FCC Set to Auction Wireless Broadband
by Robert J. Rini, Rini, Coran & Lancellotta
The FCC has moved closer to the auction stage for spectrum to be deployed for new wireless broadband services. Spectrum will be available in the 39 GHz band and 700 MHZ band. The following is an overview of the service and auction rules.
39 GHz band
Licensing. The Commission has announced that the auction of licenses in the 39 GHz band (38.6-40 GHz) will commence April 11, 2000. The following is an overview of the final auction and service rules established for the 39 GHz service.
A total of 2,450 licenses will be auctioned. Fourteen 100 megahertz licenses (paired 50 megahertz channel blocks) will be offered in each of 172 Economic Areas and three EA-like areas, covering the United States, the Northern Mariana Islands, Guam, American Samoa, U.S. Virgin Islands and Puerto Rico ("EAs"). (EAs consist of metropolitan areas that are centers of economic activity and their economically related surrounding counties.) Partitioning service areas and/or disaggregating spectrum is permitted.
Permissible operations. 39 GHz licensees may provide fixed communications including point-to-point and point-to-multipoint communications. Mobile communications are subject to the development of inter-licensee and inter-service interference criteria.
License Term. Licenses will be issued for a ten-year term from the initial license grant date. Licensees have a renewal expectancy based on the provision of "substantial service."
Eligibility restrictions. Unlike in the Local Multipoint Distribution Service ("LMDS"), a fixed broadband point-to-multipoint microwave service in the 28 GHz band, Commission decided not to adopt restrictions prohibiting ILECs and cable companies from holding an attributable interest in 39 GHz service licenses.
Bidding credits. "Small businesses" with revenues of not more than $40 million are eligible for a 25 percent bidding credit, and "very small businesses" with average annual gross revenues of not more than $15 million are eligible for a 35 percent bidding credit on all 39 GHz licenses acquired at auction.
Up-front payments. The Commission adopted the following formula for calculating both the up-front payment and minimum opening bid amounts: For licenses covering populations of less than or equal to 1,000,000 "pops" the up-front payment/minimum opening bid will be based on $0.02 per pop (the result rounded to the nearest hundred dollars for results of less than $10,000.00 and rounded to the nearest thousand dollars for results greater than $10,000.00). For licenses covering populations of greater than 1,000,000 pops, the up-front payment/minimum opening bid is based on $0.02 per pop for each of the first million pops and $0.04 per pop for the remaining pops (the result rounded to the nearest thousand dollars). A $2,500.00 minimum up-front payment/opening bid will apply to all licenses.
39 GHz channeling plan:
Channel Band (MHz) Channel Band (MHz)
1-A 38,600-38,650 1-B 39,300-39,350
2-A 38,650-38,700 2-B 39,350-39,400
3-A 38,700-38,750 3-B 39,400-39,450
4-A 38,750-38,800 4-B 39,450-39,500
5-A 38,800-38,850 5-B 39,500-39,550
6-A 38,850-38,900 6-B 39,550-39,600
7-A 38,900-38,950 7-B 39,600-39,650
8-A 38,950-39,000 8-B 39,650-39,700
9-A 39,000-39,050 9-B 39,700-39,750
10-A 39,050-39,100 10-B 39,750-39,800
11-A 39,100-39,150 11-B 39,800-39,850
12-A 39,150-39,200 12-B 39,850-39,900
13-A 39,200-39,250 13-B 39,900-39,950
14-A 39,250-39,300 14-B 39,950-40,000
The short-form application must be filed by March 13, 2000. Up-front payments are due on March 27, 2000.
700 MHZ auction
Licensing. Two 700 MHZ licenses will be auctioned in each of the six Economic Area Groupings ("EAGs") throughout the country for a total of 12 licenses. One license will consist of 20 MHZ divided into two paired 10 MHZ blocks, and the other will consist of 10 MHZ divided into two paired 5 MHZ blocks. These licenses are sufficient to provide two bi-directional 384 kb/s mobile data streams using high-tier cellular and PCS technologies, consistent with 3G service classifications. A copy of the 700 MHZ band plan, EAG map and population information is enclosed.
Public safety guard bands. The 700 MHZ band plan also calls for two "Guard Bands," which are necessary to protect the adjacent public safety spectrum. The Guard Band licenses, the rules for which will be established at a later date, will be comprised of one 2 MHZ license (two paired 1 MHZ blocks) and one 4 MHZ license (two paired 2 MHZ blocks).
Continued broadcast operations. There are currently approximately 100 analog television stations that will be permitted to continue to operate in the 700 MHZ band until the end of the DTV transition. The Commission therefore adopted strict interference standards to assure that these broadcast stations can continue to operate interference free in this spectrum. Auction participants should determine in advance of the auction where these stations are and the limitations they impose.
Eligibility requirements/partitioning and disaggregation. There are no restrictions on eligibility for obtaining a license in the 700 MHZ service; thus, LECs and franchised cable operators will be permitted bid. The CMRS cap also does not apply to the 700 MHZ service, so a PCS or cellular licensee may obtain a 700 MHZ license. In addition, the FCC will permit a single entity to acquire both the 20 and 10 MHZ licenses in each EAG, enabling a licensee to aggregate these regional licenses into a 30 MHZ nationwide license. Partitioning service areas and/or disaggregating spectrum also is permitted.
Permissible service. 700 MHZ licensees may provide mobile as well as fixed communications including point-to-point and point-to-multipoint communications on a common or non-common carrier basis. Broadcast operations also will be permitted, although such service would be subject to the technical limitations ( i.e., lower power level) contained in Part 27 of the Commissions Rules, not Part 73 applicable to traditional broadcast service.
License term. In light of broadcasters continued use of the 700 MHZ band until 2006, the license term for the 700 MHZ service will extend until January 1, 2014 for a 14-year license term. However, if a licensee commences new "broadcast-type" operations on or before January 1, 2006, the licensee will be required to seek renewal of its license at the end of the eight-year term following commencement of such operations.
Construction requirements. A 700 MHZ licensee will be required to provide "substantial service" to its service area at the end of its license termJanuary 1, 2014. Substantial service can be demonstrated by meeting certain "safe harbors." Specifically, for a licensee that chooses to offer fixed, point-to-point services, the construction of four permanent links per one million people in its licensed service area at the license-renewal mark would constitute substantial service. For a licensee that chooses to offer mobile services or fixed, point-to-multipoint services, a demonstration of coverage for 20 percent of the population of its licensed service area at the license-renewal mark would constitute substantial service.
Bidding credits. Entities that qualify as "small businesses,"those with average annual gross revenues for the preceding three years not exceeding $40 millionwill receive a 15 percent bidding credit. Entities that qualify as "very small businessesthose with average annual gross revenues for the preceding three years not exceeding $15 millionwill receive a 25 percent bidding credit.
Up-front payments/minimum opening bids. The Commission is currently seeking comment on its proposed up-front payments and minimum opening bids for the 700 MHZ service. Specifically, the Commission is proposing to require up-front payments of $14,000,000 and $28,000,000 for the 10 and 20 MHZ licenses respectively. The Commission is also proposing minimum opening bid amounts of $40,000,000 and $80,000,000 for the 10 and 20 MHZ licenses, respectively.
As of press time, the FCC has not yet established deadlines for filing short-form applications to participate in the auction. This auction is expected to overlap the 39 GHz auction, however, as the FCC is under a Congressional mandate to conduct the auctions in time for the funds to be deposited in the Federal Treasury by September, 2000.
Wireless broadband services are expected to attract great consumer interest in the future. Accordingly, if you plan to participate in these auctions, it will be necessary to develop a solid business plan and attract sufficient capital to compete effectively at the auction.
About the author
Robert J. Rini is the managing attorney at the Washington, DC law firm Rini, Coran & Lancellotta, P.C. where he specializes in the representation of wireless broadband and other technology companies. He can be contacted at 202-296-2007 or firstname.lastname@example.org.