The FCC H-block auction closed Thursday after 167 rounds and 24 bidding days, with total bids of $1.564 billion across the 176 Economic Area licenses. The FCC won’t provide results for a few days, but most analysts have long seen the most likely outcome as Dish Network buying almost all of the licenses (CD Feb 24 p12, Jan 28 p4). The money raised will pay part of the $7 billion startup cost of FirstNet, to be paid out of auction proceeds, industry observers said.
Auctions work best and raise the most when restrictions aren’t placed on who can bid, said the Georgetown Center for Business and Public Policy in a white paper released Tuesday. “Even when all firms enjoy foreclosure value, and even in settings where some firms serve far more retail customers than other firms, unfettered auctions can maximize economic welfare,” the paper said (http://bit.ly/1cMbPB6). “When competitors perceive the same marginal value of spectrum, unfettered auctions can be relied upon to (i.e., they always) generate the welfare-maximizing allocation of inputs.” Spectrum auctions work because “in contrast to bureaucratic allocation methods, well-designed auctions typically ensure that the input is allocated to the users who value that input most highly,” the center said. The center is supported in part by AT&T and the Verizon Foundation. The two major carriers strongly oppose spectrum aggregation limits in the upcoming TV incentive and AWS-3 auctions.
FCC Chairman Tom Wheeler knows the TV incentive auction won’t be easy, but the FCC is determined to get the rules of the road right, he told the GSMA Mobile World Congress. “Let there be no mistake about the degree of difficulty of this undertaking,” Wheeler said, according to prepared remarks released Monday (http://fcc.us/1hlG1nS). “We are attempting something never done before. But as with our original spectrum auctions twenty years ago, the risks are well worth taking. The Incentive Auction presents a two-part challenge of making the right fact-based policy decisions in an open and transparent manner and building user-friendly back-end systems and ensuring that they are exhaustively tested and ready to work from the start. We know the world is watching, and we will get this right.” Spectrum remains a priority for the commission, Wheeler said. “We are committed to bringing more spectrum capacity to market and fast.”
The Minority Media and Telecommunications Council asked the FCC to rework its designated entity (DE) rules to encourage more minority bidders to take part in the upcoming TV incentive auction. MMTC argued in a white paper released Tuesday that while the designated entity rules were effective in encouraging bids by small businesses, including minority-owned business enterprises (MBEs), in the early years of spectrum auctions, that’s no longer the case.
The FCC will work to fill some of the holes that the commission has yet to answer on the dynamics of the upcoming broadcast spectrum incentive auctions, said Chairman Tom Wheeler. “We live in revolutionary times and it’s requiring revolutionary thinking,” he said Monday in a video at an Association of Public Television Stations event in Washington. “Part of that revolution is spectrum and how the analog assumptions of yesterday don’t fit with the digital realities of today.” Never before has there been such a “risk-free and rewarding opportunity for people to participate in the digital revolution,” he said. Wheeler said the channel-sharing trial with Los Angeles TV stations KLCS and KJLA is “really important in demonstrating the realities of moving from analog concepts to digital reality.”
FCC Chairman Tom Wheeler is expected to address the House’s rural telecom working group at the end of the month, a Hill staffer told the NARUC subcommittee in Washington Friday. Reps. Bob Latta, R-Ohio, and Peter Welch, D-Vt., announced the creation of the working group last spring. Patrick Satalin, an aide to Welch, said Wheeler would be addressing the working group. Any Communications Act overhaul will be “front and center” and leave other items “overshadowed,” said Olivia Trusty, an aide to Latta. She expects the Satellite Television Extension and Localism Act reauthorization process, E-rate expansion, spectrum auctions and FirstNet to be major topics in 2014. She anticipates a Communications Act revamp white paper on public safety later this year, among the others that House Republicans have promised as part of updating the Communications Act. Trusty mentioned the Republican Commerce Committee leadership request that the FCC refer any E-rate expansion to the Federal-State Joint Board on Universal Service and called that “a good recommendation.” Welch is focused on the potential benefits of smaller spectrum license sizes and call completion problems, which the FCC is looking at, Satalin said: “Hopefully they continue to beat the drum there.” Sen. Ed Markey, D-Mass., sees E-rate expansion as “extremely important,” Markey Senior Policy Adviser Joey Wender said. “The next step is increasing the speed and making sure there’s access throughout buildings.” Wender mentioned the IP transition and privacy as major issues on Markey’s agenda. Josh Lynch, aide to Sen. Deb Fischer, R-Neb., said data security and the questions on the Target breach are important. Lynch sees potential for “bipartisan consensus,” referring to the FCC Process Reform Act that cleared the House Commerce Committee in December and was introduced in the Senate last week. Those in the Senate perhaps do “need to take a look at the bill,” Wender said.
The wireless industry asked the FCC to move forward on proposals to make wireless siting faster, especially in light of upcoming spectrum auctions that will require additional buildout. The FCC began a rulemaking in September (CD Sept 27 p10) on speeding wireless siting, especially for distributed antenna systems and small cells. Local government groups are raising concerns about the loss of local control on zoning decisions (CD Feb 4 p11). The FCC logged nearly 100 comments in the initial comment cycle. Industry officials said work on the NPRM presents FCC Chairman Tom Wheeler with a series of issues that will inevitably prove controversial.
T-Mobile charged that a Nov. 13 paper by Mobile Future on spectrum aggregation limits in the TV incentive auction distorts the record. T-Mobile supports limits on how much spectrum any carrier can buy in the auction, a position opposed by Mobile Future. “Mobile Future treats vastly different types of spectrum as if they were of equal value,” T-Mobile said (http://bit.ly/KVMKJE). “The analysis attempts to draw parallels between AT&T’s and Verizon’s dominance of Auction 73, where they won 71.66 percent of the total MHz/POPs auctioned, to Clearwire’s acquisitions of 2.5 GHz spectrum in Auction 86. This analogy overlooks important differences between the large blocks of unencumbered ‘beachfront’ 700 MHz spectrum and the patchwork of 2.5 GHz spectrum licenses, which requires many more sites to provide the same coverage and provides significantly weaker indoor penetration capabilities.” Mobile Future also does not offer a complete view of wireless markets in 2014, T-Mobile said: “Mobile Future’s focus on the changing control of various licenses during the last ten years should not distract from today’s market reality: AT&T and Verizon have gained control of the vast majority of the most valuable wireless spectrum.” Mobile Future fired back. “While the facts in Mobile Future’s paper might be inconvenient for T-Mobile and its parent Deutsche Telekom, there is nothing in their filing that actually refutes them,” Mobile Future said in response. “The study carefully documents the successful history of the Commission’s auction and secondary market reforms and the wide range of beneficiaries of those policies, most especially the American people and the mobile innovators working so hard to meet their wireless needs. T-Mobile has actively participated in the secondary market and also in some spectrum auctions, while staying home for others. That is their right, but those business and network decisions are not the government’s job to make or to fix. Rather than pivoting to seek government advantage, T-Mobile would do better to focus on competing in a free and open market where they seem to be doing quite well without the government’s help."
Video interests reign, as industry has spent tens of millions of dollars lobbying Capitol Hill on key communications issues, Q4 lobbying disclosure reports showed this week. Spending was often significantly up from the same period last year, particularly for stakeholders with video interests, but not always. Many disclosure reports highlighted pending priorities before Congress, such as the reauthorization of the Satellite Television Extension and Localism Act (STELA), which expires at the end of 2014 and is the source of much debate -- such as whether the reauthorization should address updates to retransmission consent law. Lobbying is widely expected to spike in 2014 as the House takes on an overhaul of the Communications Act.
New Comptel CEO Chip Pickering at a press conference Tuesday praised FCC Chairman Tom Wheeler’s principles. The principles Wheeler has laid out regarding the IP transition and spectrum auctions are consistent and compatible with CompTel’s values, Pickering said: “We are building coalitions around competitive policies so that we can help influence decisions at the FCC.” Ahead of any potential rewrite of the Telecommunications Act of 1996, Comptel plans to continue educating those on the Hill about how the Telecom Act framework has worked, the importance of preserving “the enduring principles of interconnection,” and the importance of breaking bottlenecks to allow for access to customers, he said. The Telecom Act, along with breaking up AT&T in 1984 and deciding in 1993 to have a competitive spectrum auction, have created more economic growth than any other actions in the past few decades, Pickering said.