The forward auction is where the potential users of repurposed spectrum bid for new flexible-use licenses. The FCC is familiar with forward auctions in the spectrum context, and has been conducting them for nearly two decades.
The forward auction will identify the prices that potential users of repurposed spectrum pay for new flexible-use licenses. The FCC is familiar with forward auctions in the spectrum context, and has been conducting them for nearly two decades. However, the forward auction piece of the incentive auction will differ from the typical spectrum auction because, unlike in typical spectrum auctions, the number and locations of licenses available in the forward auction will depend upon the results of the reverse auction. The FCC is considering innovative new approaches to auction design to manage this interrelationship and integrate the different auction components.
The FCC is also considering another innovation in the forward auction, bidding for “generic” blocks, which can then be translated into specific licenses at the end of the auction. This practice is common in European spectrum auctions. Under this proposal, bidders would bid for a desired number of paired and/or unpaired blocks of spectrum in a geographic market. The FCC is considering proposals to ensure that spectrum blocks in the auction are fungible, therefore reducing bidder concern for obtaining specific blocks. Bidding for generic blocks would be expected to speed up the forward auction, reducing the time and, therefore, the cost of bidder participation.
A Flexible Band Plan
Designing a band plan in the incentive auction context is complicated by the uncertainties regarding the quantity and location of available spectrum. Expecting that the reverse auction may yield different amounts of spectrum in different geographic areas (for example, along the Canadian and/or Mexican border), the FCC proposes to adopt a band plan that accommodates varying amounts of available wireless spectrum in different markets rather than requiring that a uniform set of television channels be cleared nationwide. One option in the Notice of Proposed Rulemaking proposes keeping the downlink spectrum band consistent nationwide while allowing variations in the amount of uplink spectrum available in any market.
The following diagram demonstrates how the band plan could be structured to accommodate uplink variability by market.