The Federal Communications Commission (“FCC”), at its April 12, 2019 Open Meeting, voted to adopt a Public Notice that proposes application and bidding procedures for the single, simultaneous auction of three mmW spectrum bands—37 GHz (37.6-38.6 GHz), 39 GHz (38.6 GHz-40 GHz), and 47 GHz (47.2-48.2 GHz)—as we previously reported. The Public Notice lays the groundwork for the second-ever incentive auction (in the 37 and 39 GHz Bands) and continues the FCC’s intent to make more mmW band spectrum available for auction. The auction is scheduled to begin on December 10, 2019. Comments on the Public Notice are due by May 15, 2019 and reply comments are due by May 30, 2019.
The Public Notice addresses the pre-bidding procedures for Auction 103, which will allocate upper microwave flexible use service (“UMFUS”) licenses in the bands referenced above. The spectrum in each of the three bands will offer 100 megahertz blocks of spectrum to be licensed in 416 Partial Economic Area (“PEA”) service area nationwide. The number of licenses that will be available for auction in the upper 37 and 39 GHz blocks in any given PEA will depend on commitments made by incumbent licensees in an initial phase to accept a reconfigured assignment or relinquish their license altogether in exchange for a portion of the auction proceeds.
The FCC seeks input on its proposal for Auction 103 to use an ascending clock auction format in both auction phases for licenses held by the FCC as well as those given up by incumbent licensees. The first phase will involve successive clock bidding rounds in which bidders request categories of generic license blocks in specific PEAs while in the subsequent round, bidders will bid on frequency-specific license assignments. During the clock phase, the FCC auction bidding system will announce prices for blocks in each category in each PEA, and qualified bidders will submit quantity bids for the number of blocks they seek. Simultaneously with the Public Notice, the FCC also published a technical guide with mathematical details about the proposed auction procedure and algorithms for the clock and assignment phases.
In addition, the auction procedures would include an aggregate net revenue requirement that must be met to ensure that the auction’s proceeds will be able to cover the cost of payments to incumbents that relinquish their spectrum. Bidders will be provided with an estimate of the shortfall to meeting the net revenue requirement after each round of bidding until the requirement has been met. If the revenue requirement has been met by the end of the clock phase bidding, the system will determine the winning bidders of generic blocks, and the auction will proceed to the assignment phase. If the net revenue requirement has not been satisfied at the time bidding stops in the clock phase, the auction will end, no new licenses will be assigned, and incumbents will retain their licenses while the FCC reassesses the matter.
After the winning bidders for the generic blocks have been determined, the FCC also proposes to conduct separate assignment rounds for each of the top 20 PEAs. The PEAs will be assigned sequentially, beginning with the largest PEAs. Assigning the PEAs sequentially will make it easier for bidders to incorporate frequency assignments from previously assigned areas into their bid preferences for other areas and acquire contiguous blocks of spectrum within PEAs and common spectrum among contiguous PEAs. Of note, the FCC proposes to implement a cap on bidding credits for winning bidders in the amounts of $25 million for small businesses and a $10 million for rural service providers.