FCC Readies To Auction Wireless Spectrum - Broadcasting & Cable

FCC Readies To Auction Wireless Spectrum

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The FCC says it has received 252 applications to bid for advanced wireless spectrum in its auction Aug. 9. The spectrum could help cable companies add a fourth element to their triple play offerings of data, Internet voice and video.

The FCC said 81 were complete, while the majority of them, 171, were deficient in some respect. Among the successful applicants were Dolan Family Holdings (the Cablevision Dolans) and Cable One, as well as Verizon and T-Mobile. Cingular's application will need some tweaking, says the commission.

The 81 will become qualified bidders if they make an upfront payment by July 17. The rest will have to make the same payment, then submit a corrected application by July 18.

Various parties had sued to block the auction, but a court ruled two weeks ago that it could proceed.

The Minority Media & Telecommunications Council and two would-be designated entrants in the auction of wireless spectrum licenses had sued the FCC in federal court to stay recent changes to the auction rules and to delay the auction itself yet again.

Although the court denied the stay, MMTC Executive Director David Honig was encouraged by a footnote signaling the court's own concerns about the auction.

"We share petitioners’ concern that the Further Notice may not have sufficiently apprised interested parties that the Commission was contemplating changes in the DE eligibility and unjust enrichment rules of the sort that it ultimately adopted in the Second Order," the court said. "However, this is a complicated question, as to which we form no opinion. We leave its resolution up to the panel that considers the petition for review, which remains pending."

The court's review is in two phases, the stay, which was denied, and a review of the merits of the auction challenge. The standard briefing schedule for the merit review, according to one of the attorneys involved, would take that into October, so the auction would have already been completed. But if the court ruled against it, the auction could be unwound.

That prospect has the potential to depress bidding prices.

The FCC in April tightened its rules to try and prevent larger telecommunications companies from using smaller, often rural ones one by women and minorities, as front companies to secure the bidding credits given to such designated entrants, or DEs.

Those changes included extending the length of time that a winning bidder has to own the company before selling it, and reducing the percentage of the spectrum that can be leased.

MMTC said the changes were last-minute--the FCC did move the auction from June to August--and could do irreparable harm to smaller companies by denying them the "flexibility" to lease or sell out.

The companies had asked the FCC to make some changes to discourage abuses of the credit by larger companies, but suggested the FCC's changes were too draconian and would "effectively deprive DE's of their bidding credits if they lease or resell even so much as 25% of their spectrum capacity. They also took issue with double the "hold" period--how long they have to hold the spectrum before selling out, from 5 to 10 years.

Some 1,200-plus licenses, reclaimed from government use, are up for grabs, enough to build a national network.

The cable industry, which is already delivering video, Voice over IP phone service, and Internet access, is looking to add wireless service to its bundle as it prepares for increased competition from the phone companies in its video space.

In fact, Sprint-Next along with Time Warner, Comcast, Cox, and Advance/Newhouse, have been part of a wireless joint venture last year, and are already planning to test service in seven test markets, Time Warner Cable President Glenn Britt told investors in New York Wednesday. Britt said he was pleased with the joint venture's progress.

They planned to be bidders in the Aug. 9 auction, but it was not immediately apparent from the FCC list released Monday.

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