Ensuring A Fair And Competitive Incentive Auction

Next year the FCC will conduct the first-ever “Incentive Auction,” which will harness market forces to reallocate valuable low-band (below 1 GHz) spectrum from television broadcasters who voluntarily choose to relinquish their channels in exchange for incentive payments, to wireless providers who will bid against each other to buy those frequencies to provide mobile broadband services.

Two national carriers control the vast majority of that low-band spectrum. This disparity makes it difficult for rural consumers to have access to the competition and choice that would be available if more wireless competitors also had access to low-band spectrum. It also creates challenges for consumers in urban environments who sometimes have difficulty using their mobile phones at home or in their offices.

To address this problem, and to prevent one or two wireless providers from being able to run the table at the auction, I have proposed a market based reserve for the auction. Any party desiring to bid on any license area will be free to do so. When the Incentive Auction commences, all bidders will be bidding and competing against each other for all blocks of spectrum.

We expect a fulsome bidding process. There will be no “reserved” spectrum during this initial stage of the auction. When the auction reaches a “trigger” point that the Commission will set in advance of the auction -- largely based on meeting a price threshold -- wireless providers with a dominant low-band position in a license area will be constrained from bidding on a few “reserved” spectrum blocks.

The exact amount of “reserved” spectrum available will depend on how much spectrum non-dominant providers are actively bidding for at the trigger point, but in no instance will the reserve exceed 30 megahertz. Those “reserve-eligible” bidders who are still actively bidding at the trigger point will then begin bidding for reserved spectrum against only other eligible bidders, and not against bidders who already hold a dominant low-band position in that license area.

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