Selected portions of the BloostonLaw Telecom Update, a newsletter from the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP are reproduced in this section with the firm's permission.
FCC Adopts Proposals for First-Ever Incentive Auction Of TV Band Spectrum
The FCC, at last Friday's open meeting, adopted a Notice of Proposed Rulemaking (NPRM) aimed at repurposing broadcast television spectrum for mobile broadband use through the use of incentive auctions, as contemplated by Congress.
The idea of using incentive auctions was originally discussed in the National Broadband Plan as a market-based mechanism to reallocate spectrum for next-generation uses by offering broadcast television licensees financial incentives to relinquish all or part of their licensed spectrum. A portion of the proceeds from a sub-sequent auction of this spectrum would be used to compensate participating broadcasters, and the remainder would be deposited in the Public Safety Trust Fund (PSTF) to fund a national first responder network, state and local public safety grants, public safety research, and national deficit reduction. The Commission voted to approve the Incentive Auction NPRM (formally called "Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions"), and it seeks comment from the public and interested stakeholders.
Congress anticipated that the broadcast incentive auction would have three major elements: First , a "reverse auction" in which TV broadcast licensees would submit bids to voluntarily relinquish their spectrum rights in exchange for a share of later auction proceeds; second , a "repacking" of the remaining broadcasters into a smaller band segment, freeing up a contiguous portion of the ultra-high frequency (UHF) band for other uses; and third , a "forward auction" of initial licenses for flexible use of the newly available UHF spectrum.
The reverse auction proposal brings up three broad is-sues: (1) bid submission, (2) determination of which bids are accepted, and (3) determination of payment amounts to winners. The FCC seeks comment on all of these issues, for example, whether to collect sealed bids or use a multiple round bid collection format such as a descending clock auction.
Repacking involves reorganizing the broadcast television bands so that the television stations that remain on the air after the incentive auction occupy a smaller portion of the UHF band, subject to interference and other constraints imposed by the Spectrum Act and treaties with Canada and Mexico.
The forward auction will resemble competitive bidding procedures that the Commission has utilized in the past, but with some important differences. In particular, the FCC will not know in advance the amount of spectrum it can make available in the forward auction, or the specific frequencies in any given geographic location, until the reverse auction and repacking are completed. Accordingly, instead of a single band plan with identified frequencies, a set number of spectrum blocks and a uniform set of geographic area licenses, the auction design must provide a framework that is flexible enough to accommodate varying amounts of newly available spectrum in different locations.
More specifically the notice seeks comment on the following issues:
Auction design. The FCC seeks comment on auction design choices and the tradeoffs they present. For both the reverse and forward auctions, it invites comment on different procedures to collect bids, determine which bids are accepted, and what each bidder pays or receives in payment. The Commission also seeks comment on methodologies for the repacking process, which is part of the process for determining which broadcaster bids will be accepted in the reverse auction. And the FCC seeks comment on an Incentive Auction Rules Option and Discussion report prepared by Auctionomics and Power Auctions illustrating a comprehensive approach to the auction design choices presented. Further, the FCC invites comment on how to design the incentive auction so as to facilitate the participation of a wide array of broadcasters and make it as easy as possible for them to submit successful bids.
Participation in the Reverse Auction. The FCC said it interprets the Spectrum Act to limit eligibility to participate in the reverse auction to commercial and noncommercial full power and Class A broadcast television licensees. The FCC invites comment on whether to establish reverse auction bid options including but not limited to those identified in the Spectrum Act (to go off the air, to move from a UHF to a VHF television channel, and to share a channel).
Repacking. The FCC invites comment on how to implement Congress's mandate to make "all reasonable efforts" to preserve the "coverage area and population served" of television stations as of the date of enactment of the Spectrum Act. In particular, it proposes to interpret "coverage area" to mean a full power television station's "service area" as defined in the Commission's rules, and the agency seeks comment on several approaches to preserving population served.
600 MHz Band Plan. The FCC seeks comment on a band plan for reclaimed broadcast television spectrum using 5 megahertz blocks, in which the uplink band would begin at channel 51 (698 MHz) and expand downward toward channel 37 based on the amount of reclaimed spectrum, and the downlink band would begin at channel 36 (608 MHz) and likewise expand downward. The FCC seeks comment on establishing 6 megahertz guard bands between mobile broadband use and broad-cast use, and proposes to make this guardband spectrum available for unlicensed use. In addition, it seeks comment on a number of alternative band plan approaches.
Channel 37. The FCC invites comment on whether to relocate the Radio Astronomy Service and wireless medical telemetry systems now operating on channel 37, and on whether and how to address the post-auction availability of UHF band spectrum for fixed broadcast auxiliary stations, low power auxiliary stations, and unlicensed wireless microphones.
Unlicensed Use of Spectrum. The FCC invites comment on measures that would make a substantial amount of spectrum available for unlicensed uses, including a significant portion that would be available on a uniform nationwide basis for the first time. Television white spaces will continue to be available for unlicensed use in the repacked television band. In addition, the FCC seeks comment on making the guard bands spectrum in the 600 MHz band plan available for unlicensed use, making channel 37 available for such use, and making two channels currently designated for wireless microphone use available for white space devices.
Transition. The FCC seeks comment on how to implement the repacking of broadcast television spectrum and clear the reclaimed spectrum as expeditiously as possible while minimizing disruption to broadcast television stations and their viewers. In particular, the Commission proposes streamlined broadcast license modification procedures, invites comment on reasonable deadlines for stations to transition to any new channel assignments or cease broadcasting, and proposes to allow stations eligible for reimbursement of relocation costs to elect between actual cost-based payments or advance payments based on estimated costs.
The text of this NPRM in this GN Docket No. 12-268 is available online as FCC 12-118 .
Of particular interest is the separate statement of Commissioner Ajit Pai, who approved in part, and concurred in part with the decision. He said that if the FCC makes the right decisions, "We will free up badly needed spectrum for mobile broadband, which will promote infrastructure investment, economic growth, and job creation. We will preserve a vibrant and free, over-the-air broadcast service, including by providing needed funding for those that wish to stay in broadcasting but choose to channel share or move to Very High Frequency (VHF) spectrum. And we will raise financial resources to help build a nationwide public safety broadband network, reduce the federal budget deficit, and advance next-generation 911 service. If, on the other hand, we do not get this right, we could end up with a Rube Goldberg contraption that will produce a failed auction."
While voting for the item, Commissioner Robert McDowell said he would be following a number of important issues. These include the following:
- Whether the proposed five megahertz channel blocks would result in a band plan that reserves too much spectrum for unlicensed use, contrary to Congress's explicit intent;
- Or, whether auctioning spectrum in six megahertz channels, that is, on a broadcast channel-by-channel basis, would be more intuitive and thus lead to a more efficient and fruitful auction;
- Whether the Commission will attempt to adopt rules or policies that run contrary to the directives of the statute either directly or indirectly;
- Whether adopting six megahertz guard bands (as proposed) is necessary to prevent harmful interference given the technological improvements that may come over the horizon after we adopt rules;
- Whether the proposals for determining future broadcast channel assignments and reverse auction winners would result in a process that is as objective and transparent as it must be;
- Whether issues related to the coexistence of Lower 700 MHz A Block operations and those of neighboring TV channel 51 are resolved prior to the auctions;
- Whether imposing spectrum caps prior to the auction would exclude specific potential bidders thus producing the net result of frustrating Congress's directive that the Commission attempt to raise at least $7 billion for a nationwide, interoperable public safety network; and
- Whether the Commission would be able to finish its work without undertaking a further notice and comment. This being — literally — the most complex spectrum auction in world history, I think we should keep all of our options open, including measuring twice before making the cut, as carpenters say.
LEARN Program. In conjunction with the Incentive Auction NPRM, the FCC launched the Broadcaster LEARN (Learn Everything About Reverse-Auctions Now) Pro-gram. The LEARN Program is designed to offer broad-casters valuable information about the unique financial opportunities of incentive auctions and engage the broadcaster community throughout the entire incentive auction planning, design and execution processes. The first LEARN Program workshop is scheduled for Friday, October 26, 2012. More details on this workshop will be announced soon.
LIGHTSQUARED PROPOSES TO SHARE WEATHER BALLOON SPECTRUM: Bankrupt LightSquared has proposed to share spectrum the federal government uses for weather balloons with the L-Band satellite spectrum the company already holds to launch its controversial Long Term Evolution (LTE) network, according to FierceBroadbandWireless. LightSquared approached the FCC with a proposal under which the company would combine the 5 MHz it uses for satellite service at 1670-1675 MHz with frequencies in the 1675-1680 MHz band, currently used by National Oceanographic and Atmospheric Administration (NOAA) weather balloons, said PCWorld. The company would share the NOAA spectrum rather than gaining exclusive rights to it. Such an arrangement would give the company 10 MHz for down-stream LTE traffic. The company would employ another pair of bands totaling 20 MHz—which it uses for satellite services now—for LTE traffic going upstream from users' mobile devices, said PCWorld. The total 30 MHz of spectrum would be 10 MHz less than LightSquared had originally intended to use for its LTE network. According to FierceBroadbandWireless, "LightSquared is licensed for MSS operation in portions of the 1525-1544 MHz and 1545-1559 MHz downlink bands and the 1626.5-1645.5 MHz and 1646.5-1660.5 MHz uplink bands. LightSquared's spectrum in the 1525-1559 MHz block sits below spectrum allocated for GPS. Most GPS devices are not designed to ignore out-of-band signals, such as those produced by LightSquared's proposed network, which led the FCC to cancel LightSquared's conditional waiver for terrestrial service earlier this year."
THE RISING COST OF MOBILE PHONES: A recent Wall Street Journal article notes that more than half of all U.S. cellphone owners use a device like the iPhone. According to the Journal , government data shows that people have spent more on phone bills during the past four years than they have on dining out, clothes, and entertainment. The Journal states that wireless carriers are betting they can increase bills even more with their new, faster-speed networks, and usage-based data plans. Statistics from the U.S. Labor Department show that spending on phone services rose 4% last year-the fastest rate since 2005.
T-MOBILE TO ACQUIRE MetroPCS: Deutsche Telekom AG's subsidiary, T-Mobile, is close to a merger with MetroPCS, according to the Wall Street Journal . The deal would strengthen T-Mobile's position as the country's fourth-largest wireless operator and send the market in a far different direction than it appeared to be headed a year ago. T-Mobile has 33.2 million subscribers, while MetroPCS has 9.3 million. The transaction is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders and acquire all of T-Mobile's capital stock by issuing to Deutsche Telekom 74 percent of MetroPCS' common stock on a pro forma basis. DT also will roll its existing inter-company debt into new $15 billion senior unsecured notes of the combined company, thereby providing the combined company with a $500 million unsecured revolving credit facility and a $5.5 billion backstop commitment.
xG DEMONSTRATES COGNITIVE RADIO TECHNOLOGY FOR FCC STAFF: xG Technology recently met with FCC staff to describe the latest developments in cognitive radio technology, including its rapid deployment and its interference avoidance and mitigation capabilities, in meeting public safety and homeland security goals in emergency and mission critical situations. The xG presentation included a live demonstration of a self-contained, single-cell xMax system in a commercially obtained vehicle that had an antenna mast and satellite uplink equipment installed. The demonstration used commercial off-the-shelf (COTS) electronic equipment that was used to send and receive push-to-talk calls, voice calls, text messages, and Internet data applications through the use of pre-production versions of the xMod (an xMax to WiFi, USB, Ethernet bridge) and the xMax system to and from various locations. The entire demonstration was successfully conducted in the unlicensed 900 MHz spectrum in the Washington, D.C., area. We note that xG is a BloostonLaw client.
FEBRUARY 1: FCC FORM 502, NUMBER UTILIZATION AND FORECAST REPORT . Any wireless or wireline carrier (including paging companies) that have received number blocks—including 100, 1,000, or 10,000 number blocks—from the North American Numbering Plan Administrator (NANPA), a Pooling Administrator, or from another carrier, must file Form 502 by February 1 . Carriers porting numbers for the purpose of transferring an established customer's service to another service provider must also report, but the carrier receiving numbers through porting does not. Resold services should also be treated like ported numbers, meaning the carrier transferring the resold service to another carrier is required to report those numbers but the carrier receiving such numbers should not report them. Reporting carriers are required to include their FCC Registration Number (FRN). Reporting carriers file utilization and forecast re-ports semiannually on or before February 1 for the preceding six-month reporting period ending December 31, and on or before August 1 for the preceding six-month reporting period ending June 30.