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FCC under pressure to reduce D block cost

$750m proves a bit pricey

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The FCC is being asked to reduce the minimum bid for the the last of the 700MHz blocks, due to be auctioned next year, as $750m is a lot of money for frequencies to which the buyers won't have exclusive access.

Next year the FCC will be auctioning off D Block spectrum, again, and despite bids of only $472m last time it's decided economic conditions are now ready for a reserve price of $750m - a decision with which the Telecommunications Industry Association (TIA) takes issue.

Shifting the D Block has proved troublesome to the FCC - last time the reserve was $1.3bn - but the real problem is the onerous conditions attached to the sale. The buyer is required to provide priority access to the emergency services, limiting other use to non-critical connections. But the FCC has worked to make the spectrum more attractive this time around, doubling the allocation to 20MHz and clarifying the rules as well as opening the door to the possibility of regional licensing.

The spectrum comes in two lumps of 10MHz each, 758-768 MHz and 788-798 MHz, and offers the same kind of in-building penetration and range that made the rest of 700MHz so attractive. There are a few emergency systems already operating in that band, and the auction winner will have to pay for new equipment for those to be shifted based on FCC estimates of cost - something else the TIA finds objectionable.

When the auction runs, probably early next year, companies will be able to bid for regional licences, as well as a national licence. If all the regional bids combined come to more than anyone is bidding for a national licence then the regional bids win, but they'll have to deploy a compatible technology so bidders will have to state their intentions and the most popular option wins, nationally. This leaves regions in which no one bids to be sold off on the cheap afterwards.

That worries the TIA as companies picking up a cheap region might not have the resources needed for deployment - so the TIA is asking for regional bidders to post bonds covering deployment, as well as putting money aside to cover the actual costs of moving existing services rather than FCC estimates. Most importantly, though, the association wants to see the $750m minimum bid for a national licence lowered or removed.

If the auction fails to raise that $750m, then the FCC is left holding the spectrum again, and will have little option but to hold another auction with a lower limit. Spectrum buyers are increasingly comfortable with the idea that once they've bought their frequencies they can do what they like with them, including selling them on or sub-letting them, so blocks with specific limitations are harder to shift - as the FCC may well find out next year. ®

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