In a Public Notice approved today by a 3-2 vote, the Federal Communications Commission seeks comment on the procedures that will govern the Broadcast Incentive Auction, currently scheduled for early 2016. While the bulk of the proposals presumably will be adopted, three of the FCC Commissioners expressed concern about the complexity of some of the proposals, leaving open the possibility that commenters could impact the final rules.

The FCC proposes a complex, multi-stage auction with concurrent bidding by broadcasters and wireless providers. Broadcasters will bid in a reverse auction to return spectrum to the FCC. At the same time, wireless providers will bid to obtain the returned spectrum.

While the FCC plans to set a nationwide target for the amount of cleared spectrum, the actual amount of spectrum vacated by broadcasters and sold to wireless providers will vary by geographic area. Accordingly, the FCC proposes to split the wireless spectrum blocks into two categories: Category 1 spectrum, which will have a 0 – 15% level of impairment (a level of interference), and Category 2 spectrum, which will have a 15 – 50% level of impairment. During the auction carriers will have the option to place different types of bids depending on whether they are interested in only one category of spectrum or both. After the initial bidding for amounts of spectrum in each category is completed, the FCC will conduct an additional bidding round just for the winning bidders to determine which specific blocks of spectrum they will receive in each market.

The FCC will reserve blocks of spectrum for carriers that do not currently have significant amounts of low-band wireless spectrum and that spectrum will be from the Category 1 spectrum. As a result, smaller carriers and new market entrants will have a considerable auction advantage.

The details of these proposals will be in the text of the Public Notice, which has not yet been released. Comments on the proposal are due on January 30, 2015 and reply comments on February 27, 2015.