U.S. Congress Passes Incentive Auction and Public Safety Spectrum Legislation

On February 17th, Congress passed long-awaited spectrum legislation. The legislation gives the FCC authority to conduct voluntary incentive auctions of underutilized spectrum made available by its current holders for use in the provision of new services. The bill also opens some spectrum for unlicensed use, limits the FCC’s ability to exclude otherwise qualified bidders from participating in spectrum auctions (while allowing the FCC to issue rules of general applicability that could limit the amount of spectrum that may be held by any one entity to promote competition), and reallocates the 700 MHz D-Block for public safety use.

The FCC has long been seeking authority to conduct two-sided auctions of previously assigned (yet underutilized) spectrum. With this incentive auction authority, the FCC National Broadband Plan projected that the FCC could address the current “spectrum crunch” by reallocating 120 MHz of broadcast spectrum for mobile broadband use. It now appears, however, that incentive auctions will likely yield only 60-80 MHz, with much of the loss attributable to limiting language in the bill sought by the National Association of Broadcasters to protect stations close to the Canadian and Mexican borders.

The legislation also limits the FCC’s ability to exclude qualified applicants from bidding in spectrum auctions. Specifically, the law prevents the FCC from excluding any entity that meets the FCC’s financial, technical and character requirements from participating in any system of competitive bidding.  It still, however, allows the FCC to adopt "rules of general applicability, including rules concerning spectrum aggregation that promote competition.” The legislation thus leaves open the door for the FCC to require, through spectrum limits, larger spectrum holders to divest spectrum that exceeds such limits.

Advocates for unlicensed use of white spaces were generally pleased with the bill. Unlicensed use will be allowed in narrow slices of “guard band” spectrum “no larger than is technically reasonable to prevent harmful interference.” And the bill specifically acknowledges the FCC’s White Spaces order, allowing unlicensed use in areas where TV broadcast operations do not occur.

Another important decision was the reallocation of the 700 MHz D-Block to public safety. As Vice President Joe Biden, who was instrumental in pushing this part of the legislation, explained, "[a]fter 9/11, we pledged that our cops, firefighters and EMTs would have the technology they need to stay safe and do their jobs.  Part of that promise included a nationwide network for our first responders.  Today we made good on that overdue promise." A provision of this legislation also allows agencies to lease access to the public safety network to utilities and others.

The legislation, however, left out two important swaths of spectrum—the1755-1780 MHz government (Department of Defense) band long sought by the wireless industry for pairing with spectrum at 2155-2180 MHz already held by the FCC, and the 3550-3650 MHz band already identified by NTIA for possible reallocation to wireless broadband services. The Department of Defense expressed concern with including the two bands at this time and effectively took them off the table.

Also included were provisions to make it easier to construct and modify wireless infrastructure, including on towers.  Specifically, the bill prevents local governments from blocking wireless facility modifications and upgrades that do not "substantially change the [facilities’] physical dimensions."  

The ultimate impact of the new spectrum policy provisions remains to be seen. As a research report by Stifel, Nicolaus & Company stated, “[t]he 2012 presidential election, which will determine control of the FCC, is pivotal to implementation, with auction eligibility Exhibit A.” Nevertheless, it is widely acknowledged that the legislation, which received bipartisan support, is an important step in freeing up additional spectrum for mobile broadband use.