TR Daily FCC Adopts Procedures for C-Band Auction
Thursday, August 6, 2020

FCC Adopts Procedures for C-Band Auction

The FCC today adopted procedures for its C-band auction (Auction 107), which is scheduled to start on Dec. 8. Democratic Commissioners Jessica Rosenworcel and Geoffrey Starks dissented in part over the process that the Commission used to get to this stage, including its authorization of $9.7 billion in accelerated relocation payments to satellite operators.

“This spectrum holds the potential to be prime spectrum for 5G services, and the procedures adopted today will ensure the assignment to auction winners of contiguous spectrum blocks allowing wide channel bandwidths that support 5G deployment,” the FCC said in a news release. It noted that the sale “will offer 5,684 new flexible-use overlay licenses based on Partial Economic Areas (PEAs) for spectrum in the 3.7–3.98 GHz band.”

The news release noted that the public notice adopted today in AU docket 20-25 establishes (1) “[b]idding procedures for the clock and assignment phases of the auction, including two clock phase categories of generic blocks in the 46 PEAs where certain blocks are subject to the first early clearing deadline of December 2021”; (2) “[a]n assignment phase in which winning bidders for blocks subject to the first early clearing timeline will be assigned both interim and final contiguous frequency-specific license assignments” and (3) “[u]pfront payment and minimum opening bid amounts for bidding on the licenses as well as bidding credit caps for rural service providers and small businesses, including a cap on the overall amount of bidding credits a small business bidder may apply to winning licenses in smaller markets.”

In February, the FCC adopted a public notice seeking comment on proposed procedures for the auction (TR Daily, Feb. 28). The public notice was adopted along with an order approving the repurposing of 300 megahertz of spectrum in the 3.7-4.0 gigahertz band, 280 MHz of which would be auctioned.

In dissenting in part today, Commissioners Rosenworcel and Starks reiterated their complaints with the approval of $9.7 billion in accelerated relocation payments to be paid for by auction winners and the decision by the Commission not to wait for congressional action concerning the C-band.

“Other nations have their 5G plans in order and are poised to free up to five times more licensed mid-band spectrum than the U.S. by the end of the year, while we still wait for a national spectrum strategy that is more than a year overdue,” Commissioner Rosenworcel said. “Nonetheless, this Public Notice is a step toward closing that gap. It reflects the usual high-quality work of our auction experts. The procedural rules we adopt today set up the nitty-gritty of our auction—details like timelines and bidding procedures, compliance with antitrust laws, bidding credits for small businesses and rural service providers, and more. These procedural rules mirror what has been successful in the past. I also am pleased that we are adjusting the assignment phase of the auction to better ensure that auction winners receive contiguous spectrum blocks, which will be important to providing robust 5G service. So that’s the good.”

But she complained that “there are reasons this auction will be consequential that are not so good, too. That’s because with this effort for the first time the value of spectrum assigned in a Federal Communications Commission auction will not be determined by an efficient and effective market. Instead, bids in this auction will be distorted by a nearly $10 billion payment to incumbent satellite operators that was negotiated outside the light of day. Whatever hazy deal this agency cut with existing licensees is hard to square with our clear statutory duty to deposit auction proceeds in the United States Treasury.”

Ms. Rosenworcel added that the FCC “should have worked with Congress on a more transparent path. By doing so, we could have cleared up these ambiguities. Not just for this auction but for spectrum efforts in the future. Because we would benefit from a legislative overhaul of our system for incentivizing the return of airwaves and the repurposing of them for a future where we can lead in 5G. In fact, I believe our experience with C-band and mid-band more generally proves we need more innovative tools to help this process along—just like incentive auctions have helped with freeing low- and high-band spectrum.”

“My perspective on the fundamentals underlying this item haven’t changed. Under the majority’s decision from this February, we’re paying nearly $10 billion of taxpayer money to foreign satellite companies to vacate spectrum that belongs to the American people, based on a formula that has nothing to do with the companies’ relocation costs,” Mr. Starks complained.

“Nearly six months later, and we still have tremendous uncertainty surrounding this bad deal. The DC Circuit is now considering two sets of challenges to the February order. Intelsat has declared bankruptcy, and the former C-Band Alliance has turned into a circular firing squad. And [the] last week’s Bureau-level decision on lump-sum reimbursements has generated yet another issue by dramatically limiting the ability of small cable companies to replace their satellite connections with fiber that could have helped with rural broadband expansion. Now those companies may create yet another front attacking this proceeding in court. Who knows what will happen next?” Mr. Starks added.

“All of this confusion affirms what I said back in February. Instead of racing ahead with a half-baked decision, we should have allowed Congress to act here, as it did with the 700 MHz band nearly 20 years ago. Doing so would have avoided this uncertainty and ensured that the proceeds from this auction went towards the needs of the American people and not to the coffers of foreign satellite operators,” he said. “While I dissent from the underlying decision to proceed with the auction under these circumstances, I support the basic auction rules we adopt today.”

But FCC Chairman Ajit Pai reiterated his defense of the actions the agency has taken in the proceeding.

“When we crafted our rules for repurposing the C-band, we prioritized making a large amount of spectrum in this band available for 5G as quickly as possible while still ensuring that incumbents would have access to sufficient spectrum to continue delivering the same services they currently provide over the entire C-band spectrum,” he said. “That’s why we rejected politically-motivated calls to do literally nothing until Congress passed a law on the subject (breaking news: It still hasn’t). That’s why we included accelerated relocation payments to incumbent satellite operators that will make spectrum available for 5G two to four years earlier than otherwise would have been the case. And that’s why we proposed an aggressive schedule for holding an auction within the calendar year. I’m proud to say that even amidst a pandemic—and the effective shutdown of Commission headquarters it occasioned just a few weeks after we adopted the C-band Order—the excellent work of FCC staff has kept us fully on track and on schedule.”

Commissioner Mike O’Rielly said that “this spectrum will bring the benefits of 5G not only to large metropolitan areas, but also to our more rural communities where other frequencies the Commission has made available, such as the millimeter waves, may be too costly to rely on for mobile broadband build out. Most importantly, perhaps, this swath of spectrum will allow potential bidders to aggregate 20 megahertz licenses to create the larger channel blocks needed to truly meet 5G’s full promise of faster speeds, greater capacity, and lower latency. I am pleased that changes were made, at industry’s request, to modify the assignment round process to ensure the contiguity of licenses once the entire wireless portion of the band is cleared. Keeping a winning bidder’s licenses together maximizes functionality and spectrum efficiency, while reducing harmful interference risks within the band.

“Additionally, these licenses will be usable in tandem with the adjacent 3.5 GHz band frequencies, hopefully getting wireless providers closer to the 100 megahertz blocks that many seek for 5G. However, we know that the interest in mid-band spectrum is through the roof and more is still needed to meet overall demand,” Mr. O’Rielly added. He reiterated his call for action to free up at least a significant chunk of the 3.1-3.55 GHz band.

“Mid-band already is providing hundreds of megabits of 5G mobile performance in markets across the country,” said Commissioner Brendan Carr. “It can be used for telehealth, remote learning, or working from home—use cases we’ve suddenly had to rely on. And while none of us can say for sure what particular need will arise in the future, we can be sure that this mid-band capacity will help us meet it.”

“We commend Chairman Pai and the FCC for their efforts to achieve this important milestone,” said Meredith Attwell Baker, president and chief executive officer of CTIA. “Chairman Pai has been clear that promoting American leadership in 5G is a national priority, and keeping the C-Band auction on schedule is critical to making sure we have the mid-band spectrum we need to lead the emerging 5G economy. We look forward to a successful auction in December and to continuing to work with the FCC to bring more mid-band spectrum to market.”

Will Johnson, senior vice president-federal regulatory and legal affairs and associate general counsel for Verizon Communications, Inc., also welcomed today’s FCC action.

“Increasing the availability of mid-band spectrum is more important than ever as the U.S. strives to maintain its global competitiveness and leadership position in the deployment of 5G networks,” he said. “New spectrum in the mid-band will help close the digital divide and open the door to new innovations for millions of American consumers and businesses. We welcome the FCC’s action today that will help ensure a timely auction in December – an auction that will yield a variety of benefits for the U.S. Government, next-gen technologies and apps, and all those who will benefit from them.”

“Today’s action by the FCC to finalize the procedures for December's C-Band auction is another great step forward to rolling out 5G across America,” said Mike Rogers, chairman of 5G Action Now. “Under Chairman Pai’s leadership, the FCC continues to make the right moves and steady progress to ensure that we, not China, shape and secure our telecommunications future—a future will fundamentally change with the deployment of nationwide 5G connectivity.” —Paul Kirby, [email protected]

MainStory: FCC FederalNews SpectrumAllocation

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