commitment to oppose any attempts to alter bid date for later this summer on smaller licenses. One concern of some rural carriers had been “the people that put money into the auction will probably now turn their attention to the licenses that were set aside,” scenario that could increase prices for smallest carriers if larger bidders redoubled their attention on remaining licenses, she said.