Hogan Lovells

The Federal Communications Commission (FCC) Thursday voted to approve a draft Public Notice seeking comment on procedures for Auction 105 – a novel competitive bidding process that will offer 70 megahertz of Priority Access Licenses (PALs) in the 3.5 GHz Band, sometimes referred to as the Citizens Broadband Radio Service (CBRS) Band. Bidding in Auction 105 is set to begin June 25, 2020 and continues the FCC’s effort to release mid-band spectrum to commercial wireless broadband operators.

The proposed procedures for Auction 105 resemble other competitive bidding processes, but include a few key differences to accommodate shared use of the band, encourage 5G deployments, and increase flexibility for participants.

Plan for the 3.5 GHz Band

The 3.5 GHz Band includes the 3.55-3.70 GHz band occupied by the U.S. Department of Defense (DoD). In 2015, the FCC adopted a novel three-tiered access structure that preserved DoD use of the band while allowing different types of commercial uses under a light-touch regulatory framework designed to support shared federal and non-federal, commercial uses.

The Three-Tiered System

Tier 1 is for Incumbent Access users, including authorized federal users, Fixed Satellite Service earth stations, and (for a finite period) grandfathered wireless broadband licensees. Incumbent Access users receive protection from interference by users in Tiers 2 and 3. Tier 2 is for Priority Access users that will be determined through competitive bidding in Auction 105. Priority Access users must protect and accept interference from Incumbent Access users but receive protection from users in Tier 3. Tier 3 is for General Authorized Access (GAA) users and is licensed-by-rule to permit the widest possible access to the band. GAA users must protect Incumbent Access and Priority Access users from interference and have no expectation of interference protection from any other users.

Automated frequency coordinators, known as Spectrum Access Systems (SAS), will manage spectrum and coordinate operations in the band. In order to protect incumbent federal uses, SASs may rely on Environmental Sensing Capability (ESC), a sensor network that detects frequency use by Department of Defense radar systems and transmits that information to the SAS. In July, the FCC approved three ESC operators: CommScope, Federated Wireless, Inc., and Google. On September 16, 2019, the FCC announced that Amdocs, Inc., CommScope, Federated Wireless, Inc., Google, and Sony, Inc. had all been approved as SAS administrators. These five companies are now authorized to begin initial commercial deployments (ICD) in Tier 3, the GAA Tier. The ICD periods will run at least 30 days and will be subject to review by the FCC. If the ICD periods are successful, the FCC may certify nationwide GAA operations.

Carriers and service providers will not have to wait until June 2020 to gain access to spectrum in the 3.5 GHz Band because access to GAA spectrum can occur prior to the auction. GAA access achieved a milestone of sorts on September 18, 2019, when the CBRS Alliance announced the launch of Initial Commercial Deployment of OnGo commercial service in the GAA Tier of the band. All of the approved ESC operators and SAS administrators are members of the CBRS Alliance.

Auction 105 Format

Auction 105 will assign licenses within Tier 2, the Priority Access tier. The auction will offer seven PALs in each of 3,233 county-based license areas, for a total of 22,631 PALs nationwide. Each PAL will consist of ten-megahertz of unpaired channel. The PALs are ten-year renewable licenses. PAL Licensees can hold up to four PALs within the band in any license area at a given time. The initial bidding schedule will be announced in a public notice to be released at least one week before bidding starts June 25, 2020.

In its September 26, 2019 Public Notice, the FCC seeks comment on various aspects of the pre-bidding and bidding procedures, as well as the post-auction process for Auction 105. A few key features of the proposal include:

  • Conducting Auction 105 as an ascending clock auction. The FCC also used ascending clock auction formats for Auctions 102 and 103, but the proposed procedures for Auction 105 are slightly different because there will be no assignment phase. Participants in Auction 105 are not purchasing specific spectrum blocks. Instead, PAL Licensees will be authorized to use frequency dynamically by the SAS.
  • Allowing bidders to bid at the “Cellular Market Area” (CMA) level. Even though the PALs are generally county-based licenses, the FCC proposes to allow bidders to have the option of acquiring spectrum in the 172 CMAs that are classified as Metropolitan Statistical Areas and comprise multiple counties.
  • Incorporating an “activity upper limit” into the bidding procedures. This feature would allow bidders to submit bids that exceed current bidding eligibility to help mitigate the effect of rules that might otherwise cause participants to lose eligibility.
  • Capping bidding credits at $25 million for small businesses and $10 million for rural service providers. In addition to these hard caps, the FCC proposes to impose a $10 million cap on the overall amount of bidding credits that a small business bidder may apply to winning licenses in smaller markets.
  • Imposing limited information procedures, also known as anonymous bidding, in the auction. The only information that will be made available at the end of each round of bidding will be, for each county, the aggregate demand for licenses, the prices at the end of the last completed round, and the prices for the next round.

The five FCC commissioners unanimously approved the Public Notice at their September 2019 Open Meeting. Chairman Ajit Pai and Commissioners Michael O’Rielly and Brendan Carr spoke favorably of the proposed changes. Commissioners Jessica Rosenworcel and Geoffrey Starks both raised questions about how the CMAs will operate and how the proposed changes would affect smaller carriers, new entrants, and innovative users. Commissioner Rosenworcel also questioned the timing of the auction. She suggested the FCC should try to hold the auction this year, or prior to June 2020.

The FCC asked for comment on the proposed procedures for Auction 105 by October 28, 2019. Reply comments are due November 12, 2019.

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