Concerned about the concentration of low-band spectrum in the hands of the major carriers—AT&T and Verizon—the FCC is proposing to set aside from the broadcast incentive forward auction up to 30 MHz of spectrum in each market as a reserve for companies with less than 1/3 of the low-band spectrum in those markets.
But also concerned with raising enough money in the auction to pay broadcasters and support emergency communications and other outlays, that spectrum will not be reserved until a specific trigger—to be determined—has been met. That means, said a senior FCC official speaking on background, that all wireless carriers can bid for at least some spectrum in every market.
AT&T and others have complained about that reserve, but the FCC argues its proposal is a modest one that balances the need for robust participation in the auction and for making sure that low band spectrum gets into the hands of more carriers. Asked whether this proposal was at all modified to try to keep AT&T in the auction, the proposal was about consumers and competition.
FCC chairman Wheeler emphasized the need for spreading the low-band wealth in a blog posting about the item.
"Today, two national carriers control the vast majority of that low-band spectrum," Wheeler said. "This disparity makes it difficult for rural consumers to have access to the competition and choice that would be available if more wireless competitors also had access to low-band spectrum. It also creates challenges for consumers in urban environments who sometimes have difficulty using their mobile phones at home or in their offices."
But he also said that the auction would still be open to all. "Any party desiring to bid on any license area will be free to do so," he said.
Wheeler described the "reserve" policy this way:
"When the Incentive Auction commences, all bidders will be bidding and competing against each other for all blocks of spectrum. We expect a fulsome bidding process. There will be no 'reserved' spectrum during this initial stage of the auction. When the auction reaches a 'trigger' point that the Commission will set in advance of the auction—largely based on meeting a price threshold—wireless providers with a dominant low-band position in a license area [AT&T and Verizon will be most affected, but others will be to a lesser extent] will be constrained from bidding on a few 'reserved' spectrum blocks [up to 30 MHz]."
"Those 'reserve-eligible' bidders who are still actively bidding at the trigger point will then begin bidding for reserved spectrum against only other eligible bidders, and not against bidders who already hold a dominant low-band position in that license area. Of course, all bidders will be able to continue to bid on all of the 'unreserved' spectrum."
An FCC official was concerned that bidding on reserved spectrum could result in the spectrum going for less since the bidders would be restricted.
The mobile spectrum holdings is actually a three-parter. The FCC has decided not to change its spectrum screen transaction benchmark of 1/3 of available spectrum in any given market. Any deal that would give a company more than a third of the available spectrum in a market triggers additional public interest scrutiny, and will continue to do so. Some had wanted the FCC to tighten the screen.
The FCC is also proposing to modify the screen to make it clear that a transaction that results in a company getting more than 1/3 of low-band spectrum in a market would also deserve enhanced scrutiny on a case-by-case basis.