WASHINGTON-Is the fourth time the charm?
The Federal Communications Commission last week delayed the 700 MHz (746-806 MHz) auction set to begin March 6 for the fourth time. The auction of spectrum currently occupied by TV broadcasters transitioning to digital is now set to start Sept. 12.
Congress originally told the FCC to complete the auction before Sept. 30, 2000, to help recover funds used for the war in Kosovo. But congressional budgeters agreed to the delays after budget surpluses increased and value forecasts on the spectrum-still held by TV broadcasters-decreased.
It was this delay that caused outgoing FCC Commissioner Harold Furchtgott-Roth to strongly rebuke the FCC’s Wireless Telecommunications Bureau.
“As I have now said on four previous occasions. … There was no legal or logistical basis for delaying the auction in the first place. Each delay only brings the agency further out of compliance with the law. … With each succeeding delay, the credibility of our spectrum and auction-management policies becomes more suspect,” said Furchtgott-Roth.
FCC Commissioner Gloria Tristani, who previously opposed delaying the auction, this time favored it.
“The scheduling problems before us are of a different nature and largely of this agency’s own making. For example, the timing of back-to-back auctions, with an overlapping ‘quiet period’ that prohibits bidders from engaging in discussions with others not previously disclosed, provided only limited opportunity to assess spectrum needs and no time between auctions to consider new marketplace realities,” said Tristani.
Congress in 1997 directed the FCC to auction 36 megahertz of the 60-69 spectrum and reserved 24 megahertz for public safety. The FCC held one auction last fall for two guard bands to protect public-safety operations from interference. It is planning to re-auction the remaining guard-band licenses beginning Feb. 13.
Notwithstanding auction plans, broadcasters do not have to give back their extra channel until at least 2007, or when 85 percent of the homes in their viewing area were capable of receiving digital signals, whichever is later. Congress gave TV broadcasters an extra channel (six megahertz) of spectrum so they could transition from analog to digital technology without stranding consumers who had not invested in digital receivers.
Verizon Wireless last month urged the FCC to delay the auction, noting at the time the re-auction of personal communications services licenses was still under way. Verizon argued, apparently successfully, that the anti-collusion rules prohibited it from talking with other carriers and developing a bidding strategy until the auction and its quiet period had concluded.
In a speech last week at the Communications Network trade show, Verizon CEO Dennis Strigl said, “The delay to September was exactly the right move.”
Strigl also called for a spectrum policy spectrum that is predictable, comprehensive and forward-looking.
“Let’s not speculate with spectrum. We need a policy for radio-frequency spectrum that leaves nothing to chance,”said Strigl.
This policy would include removing caps that limit the amount of spectrum a carrier can control in urban areas to 45 megahertz and 55 megahertz in rural areas and removing small-business bidding credits.
Verizon won the majority of PCS licenses in last month’s re-auction without having to bid aggressively against small businesses. However, Strigl said bidding credits still need to be removed because they hurt the value of the spectrum.
As part of its wireless data strategy, Verizon will need more spectrum, Strigl said. “The raw material, the lifeblood of what we do … is spectrum, and like most raw materials there, is only so much of it. Long term will require more and more spectrum,” said Strigl.
In the 30-megahertz commercial auction, participants can bid on two licenses in six economic areas. One license will comprise a pair of 10-megahertz blocks, and one license will comprise a pair of 5-megahertz blocks). The FCC will allow bidders to win both licenses in each area.
The FCC is also allowing participants to use package bidding, which allows companies to bid on individual licenses or to place all-or-nothing bids on up to 12 packages of licenses of their own design. Winning bids are the set of consistent bids on individual licenses and packages that maximize total revenue when the auction closes. Consistent bids are bids that do not overlap and are made or renewed by an individual bidder in the same round.
In other news, ongoing litigation between the FCC and NextWave Telecom Inc. moved forward. NextWave last week filed reply briefs, again expressing its contention that the FCC unlawfully reclaimed the licenses it re-auctioned for nearly $17 billion.
“The FCC’s representations and conduct made clear that NextWave’s licenses would not cancel during NextWave’s reorganization,” said NextWave in its reply brief.
Oral argument in the NextWave case is set for March 15. Theodore B. Olsen will argue the case for NextWave. Olsen recently gained fame for successfully arguing before the U.S. Supreme Court on behalf of George W. Bush’s election efforts.
“The FCC’s attempts to cancel NextWave’s licenses are forbidden by federal statutes, by well-established judicial precedent and by fundamental principles of due process and administrative law,” said Olsen.
