FCC Modifies AWS Band Plan, Refuses to Change DE Rules

As expected, the new band plan creates the same block sizes as proposed by T-Mobile and Rural Telecom Group (RTG), but places them in a different order. It breaks the 30 MHz E Block at 1740-1755 MHz and 2140-2155 MHz into one 10 MHz block (new E Block) and one 20 MHz block (new F Block) -- creating a 6th block to “facilitate access to the spectrum by a wider array of new and existing wireless carriers.” Echoing a Verizon Wireless proposal, the order moves the cellular market area (CMA) license to the A Block from the D Block.

As sought by T-Mobile/RTG, the FCC increased the amount of spectrum licensed on a CMA basis from 20 MHz from 10, to give smaller rural and regional providers access to this spectrum at auction. It also provided for an additional 10 MHz of spectrum licensed by economic areas (EA), in line with the T-Mobile/RTG’s proposal. The order aligns the CMA, EA and REAG spectrum blocks to “provide multiple opportunities to aggregate spectrum, including opportunities to aggregate EA licenses with REAGs,” Wireless Bureau Broadband Div. Special Counsel Peter Corea said in presenting the item.

Under the revised AWS band plan, 2x10 MHz A Block will be licensed on a CMA basis; 2x10 MHz B Block will be licensed on EA basis, as will the adjacent 2x5 MHz C Block. Blocks D, E and F will be licensed on REAG basis, as will two 2x5 MHz and one 2x10 MHz blocks.

T-Mobile and RTG applauded the decision, calling it a major victory for rural carriers and their consumers. T- Mobile Vp-Govt. Affairs Tom Sugrue commended the FCC revision of the band plan in favor of a 6-license plan. He said the new band plan “responds to the needs of rural and smaller incumbent carriers to acquire spectrum is a manner that will promote competition and strengthen service for the benefit of consumers.” RTG CEO Jessica Bridges said the FCC’s “consolidation of spectrum blocks will allow rural carriers to avoid costly and time- consuming transitions to current BRS licensees operating on BRS channels 1 and 2A.”

Comr. Copps said the new band plan “balances the needs of different types of wireless companies by offering both geographically large and small auction areas.” Both Martin and the commissioners voiced their commitment to sticking to the schedule and conducting the AWS auction next June. They said the resolution of the pending petitions on the AWS spectrum and the new rules adopted Fri. would enable the FCC to do that. “The adoption of this order is going to allow the Commission to move forward expeditiously toward auction of 90 MHz of [AWS] spectrum,” Chmn. Martin said: “I do think we tried to address some of the concerns that minorities and rural providers have had, adopting some of the recommendations… that identify spectrum covering smaller geographic areas.”

The FCC also modified one of its original technical rules, revising Sec. 27.50(d)(1) of its rules to eliminate the transmitter output power limits for AWS base and fixed stations consistent with PowerWave’s petition.

The Commission also denied a Council Tree petition seeking changes to the DE rules. It affirmed its 2003 decision not to set aside part of the 1710-1755 MHz and 2110-2155 MHz bands exclusively for small businesses that meet eligibility criteria. “The Commission has generally used bidding credits rather than eligibility restrictions to encourage the participation of designated entities in a competitive bidding,” Corea said. The FCC also affirmed its 2003 decision to provide 2 levels of bidding credits to small businesses that are winning bidders for licenses in those areas. The agency denied a Council Tree request to add a 3rd level of bidding credits and 2 proposals that would have amended its rules on eligibility for DE status and DE benefits such as bidding credits.

Copps said he’s “glad” the FCC will explore whether it should “close a potential troubling loophole” in the DE program. He called on the agency to “put this NPRM out immediately,” so it can “develop whatever action plan may be necessary if it is determined that new protections are needed for the DE program well before the [AWS] auction is held.” Copps expressed concern about carriers “with billions of dollars in revenues” being able to receive DE discounts by partnering with small companies. “The DE program was initiated to create new competition and to give small entrepreneurs a chance to bring innovations to consumers,” Copps said: “If there is a loophole that could result in millions of dollars less in auction revenues [due to discounts] without these goals being served, we should act expeditiously to protect the DE program.”

Comr. Adelstein agreed, saying examining the DE program is “particularly important given the dramatic scope of consolidation in the wireless industry in just the last 12 months” and the largest carriers’ market share, estimated at up to 90%. “It is unclear to me why the Commission allows large wireless companies to partner with DEs,” Adelstein said: “Do we want the nation’s largest wireless carriers partnering with DEs to get a 25% discount so that auction revenues to the U.S. treasury could potentially be reduced by well over a billion dollars? How is the public interest served in that outcome?” Both Copps and Adelstein said they believed the FCC -- if it moves quickly -- can resolve this issue in time before the AWS auction, without having to delay it. Wireless Bureau Acting Chief Cathy Seidel couldn’t give the precise time for the launch of the DE NPRM, but said it would be very soon, given the commissioners’ intent to move this issue fast.

Comr. Abernathy said while she was “completely comfortable with an idea of looking at our rules and deciding whether and how we should change them, in this particular instance, I think our DE rule should apply broadly and not be revised docket-by-docket.” She also said she didn’t know whether Council Tree’s proposal “makes sense or not,” because only a couple of parties commented. “It’s complex, this idea that perhaps you can’t partner with large carriers within certain geographic areas,” she said: “I think while in overlapping areas it may not make business sense for large carriers to partner with DEs, geographic areas cover more than simply where you provide service. To the extent that a large carrier in a certain geographic area… wants to invest in a DE, I say more power to them… I am keeping an open mind about whether or not that presents any problems.”

CTIA, which hasn’t taken a position on the AWS band plan due to differences in views of its members, applauded the FCC action. The decision will “ensure that consumers in both large urban and smaller rural markets continue to enjoy the benefits of a competitive mobile wireless marketplace, by making a mix of both large and small service areas available in the upcoming auction,” CTIA Pres. Steve Largent said: “The Commission has also properly recognized the effectiveness of bidding credits as a tool to ensure spectrum licenses are made available to a diverse group of licensees.”