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. 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 will use innovative new approaches to auction design to manage this interrelationship and integrate the different auction components.
The FCC adopted 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 adopted design, bidders would bid for a desired number of paired blocks of spectrum in a geographic market. Bidding for generic blocks is expected to speed up the forward auction, reducing the time and, therefore, the cost of bidder participation.
Forward Auction Bidding Process
The Commission adopted an ascending clock auction format for the forward auction. Bidders will be able to bid for generic licenses in one or more categories. Intra-round bidding will be allowed. There will be a separate clock price for each category in each geographic area, and bidders will indicate the number of licenses that they demand at the current prices. The prices generally will rise from round to round, as long as the demand for licenses exceeds their availability. Bidders still demanding licenses when the clock prices stop rising in every license category in every area will become winners of those licenses, provided the final stage rule is satisfied. If the rule is not satisfied, those bidders will have an opportunity to make additional bids in an extended bidding round. Once the rule is satisfied, winners may indicate their preferences for frequency-specific licenses in an assignment round or a series of separate bidding rounds. Final license prices will reflect the winning bid amounts from the clock bidding rounds as well as any adjustments from the extended bidding and assignment rounds.
600 MHz Band Plan
The 600 MHz band plan adopted by the Commission maximizes the value of spectrum to potential bidders and provides both larger and smaller bidders a fair opportunity to acquire spectrum. Specifically the band plan consists of specific paired uplink and downlink bands (which enables two-way communications), comprised of five megahertz “building blocks.” Additionally, the band plan accommodates limited variation in the amount of spectrum recovered from broadcasters in different geographic areas in order to prevent the “least common denominator market” from limiting the quantity of spectrum we can offer generally across the nation.
The band plan incorporates technically reasonable guard bands, including a uniform duplex gap (a special guard band used to separate uplink and downlink spectrum), to prevent harmful interference between licensed services. Consistent with the Spectrum Act, and recognizing that unlicensed spectrum is a catalyst for innovation that provides economic value to businesses and consumers alike, the Commission authorizes the use of these guard bands for unlicensed use nationwide. Also, one naturally occurring white space channel in the remaining TV band in each area will be designated for use by unlicensed devices as well as wireless microphones. Any other unused television channels in an area following the Incentive Auction will also be available for unlicensed devices as well as wireless microphone use. Unlicensed devices also will be able to operate on channel 37 at locations where it is not in use by channel 37 incumbents, subject to the development of technical rules to prevent harmful interference to the incumbents.
The band plan does not relocate Wireless Medical Telemetry Service or the Radio Astronomy Service from channel 37. Other incumbent services in the television band, including low power television, and translators may be displaced. Recognizing the value these services provide, the Report and Order allows their continued operation until new license holders become operational.
To facilitate wireless microphone use of available spectrum in the reorganized UHF band, the Report and Order adopts measures in addition to those noted above. It will allow wireless microphone devices licensed to broadcast and cable programming entities to operate in a portion of the duplex gap on a licensed basis. In addition, the Report and Order will permit other wireless microphones to operate in the guard bands on an unlicensed basis. The Commission will initiate a proceeding to adopt technical standards to govern these uses as well as a separate proceeding to address the needs of wireless microphone users over the longer term.