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The Federal Communications Commission (FCC) on March 29 will start an incentive auction of 600 MHz broadcast spectrum. The auction will repurpose spectrum for wireless broadband where licensees will give up their usage rights for part of the proceeds from the auction.

“This has been four years in the making,” Angela Giancarlo, a former chief of staff at the FCC and now an attorney at Mayer Brown, told Legaltech News. “It’s a grand experiment…. Congress is hopeful it will work.”

Moreover, Todd O'Boyle, program director for Common Cause's Media and Democracy Reform Initiative, explained, “The incentive auctions are very important for a number of reasons. They will fund FirstNet, an upgrade to public safety wireless connectivity, and they will represent a once-in-a-generation opportunity to open up crucial low-band spectrum –  part of the airwaves that is particularly well-suited to wireless broadband.”

He also said that the incentive auction is “actually two auctions in one: television broadcasters will participate in a declining-bid auction, while wireless providers like AT&T and T-Mobile will be bidding upwards to take over the licenses broadcasters are giving up.”

“After using the wireless companies' money to pay broadcasters to hand over their licenses, the government will fund FirstNet, and turn over any excess to the federal treasury,” he added. “In terms of results, it's very hard to forecast exactly how vigorously the various parties will bid, how long the auctions will take, or what kind of dividend will be generated for taxpayers. Auctions are notoriously unpredictable – the previous AWS3 auction generated many billions more than projected. On the one hand that might indicate record-breaking levels of demand and thus high bidding this time around. On the other, perhaps the bidders now have less capital available to spend on spectrum.”

He speculated that when it comes to “real world outcomes for individuals” – “over the coming years, they can expect to see their wireless broadband moving more quickly – though perhaps at the cost of their access to free over-the-air broadcast television.”
It is also noteworthy that the process to identify available spectrum and set up an auction is a relatively slow one.

Giancarlo said it takes “almost a better part of a decade to bring spectrum to auction once identified.” In addition, so far there is no other spectrum mandated by Congress after the spectrum is sold in the upcoming auction.

“We will be studying the outcome of these auctions for years. To my knowledge, no government has ever fostered a simultaneous forward and reverse auctions of spectrum. Governments and regulators from around the world will be tracking this closely for lessons learned,” according to O'Boyle.

Moreover, Giancarlo said the FCC has not defined what a successful auction would be. “I think they would be happy if 60 [MHz of spectrum] came back… It would be magnificent to have more,” she said.

Reprinted with permission from the March 28, 2016 edition of LegalTech News © 2016 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.