Welcome to the Reverse and Forward Auctions presented to you by the FCC! The FCC put all of this together to free up more spectrum for the carriers. Don’t we all want more spectrum? Doesn’t the world revolve around bandwidth? Don’t we all want to have live video streaming all the time on our smart phones? Isn’t that the American dream? Ask any teenager, isn’t that what they really want? Life, love, prosperity, and bandwidth is what we all desire.
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Did you know that the FCC is trying to buy back the TV licenses in the 600MHz bands? All this so they can sell more bandwidth to the carriers. I would imagine the broadcasters would love this since they should make tens of thousands of dollars. Some may make millions! How you ask, read on my friends.
They are doing it with an incentive auction, how cool is that? It is supposed to happen March 29th, 2016, but dates tend to slip, especially when something is this complicated. Well, I think it’s complicated. I am sure the FCC has it all figured out, right?
Why would the carrier want 600MHz? I would think that for rural applications it would cover farther. 600MHz is great for rural coverage, the properties allow it to travel through the air very well with limited power. I believe that building penetration should be pretty good as well depending on the building walls and windows. Of course it’s more bandwidth, which in today’s world is worth billions according to the last AWS-3 auction.
Downside? 600MHz is going to make the cell coverage larger, so in an urban area it may cause self interference, where the cells will carry into the nearby cells causing self interference. With LTE you have ICIC, Inter-Cell Interference Coordination, which will really help you minimize it, but in the real world you need to put so much more work into self interference when it carries so well. It really will cause more work for the RF engineers and the optimization engineers. I would imagine that down-tilt will play a big part in this. As well as frequency planning, with all the bandwidth being used they probably want to push it all through, but with these issues they need to plan out each band carefully.
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Why is the broadcaster willing to give them up? I believe many of them want to get out of over-the-air broadcasting since it is not as profitable as it used to be, especially in urban areas where everyone uses cable or broadband to watch TV. If they don’t see it as profitable then this is a way for them to retire or maybe fund a new broadcast model to start-up by partnering with someone else. I think that many of them want to get a piece of that $900M (or more) so to find a partner, someone who would be willing to work with them on the multiple channels available on the existing channels out there. I don’t know if many of you look at OTA, over-the-air, channels but the new digital channels allow 2 or 3 channels to be broadcast on one band. So why not partner with someone and share the costs. Each partner can broadcast their content on their channel and share the broadcast equipment expenses. To me it makes sense, but what do I know, I used to be in paging and I thought that was awesome. (For those of you who don’t know what paging is, you made my point.)
How will it work? Well, here is what I read.
Reverse Auction – This is where the FCC will request that broadcasters give their licenses back to the FCC. They will set a price for each license based on location, population, and I imagine coverage. They will release the details soon. I didn’t see them yet. They will have a price they will set to offer to the broadcaster to start at. The broadcaster will need to apply to have their license accepted into the auction. They must also be willing to relinquish the licenses, there is no going back if they get the minimum amount. Got it? They will have a minimum they will get, set by the FCC. So it isn’t like they will leave empty-handed. However, if the price drops below what they FCC says they should get or if no one bids on that license/frequency band, then the broadcaster gets to keep their license. They must get the bare minimum to give it up. From what I read the FCC will have $900M set aside for all of the auctions. All of them, but who knows what will happen.
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Forward auction – This is where the FCC has reserved bands they got from the reverse auction and put them up to bid from the carriers to get. The carriers will bid on them based on location, bandwidth, and economic area. I was going to go over how the FCC is going to set the opening bids, but I am confused, that is why you hire consultants that handle this stuff. However, not to leave you empty-handed I will quote the FCC from their public notice found here. “Forward Auction Bidding. We adopt our proposal to offer two categories of generic spectrum blocks for bidding in the clock phase of the forward auction: “Category 1” blocks with potential impairments that affect zero to 15 percent of the weighted population of a PEA; and “Category 2” blocks with potential impairments that affect between greater than 15 percent and up to 50 percent. Prices for frequency-specific licenses will be adjusted downward at the end of the assignment phase of the forward auction by one percent of the final clock phase price for each one percent of impairment to the license……….. To implement the final stage rule established in the Incentive Auction R&O, we adopt the proposed average price and spectrum benchmarks of $1.25 and 70 megahertz of licensed spectrum, respectively. The benchmarks will help to ensure that winning bids for the licenses in the forward auction reflect competitive prices and return a portion of the value of the spectrum to taxpayers without reducing the amount of spectrum repurposed for new, flexible-use licenses. We also adopt our proposals for triggering an “extended round” to give bidders the opportunity to meet the final stage rule without moving to another stage, except that an extended round will not be triggered if the shortfall is greater than 20 percent.” Got it, good!
The carriers will get FDD 5+5 paired spectrum (or maybe 10+10). I am not sure why they don’t go with any TDD and hand over a 10MHz channel, but what do I know. Maybe that will change.
Then, the auction happens! The carriers will be bidding on the licenses that the broadcasters have based on need and what they really want. This is how the money is passed from carrier to broadcaster.
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By the way, clause #287, “Paperwork Reduction Act Analysis”, they may reduce paperwork but they didn’t reduce any words, wow!
OK, so I simplified it. If you are going to get involved, then go to the links below and check it out. The best thing you can do is hire a consultant, not me, to walk you through this. Maybe a lawyer that knows and understands how the FCC is going to do this. If you want to learn more than read the documents and get involved. Let me tell you, I just skimmed the document. It is very, very long.
I would like to thank RCR and Fiercewireless for getting me to the proper FCC documents.
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