FCC Releases Forward Auction Bidding Guide

Guide lays out steps for 'Big Wireless, Inc.' July 13, 2016
WASHINGTON—“Big Wireless, Inc.” is the name given qualified forward-auction applicants who can bid on all spectrum parcels and some reserved spectrum, but who don’t get bidding credits reserved for smaller outfits and rural service providers. That’s according to the Forward Auction User Guide released today by the Federal Communications Commission. The guide is a directive for applicants who qualified to bid on the 100 MHz of available TV spectrum generated through the reverse auction, which concluded June 29.

As of early June, 99 parties had made it through the FCC’s forward-auction hoops, according to the commission’s public notice setting July 1 as the deadline for making upfront payments, or deposits, on spectrum blocks. Another public notice with a final list of bidders is expected to be released any day, with the forward auction starting no sooner than 15 business days after its release, so early to mid-August.

Bidders in the forward auction will contend for spectrum in the 600 MHz band divided into 416 partial economic areas. Each of these PEAs is divided into a number of bidding units as defined by Appendix F of the upfront payment PN. The amount of each bidder’s upfront payment will determine how many bidding units they can bid on. These bidding units further will be offered in 5 MHz paired blocks to support two-way wireless broadband operations.

The forward auction must raise at least $86.4 billion to cover the aggregate price offered to broadcasters in the reverse auction, as well as $1.75 billion to move displaced broadcasters and a lesser amount for administrative costs. (See “126 MHz Cleared at $86 Billion,” June 29, s016.)

As with the reverse auction, bidding will occur in several rounds. If the final stage rule is met after the first round and there is no excess demand for Category 1 spectrum, then it will be split into reserved and unreserved spectrum. Category 1 comprises spectrum with 15 percent or less interference, or “impairment,” in a given PEA. Reserved C1 spectrum becomes available only to those forward auction bidders who don’t already possess at least one-third of the available licenses for low-band spectrum—namely, not Verizon nor AT&T.

The final stage rule is a revenue floor that’s met when “total proceeds of the forward auction exceed the product of $1.25 per MHz/pop times 70 MHz times the total number of pops for the high-demand PEAs with at least one Category 1 block in this stage,” according to the FCC.

If all conditions are met, this so-called “clock phase” of the auction will be followed by the “assignment phase.”

If, however, the final stage rule is not met, but within 20 percent of being met, an extended round will be held. If it is met during the extended round, the auction will proceed in regular rounds. If not, this stage of the auction will end and the incentive auction will restart with a lower clearing target. The initial clearing target of 126 MHz was reached in the reverse auction, with 26 MHz of that dedicated to buffer zones and other uses, yielding 100 MHz for the forward auction.

The “FCC Incentive Auction Forward Auction Clock Phase Bidding System User Guide” is available for downloading here.

~ See our Spectrum Auction silo for previous comprehensive coverage.

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