H Block Closed: Raises $1.564 Billion - Broadcasting & Cable

H Block Closed: Raises $1.564 Billion

First of three key spectrum auctions now in the books
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The FCC's H Block auction has closed after no new bids were received and the auction having generated exactly $1.564 billion, the FCC's aggregate floor price.

The H block is the first of three spectrum auctions Congress mandated to free up spectrum for wireless broadband. The other two being the AWS auction, which must be conducted and the spectrum reassigned by February 2015 (the auction is targeted for fall), and the broadcast incentive auction, currently slated for mid-year 2015.

The New York market drew the highest bid in the auction at $216 million.

The bidders are mostly regional carriers rather than the major players, but Dish was bidding--though under another name, according to reports--and had promised to bid at least that minimum, insuring the FCC would not have to start over.

The FCC was under a congressional mandate to auction and reassign the H Block spectrum by next year.

The money from the auction will be used to fund FirstNet, the interoperable broadband first responder communications network.

The FCC will release the names of the winning bidders in a few days.

"With this successful auction, the Commission makes good on its commitment to unleash more spectrum for consumers and businesses, delivering a significant down payment towards funding the nationwide interoperable public safety network," said FCC Chairman Tom wheeler. "The H Block auction is a win for the American people, and we thank Chairwoman Clyburn for her leadership scheduling it.  We also commend everyone who worked so hard to resolve technical issues that made this previously unusable spectrum valuable."

The FCC tried to guarantee the success of the auction through what many saw as an unusual quid pro quo with Dish.

It cleared the way for Dish to bid on H block spectrum by granting a Dish petition to waive some technical rules on its use of adjacent spectrum. Dish had said it wanted to bid, but needed some help from the commission, which it got.

In a December 2012, the FCC voted to reallocate 40 MHz in the advanced wireless services (AWS)-4 band for satellite spectrum for terrestrial broadband, so Dish could potentially use that spectrum for a wireless broadband network, and to approve the auction of adjacent H Block spectrum.

But to bid on that adjacent H Block spectrum, and to bid at least the reserve price of $1.564 billion, Dish told the FCC it would need more flexibility to use that AWS-4 spectrum for downlink as well as uplink, and asked for a one-year extension of its buildout commitment for those AWS-4 licenses.

In exchange, Dish promised to let the commission know how it would be using the AWS-4 band (whether uplink or downlink) within 30 months after the petition was granted, and agree to be a bidder at the reserve price in the H block, essentially guaranteeing that at least that price would be met, which it was.

The FCC granted the petition with some conditions. The flexibility to use the spectrum for downlink is subject to interference protections. "Beyond the benefits inherent in flexibility," said the FCC in granting the petition, "the technical waivers Dish seeks offer the potential for compelling public interest benefits, including improved spectrum management."

The FCC rejected Sprint’s request that it impose a specific cost-sharing payment condition on Dish should it be a winning bidder in the H Block auction, and said it "declined to address in this particular adjudication" Sprint’s request for a blanket waiver to future H Block licensees of "certain H Block technical rules."

Wheeler had said he would walk with a signboard advertising the auction if it would generate participation. Potential winners in the auction include Cspire, nTelos, Piedmont Rural and James Valley Cooperative Telecom, but not other big-pocketed majors like AT&T, Verizon, Sprint or T-Mobile.

Commissioner Ajit Pai saw it as a net positive.

"I am pleased that the Commission has completed its first spectrum auction in six years," he said. "This was no easy task. In light of once intractable issues surrounding the H Block, the Commission worked together, took steps to ensure that the auction would yield maximum revenue, and refrained from saddling the spectrum with unnecessary conditions. As a result, we have raised $1.564 billion from spectrum that used to be viewed as almost worthless. While I might not have agreed with every single decision that was made in connection with this auction, I believe that commencing this auction in January was the right call and applaud then-Chairwoman Clyburn for her decision to do so. I also commend the Wireless Telecommunications Bureau for its hard work on this important endeavor, and I thank Congress for its leadership in helping to get this spectrum into the market."

Commissioner Mignon Clyburn agreed.

"The FCC staff deserves special recognition for the successful H Block auction," she said. "They worked diligently through several proceedings to resolve difficult interference issues and enable the use of this spectrum to help meet the Nation's skyrocketing demand for mobile services. I also want to thank Chairman Wheeler for his unwavering support for the timing of the H Block auction."

Rep. Henry Waxman (D-Calif.) also commented on the closing of the auction.

"Today the FCC passed an important milestone," said Waxman, ranking member of the Energy & Commerce Committee. "By successfully concluding the first spectrum auction authorized under the Public Safety and Spectrum Act of 2012, we now have a $1.5 billion down payment toward the nationwide interoperable public safety network for our first responders. I look forward to working closely with the FCC on the other spectrum auctions authorized in the law, including the AWS-3 auction that is slated to take place this fall."

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