600 MHz Incentive Auction Key Facts
February 23, 2015
Now that the AWS-3 auction has concluded, not without controversy which will continue to reverberate for some time, attention will shift to the incentive auction planned by the FCC for next year. Being the first of its kind anywhere in the world, I thought it would be a good idea to summarize some of the inter-working of this auction by highlighting some key features:
- Incentive auction allows broadcasters in the UHF band to voluntary relinquish spectrum in exchange for a share of the proceeds from an auction of new licenses to use the repurposed spectrum. It was first introduced in 2010 by the National Broadband Plan.
|Channel 14 – 36||470 – 608 MHz|
|Channel 37||608 – 614 MHz|
|Channel 38 – 51||614 – 698 MHz|
- Incentive auction consists of two parts: reverse auction and forward auction.
- Reverse auction: sets the price at which broadcasters will voluntarily relinquish their spectrum. It has a descending clock format.
- Forward auction: determines the price companies are willing to pay for wireless licenses. It has an ascending clock format.
- “Repacking” is a process of reorganizing and assigning channels to the remaining broadcast television stations in order to create contiguous blocks of cleared spectrum. Stations that remain on the air after the incentive auction will occupy a smaller portion of the UHF band.
- Interworking of the auction is critical: the reverse auction requires information about how much bidders are willing to pay for spectrum licenses in the forward auction. The forward auction requires information regarding what spectrum rights were tendered in the reverse auction, and at what price; and each of these depend on efficiently repacking the remaining broadcasters.
- The auction will be held in stages consisting of reverse and forward auctions:
- Before the first stage, a spectrum clearing target will be set. Broadcasters will indicate their willingness to relinquish spectrum at the opening prices. The initial spectrum clearing target will be set based on these results.
- The reverse auction will start to determine the total incentive payments broadcasters require to clear that amount of spectrum.
- The forward auction will then follow to determine…
- The auction ends when the final stage rule is satisfied. Otherwise additional stages will be conducted with progressively lower spectrum targets in the reverse auction and less spectrum available in the forward auction.
- The final stage rule is a reserve price with two components that must be satisfied. The first component requires the average price per MHz-pop for licenses in the forward auction meets or exceeds a certain price per MHz-pop benchmark, or alternatively a large amount of spectrum becomes available for wireless use even if the price per-MHz-pop is less than the benchmark price. The second component requires that the proceeds of the forward auction be sufficient to meet mandatory expenses related with FirstNet public safety operations.
- Broadcasters who participate in the reverse auction will be able to chose from four options:
- Relinquish a UHF channel to move to either a high VHF (7 to 13) or low VHF (2 to 6) channel;
- Relinquish a high VHF channel to move to a low VHF channel;
- Relinquish current channel in order to share a channel with another broadcaster after the auction; or
- Relinquish license and go off the air.
Broadcasters who don’t participate can be reassigned to another transmit channel depending on the repacking process.
In each bidding round, broadcasters are offered prices for one or more bid options to indicate their choices. The prices offered to each station will be adjusted downward as the rounds progress in a way that accounts for the availability of television channels in different bands in the repacking process. “Intra-round bidding” enables bidders to indicate price levels (between the opening- and closing prices in a round) at which they would like to either choose different bid options or drop out of the auction and remain in their home bands. A station will continue to be offered prices for bid options until the station’s voluntary relinquishment of rights becomes needed to meet the current spectrum clearing target. When all remaining active bidders are needed in this way, the reverse auction for the stage will end. If the final stage rule is satisfied in that stage, then the active bidders are winning bidders, and the price paid to each will be at least as high as the last price it agreed to accept.
In the forward auction, bidders will bid on generic licensed in one or more categories. oce the final stage rule is satisfied, the winners would indicate their preference for frequency-specific licenses in separate bidding rounds. The final license prices will reflect the winning bid amounts from the clock bidding rounds as well as any adjustments from the assignment rounds.
- Upon completion of the reverse and forward auctions and repacking process, the FCC will relicense the remaining broadcast television stations to broadcasters who will receive new channel assignments. Transition to new the new channel is expected within up to 39 months. Licensees that successfully bid to relinquish their licenses or to share a channel will have three months from their receipt of auction proceeds to cease operations on their pre-auction channels.
- 600 MHz Band Plan: The UHF spectrum assigned to broadcasters today includes 222 MHz of spectrum between 470 MHz and 698 MHz (excluding channel 37 which is used for radio astronomy) allocated on basis of 6 MHz-wide channels. The spectrum recovered from broadcasters will be divided into a number of paired (FDD) 5 MHz channels. It will incorporate guard bands, including an 11 MHz duplex gap separating the uplink from downlink spectrum. The guard bands will be available for unlicensed use. Moreover, each market will include one TV whitespace channel for use by wireless microphones and unlicensed devices. Wireless microphone devices licensed to broadcast and cable programming entities will also be licensed to operate in a portion of the duplex gap.
|# of Freed Broadcast Channels||Resulting Wireless Spectrum (MHz)||# of Remaining Broadcast Channels||Total Freed spectrum (MHz)||Guard Bands – Available for TVWS (MHz)|
For more information check published information by the FCC