The FCC has qualified 70 companies (pdf) to bid on AWS-3 spectrum (pdf). The auction starts Nov. 13 and will be the country’s largest spectrum auction since the $19 billion 700 MHz auction in 2008. That auction was before Apple’s iPhone became a huge hit and the extraordinary growth of data-hungry smartphones. The FCC has set a total reserve price of $10.587 billion for the AWS-3 auction.
The AWS-3 auction is not as straightforward as previous auctions because two chunks of spectrum are currently used by federal agencies, including the Department of Defense. In most cases, federal spectrum users will have to exit the 1695-1710 MHz and 1755-1780 MHz bands or geographically share them with commercial users.
The Report and Order sets flexible-use regulatory, licensing, and technical rules for 65 megahertz of spectrum in the AWS-3 band, which includes the 1695-1710 MHz, 1755-1780 MHz, and 2155-2180 MHz bands.
The FCC adopted rules to allocate and license the 1695-1710 MHz band for uplink/mobile operations on an unpaired shared basis with incumbent Federal meteorological-satellite (MetSat) data users.
The other 40 MHz block is more traditional. They will assign AWS-3 licenses by competitive bidding, offering 5 megahertz and 10 megahertz blocks that can be aggregated using Economic Areas (EAs). The FCC’s decision to license only one paired 5×5 MHz block in smaller Cellular Market Areas (CMAs) was disappointing for most competitive carriers. The FCC also left it up to carriers to voluntarily have AWS-3 be interoperable with AWS-4 (MSS) spectrum, which Dish Network controls.
The Order will make 40 megahertz (of the total 65 megahertz) of the AWS-3 spectrum available for commercial use. The 15 MHz chunk will be available on a shared basis with federal incumbents. The 1695-1710 MHz band will be unpaired spectrum used for low-power uplink operations. The 1755-1780 MHz band will be licensed for low-power uplink operations and will be paired with the 2155-2180 MHz band, which is unencumbered by federal users, for downlink operations.
Verizon Wireless and AT&T will likely be major bidders of AWS-3 spectrum, but the two dominate carriers did not get their wish to have two chunks of 10Mhz X 2. Instead, the auction will include three 5×5 megahertz options, and just a single 10×10 megahertz license covering the country, notes RCR Wireless. Verizon, AT&T and T-Mobile US as well as Dish Network are qualified to bid, along with dozens of smaller carriers, investment firms and private entities. Sprint said in September that it will sit out the AWS-3 auction.
Steve Berry, president of the Competitive Carriers Association was not impressed. “The use of the larger Economic Areas (EAs) will likely curtail participation among smaller carriers, who have neither the resources nor the scale to bid on license areas of that size.”
Congress has mandated the AWS-3 spectrum be auctioned by February 2015.
The FCC also chose to require that AWS-3 spectrum be interoperable with AWS-1 spectrum, which many carriers already use for LTE services. AWS-1 runs from 1710-1755 MHz and 2110-2155 MHz, notes Fierce Wireless, but left it up to carriers to voluntarily have AWS-3 be interoperable with AWS-4 (MSS) spectrum, which Dish Network controls. That will likely mean phone sold by the big carriers will shut out Dish.
Dish controls more than 50 MHz of spectrum, including 40 MHz in the AWS-4 band and 10 MHz of the 1900 MHz PCS H Block, part of which is adjacent to AWS-4. It also owns a large block of unpaired 700MHz “E-Block”, which was originally planned for MediaFLO broadcast-type service. That 700 MHz spectrum (adjacent to the “A block” downlink), would now likely be used for LTE – potentially causing less interference to “A block” licensees.
The FCC also recently announced they will delay the start of the 600 MHz broadcast TV auction from mid-2015 to early 2016, due to broadcasters’ court action. The 600 MHz auction will be the big one, with lots of valuable spectrum likely to be available between TV channels 52-69. Unlike cellular carriers, broadcasters do not pay the government for use of spectrum. That’s because they’re still considered a “public service” by the federal government even though only 5-10% of the population still depend on over the air broadcast television. Broadcasters would get paid off to move off (our) public airwaves in the 600 MHz band.
If fully realized, the 600 MHz auction could bring in $45 billion. From that sum, the FCC will deduct $7 billion: $250 million to run the auction; $1.75 billion to reimburse broadcasters for expenses during the repacking of spectrum assignments; $5 billion to establish the “FirstNet” high-speed public safety network for first responders.
The FCC established an outlay of up to $38 billion to broadcasters, based on the recovery of 126 MHz of spectrum and AT&T’s pledge to spend $9 billion in the auction if its acquisition of DirecTV is approved. If, as some observers expect, only two- thirds of that goal (about 84 MHz of airwaves) is relinquished, the pay-out would be about $26 billion at top valuations. A portion of the reclaimed airwaves will not be sold to wireless carriers; about 26 MHz will be retained for use as guard bands and buffers between broadcast and wireless services sharing the bands. Those may be used for unlicensed White Space data transmission.
The AWS 3 auction could reveal disruption in the comfortable 4 carrier status quo in the United States. Dish Network is “cautiously optimistic” that its fixed-mobile broadband trials, currently running with Sprint and nTelos, will turn into a “real business.” For example, Google and Dish could acquire AWS-3 (for roaming compatibility) and launch a 5th nationwide wireless service. Perhaps Google Wireless could deliver cable-like services with enough spectrum.
Related Dailywireless articles include; FCC Sets AWS-3 Auction Rules, AWS-3 Auction Rules: Who Benefits?, Dish Wins Everything in H-Block PCS Auction, Verizon Activates AWS Band , DOJ Sets Conditions for Verizon AWS, Verizon Getting AWS Spectrum Says WSJ, T-Mobile Okayed to Test Spectrum Sharing, Verizon’s Spectrum Deal: Tough Nut, AT&T Buys 2.3 GHz from NextWave, AT&T Wants 2.3 GHz for LTE, FCC to Okay Verizon/Cable Spectrum Buy, 700MHz: Money Talks