An Update on the Educational Broadband Service Band and Upcoming FCC Auction

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The FCC has released its proposed procedures for the upcoming EBS spectrum auction, including a novel approach for bidding. In the meantime, the FCC requires EBS licensees to continue to provide service.

TAKEAWAYS

  • Existing EBS licenses must be providing minimum service by March 27, 2021, or else face automatic termination.
  • The upcoming auction of mid-band spectrum brings opportunities, risks.

On July 10, 2019, the Federal Communications Commission (FCC) adopted rules to overhaul the spectrum assigned to the Educational Broadband Service (EBS). This valuable mid-band spectrum had been reserved for educational use since 1964, but a large portion of the spectrum has been leased to commercial operators since the 1980s.

In recognition of the existing relationship between educational institutions and commercial operators, the FCC has taken steps to permit commercial operators to own EBS spectrum directly and has eliminated the educational use requirements previously set forth in the FCC’s rules.

One major goal of the new EBS rules was to bring EBS spectrum under the same application processing and licensing rules that are applicable to other commercial wireless spectrum. Of special note is the “use it or lose it” requirement—holders of site-specific licenses must provide minimum service without interruptions of service lasting more than 180 days.

This requirement went into effect for EBS operators on September 28, 2020, and as a result, the EBS license of any licensee that was not providing minimum service on that date and continues to not provide minimum service on March 27, 2021, will automatically terminate. This is a rolling deadline, meaning that EBS licensees must continue to provide minimum EBS service during the entire license term, i.e., covering 30 percent of population in the assigned Geographic Service Area (GSA), operating six point-to-point links for every million persons, or meeting former minimum educational use requirements.

The 2019 EBS rules also called for a future auction to distribute overlay EBS licenses that would permit any qualified entity to operate on currently unused EBS spectrum. The first step in this process was to open a priority filing window for federally recognized American Indian Tribes and Alaska Native Villages that intended to serve rural tribal lands. That window closed in September 2020. Thus far, the FCC has accepted more than 200 applications and granted more than 150 such applications.

With the closure of the priority filing window, the FCC is now moving forward to establish the procedures for the upcoming auction. The FCC expects to hold this auction by September 2021, and it will release an inventory of available spectrum prior to the auction.

A Question of Format

Most of the proposed procedures are similar to those that have been used in other FCC-run auctions. However, one of the most significant questions raised by the FCC in the Public Notice is the format of the bidding process. A vast majority of the auctions conducted by the FCC since 1993 have been based on the simultaneous, multiple-round (SMR) auction format, whereby authorized bidders place bids in successive rounds on all licenses until the bidding is concluded.

The main benefits of this approach are that bidders have multiple opportunities to bid on all available spectrum, bidders can switch their targeted markets based on “price discovery” during each successive round, and can drop out once the bidding exceeds the bidder’s maximum price. The most significant drawback with the SMR format is that such an auction can take several months to conclude, especially when a large number of licenses are available, as is the case in the upcoming EBS auction, where over 8,300 licenses could potentially be up for auction.

The alternative auction format—single-round with package bidding—would consist of only one round, thus expediting the auction. Under this format, authorized bidders would submit bids on one or more licenses, and the FCC’s systems would select the highest bids. Bidders would be able to place “package” bids that combine bids for separate licenses, including for multiple licenses in one or more metropolitan areas.

The main benefit of the single-round format is that it would speed up the auction process. Because much of the non-rural EBS spectrum is already licensed, there will not be a multitude of bidders like in other auctions. At the same time, however, bidders would lack the flexibility to change bidding strategies during the auction, and a single-round bidding process could be too complicated for bidders.

The complexity associated with the single-round format is on display in the recently released Auction 108 Technical Guide. The Guide provides additional background on how the single-round auction could be conducted but will likely invoke fear among anyone who opted out of college math. For example, the maximum sum of bid amounts would be derived from this equation:

while the tie-breaking process will be governed by this formula:

Faced with this scenario, it is possible that many bidders would simply opt out of participating in a single-round EBS auction, leaving a significant portion of the EBS spectrum fallow.

The deadline for filing comments on the auction procedures will be 60 days after the publication of a public notice in the Federal Register. Reply Comments will be due 75 days after the Federal Register public notice.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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