Two years after the first Spectrum Frontiers report and order, the Federal Communications Commission (“FCC” or “Commission”) is completing the final set of preliminaries before commencing the first mmW auction. With the release of a draft Public Notice (“Notice”) on July 12, 2018, the Commission gave a sneak preview of the application and bidding procedures for upper microwave flexible use service (“UMFUS”) licenses in the 28 GHz and 24 GHz band. The Commission will vote on these procedures at its next Open Meeting, scheduled for August 2, 2018. The auction will be an important milestone in the Commission’s efforts to make high band spectrum available for next-generation applications, including 5G wireless connectivity.
In the Notice, the FCC sets out its plan to operate two separate and consecutive auctions, with different application and bidding processes, for licenses of available spectrum in the 28 GHz (27.5 – 28.35 GHz) band – which was designated for UMFUS in July 2016 – and 24 GHz (24.25-24.45 and 24.75-25.25 GHz) band – which was a subject of the Second Report and Order in Spectrum Frontiers in November 2017. The window during which individuals can apply to bid in each auction, as outlined in the draft Notice, will run concurrently. Since both auctions involve UMFUS licenses, applicants will be subject to the same application requirements, certifications, prohibited communications rule, and procedures regarding information available during the auction process. The 28 GHz band auction is set to start on November 14, 2018 and the 24 GHz band one will commence after bidding in the 28 GHz closes.
It remains to be seen what the level of interest in the auctions will be because portions of both spectrum bands are already encumbered. Thanks to relatively recent secondary market acquisitions of Nextlink and StraightPath, Verizon already has significant portions of the 28 GHz band in some key markets. Under the Spectrum Frontiers 2016 decision, the existing licenses will be converted to UMFUS licenses without competitive bidding. For the 24 GHz band, AT&T was initially set to acquire a large set of licenses in that band through its purchase transaction with FiberTower which would have resulted in significant encumbrances there as well. However, as part of a settlement agreement with the FCC to get the transaction approved, AT&T was required to return the 24 GHz licenses to the Commission. The 24 GHz band still has some active licenses but the encumbrance is less and the current licensee has filed applications seeking to reconfigure its licenses in a way the FCC has indicated would increase the number of unencumbered blocks available for auction.
At the August Commission Meeting, the FCC is also set to take vote on a Fourth Further Notice of Proposed Rulemaking (“FNPRM”) in the Spectrum Frontiers proceeding that would consider rules to set the stage for a separate, single auction of three other mmW bands, 37 GHz (37.6-38.6 GHz), 39 GHz (38.6 GHz-40 GHz), and 47 GHz (47.2-48.2 GHz). The Commission hopes that the auction will occur in the second half of 2019, after rules are adopted to tweak the current band structure. To facilitate the auctioning of these bands, the FCC proposes changes to the current service rules for the 39 GHz band. Specifically, the FCC seeks comment on the following changes which would be designed to make the bands more attractive to potential high-stakes bidders, the large carriers and providers, and maximize auction revenues:
- Create fourteen 100 MHz channels instead of seven 200 MHz ones in the 39 GHz block to facilitate repacking of incumbent licensees;
- Modify upper 37 GHz band channels to also have 100 MHz instead of 200 MHz to align the licensing scheme with the adjacent 39 GHz; and
- Modify the plan for the portion of the 47 GHz band licensed under UMFUS rules to also have 100 MHz channels.
The FNPRM also puts forward a plan to reconfigure and hold an incentive auction for contiguous blocks of spectrum in the 39 GHz and upper 37 GHz bands. The auction, which would be only the Commission’s second incentive auction – the first being the 600 MHz broadcast incentive spectrum auction that completed in March 2017 – is intended to try to clear out some of the encumbrances in these bands by offering incumbent licensees the option to relinquish their license rights in these bands in exchange for payment. The incumbents, under the Spectrum Frontiers June 2016 Report and Order, would be converted to UMFUS licenses. The FCC also proposes to mandate repacking for any remaining licensees that forego participation in the auction. The FNPRM, though it still needs to be voted on, has preset response deadlines of September 17, 2018 for comments; and October 8, 2018 for reply comments.