FCC Approves Wireless Spectrum Incentive Auction Plan

The Federal Communications Commission Friday voted to initiate a rulemaking proceeding to set the guidelines for a series of auctions that aim to transfer wireless spectrum from television broadcasters to mobile broadband operators.

By a unanimous vote, the commission approved a notice of proposed rulemaking (NPRM) seeking comments from interested parties on a proposal to move ahead with the auctions, which supporters say are necessary to furnish wireless operators with the capacity they need to keep up with the surging volume of data passing over their networks.

The FCC is proposing to hold so-called incentive auctions, whereby TV broadcasters will be invited to hand over their spectrum licenses, receiving a portion of the proceeds from the resale at auction.

“This is a big deal,” FCC Chairman Julius Genachowski said at the commission’s monthly meeting. “Today the U.S. becomes the first nation in the world to launch incentive auctions, a new paradigm in spectrum policy that uses market forces to repurpose beachfront spectrum for licensed and unlicensed wireless broadband. The world is watching.”

The FCC first proposed the idea for incentive auctions in its 2010 national broadband plan, of which spectrum reform to boost mobile broadband was a cornerstone. Earlier this year, with the passage of the Middle Class Tax Relief and Job Creation Act, Congress granted the agency the authority it needed to implement the auction process.

By the timetable outlined in Friday’s order, the FCC is hoping to finalize the rules for the auctions next year, with the actual proceedings to take place in 2014.

In the meantime, the FCC faces the tall order of writing the rules for a series of spectrum transactions that will be far more complex than any of the other auctions the agency has held.

“The analogy I make is it’s like moving from two-dimensional chess to three-dimensional chess, and perhaps three-dimensional chess while blindfolded,” said Commissioner Robert McDowell. “We all simply do not know where the facts will lead us.”

McDowell and other commissioners raised some concerns about the details of the proposal, such as the split between licensed and unlicensed uses, and the volume of spectrum set aside to guard against interference, but all the members of the panel acknowledged that, in general, the NPRM is a necessary starting point.

The proposal consists of three parts, beginning with a reverse auction through which TV broadcasters would put their licenses into consideration for resale, determining the inventory of available airwaves.

Then, the FCC would begin the highly technical work of determining how to repackage its spectrum allocations to ensure that the bands slated for mobile broadband are put to optimal efficiency, while relocating and consolidating the remaining TV broadcasters into another portion of the airwaves.

Finally, the FCC would hold the forward auctions through which wireless operators would bid on and eventually purchase new licenses to build out their networks.

Some TV station operators, represented in Washington by the National Association of Broadcasters, have raised concerns about how the auctions will proceed, and while the NAB has voiced support for the concept as a general matter, it has warned that the auctions must be truly voluntary. NAB President Gordon Smith is slated to address the media about the FCC’s move later this afternoon, and a spokesman association declined to comment ahead of those remarks.

“This is an historic day, and we’re certainly entering uncharted territory. There’s never been an auction of this type or this magnitude in our country,” Smith told reporters on a conference call. “Our hope, and the assurance that the FCC has continued to give us, is that this will be a transparent process. We’re grateful for that. We’re anxious to see that.”

Genachowski, though he acknowledged that many broadcasters will choose to hold onto their current licenses, indicated that he had heard significant interest from certain TV stations about participating in the auctions. Asked about that assessment, Smith offered a decidedly different take.

“If there’s a stampede coming we certainly aren’t hearing any hoofs,” he said.

Trade groups representing various corners of the tech industry were quick to praise the vote, however.

“Today’s action by the chairman and commissioners was an important step toward alleviating the looming spectrum crisis that we’ve been warning policymakers about for the last three years,” Steve Largent, president and CEO of CTIA, the principal association representing the wireless industry, said in a statement.

Similar plaudits came rolling in from TechAmerica and the Consumer Electronics Association.

In addition to the incentive auction order, the FCC approved a rulemaking proposal to begin a comprehensive review of its spectrum policies and the current allocations with an eye toward ensuring that markets are sufficiently competitive.

Also at Friday’s meeting, the commissioners voted unanimously to initiate a proceeding to streamline and simplify the licensing and operating rules for satellite services. By eliminating outdated or duplicative provisions in the satellite regulatory landscape, FCC staffers said they propose to streamline more than 100 rule sections or subsections.

Kenneth Corbin is a Washington, D.C.-based writer who covers government and regulatory issues for CIO.com.

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