History shows that to guarantee a successful TV incentive auction, the FCC should do as little as possible to offer preferences for some bidders over others, said Gregory Vogt, visiting fellow at the Free State Foundation, in a Monday blog post. Policymakers need look no further than the AWS-3 auction in Canada versus an auction of similar spectrum in the U.S., Vogt wrote. “The Canadian government specifically intended that a major goal of its AWS-3 auction was to inject more competition in the market, rather than obtaining auction revenues,” he said. “Thus, it set-aside a block of 30 MHz available only to bidders that were smaller than the ‘big three,’ who currently have roughly a 90 percent market share. All other bidders had to vie for two 10 MHz blocks.” The AWS-3 auction in Canada brought in $2.2 billion, versus close to $41.3 billion for the U.S. version, he said. “The skewed Canadian auction resulted, according to one assessment, in a cost of about 11 cents per MHz/Pop for the favored bidders, while Telus paid $3.02 per MHz/Pop and BCE paid $2.96 per MHz/Pop,” Vogt said. A skewed system “could prove catastrophic for the U.S. incentive auction,” he said. “If broadcasters believe that the potential outcome of the incentive auction is relatively low, they may well just hang on to their spectrum. In that case, the government, broadcasters, mobile providers, and consumers will all lose.” The Hispanic Technology and Telecommunications Partnership, meanwhile, met with Commissioner Mike O’Rielly to argue against providing additional benefits for competitive carriers in the auction. “HTTP made it clear that it does not support multi-billion [dollar] companies getting multi-billion dollar, taxpayer funded discounts on spectrum by trying to masquerade as a small DE and that HTTP is opposed to further set asides in the upcoming auction,” the group said in a filing in docket 14-28.
The FCC shouldn't destroy the historic designated entity classification because of concerns over the bidding practices of a few DEs in the AWS-3 auction, U.S. Cellular said in a meeting with Wireless Bureau Chief Roger Sherman and other FCC officials, according to ex parte filing posted Monday by the FCC. AT&T and smaller carriers last month asked the FCC to restructure the DE program in light of alleged bidding irregularities by two DEs working with Dish Network in the auction, known in FCC parlance as Auction 97 (see 1505110048). The FCC should “not allow a justified concern over possible abuses among participants in a joint bidding arrangement in Auction 97 to obscure its traditional recognition of the necessary financial prerequisites of a solid DE program, one which allows DEs to achieve adequate scale and scope, and gives them a reasonable chance to succeed,” U.S. Cellular said. Since 1994 when the DE program was launched “the Commission has acknowledged that bidding credits for DEs have been a necessary incentive for these investments, which have allowed DEs to obtain more than a negligible number of licenses,” the carrier said. U.S. Cellular highlighted its work with DEs to bid in spectrum auctions. “The DE program has helped U.S. Cellular remain in business and invest aggressively as a mid-sized carrier in an industry dominated by giants,” it said. The filing was made in docket 14-70.
Northstar Wireless asked the FCC to reject a pleading by AT&T that it said supports petitions asking the agency to reject Northstar’s applications for the licenses it won in the AWS-3 auction. Northstar was one of the two designated entities (DEs) working with Dish Network in the auction (see 1505190046). The AT&T motion is “misleadingly styled as a ‘partial opposition’ when it actually arguably appears to seek denial of Northstar’s applications,” Northstar said. “Rather than file a petition to deny, AT&T has attempted to piggyback on timely filed applications.” The “stratagem” should be denied, Northstar said. The DE is controlled by Doyon, an Alaska Native Corporation. Dish is “confident” it and the DEs followed FCC rules in the auction when they bought $13.3 billion worth of spectrum for $10 billion, saving more than $3 billion in discounts, Dish CEO Charlie Ergen said on a recent earnings call (see 1505110035). AT&T is "not an applicant for the licenses at issue in this proceeding," Northstar said. "Moreover, AT&T does not qualify within the meaning of an 'interested party' under Section 1.939(f) of the Commission’s rules as it alleges no ownership or other interest in the licenses in question." The AT&T filing was made May 18 and challenges to the license applications were due at the FCC May 11, Northstar said.
Sennheiser representatives met with aides to all FCC members on the wireless mic maker's proposals for devices in the TV band, after the incentive auction, the company said in an ex parte filing in docket 12-268. The Sennheiser reps “disabused the myth that wireless microphone technology is not cutting edge or spectrally efficient” and “emphasized the importance of wireless microphones to one of our country’s most vital industries, content creation,” said the filing. It said Sennheiser highlighted the differences between wireless mics and white spaces devices “which allow wireless microphones to be good spectrum neighbors to incoming 600 MHz licensees and to not require control by a database.” Two clear UHF channels for wireless mics without white space devices “is a need not a want,” the company said.
Sprint said the FCC should make changes to the rules for the TV incentive auction, which set aside “reserve” spectrum blocks for carriers that don't already own significant amounts of low-band spectrum. The FCC approved rules for the set-aside at its May 15, 2014, meeting (see 1405160030). The FCC “established a reserve to lessen the likelihood that the two largest providers, with their vast resources, could foreclose their much smaller rivals from obtaining 600 MHz spectrum in the auction to better compete in the downstream mobile broadband market,” Sprint said. “The Commission set the right goal, but its implementation plan could create the very foreclosure risk it intended to prevent.” Sprint proposed that the FCC change its rules to establish the reserve blocks at the start of the forward auction, rather than toward its end, and allow eligible bidders to bid on the blocks from the start of the auction. “The Commission could adopt these two changes quickly, without delaying the auction or extensively revising the proposed auction processes,” Sprint said. “With these modifications, the Commission can help ensure that consumers ultimately benefit from the 600 MHz auction by giving competitive carriers a fair shot at getting the low-band spectrum they need to compete more effectively with the two largest providers.”
The Senate Commerce Committee hasn't dealt with any issue this year that hasn’t involved spectrum and wireless technology, said Chairman John Thune, R-S.D., during a Wireless Foundation awards reception Monday evening. “We’ve got to get more spectrum available if we’re going to do the types of things that will improve the quality of life of the people across this country -- whether it’s a light bulb or an appliance or a fitness machine. There are so many ways in which the technology continues to improve the life of people in this country." Consumers are going to need spectrum for everyday activities, Thune said. It’s important that future spectrum auctions are fair and clear, and companies have to abide by both the letter and the spirit of the law, he said. “It’s also important that it be an open competition that the free market decides, that the government isn’t there, putting its finger on the scale in one way or another.” Thune commended CTIA involvement with fighting the FCC net neutrality decision and making it “abundantly clear that that’s a wrong approach,” he said. The FCC is using a 1930s law to try to govern the Internet in the same way that the agency did landlines in the monopoly era, and “that’s a mistake,” Thune said. “I’m hopeful that at some point we’re going to encourage enough Democrats and Republicans not just on the Senate Commerce Committee, but in Congress in general that there’s a better way to do this.”