incentive auction overview [date]. 2 what are spectrum incentive auctions? incentive auctions are a...
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What are Spectrum Incentive Auctions?
Incentive auctions are a voluntary, market-based means of repurposing spectrum by encouraging licensees to voluntarily relinquish spectrum usage rights in exchange for a share of the proceeds from an auction of new licenses to use the repurposed spectrum.
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Broadcast Incentive Auction: From Idea to Law
“Congress should consider expressly expanding the FCC’s authority to enable it to conduct incentive auctions in which incumbent licensees may relinquish rights in spectrum assignments to other parties or to the FCC.”
“As recommended in the FCC’s National Broadband Plan, legislation is needed to allow the FCC to conduct “voluntary incentive auctions” that enable current spectrum holders to realize a portion of auction revenues if they choose to participate.”
“…the Commission may encourage a licensee to relinquish voluntarily some or all of its licensed spectrum usage rights in order to permit the assignment of new initial licenses subject to flexible-use service rules by sharing with such licensee a portion…of the proceeds…from the use of a competitive bidding system...”
National Broadband Plan
(Mar. 2010)
President’s Nat’l Wireless Initiative
(Feb. 2011)
Spectrum Act (Feb. 2012)
Notice of Proposed
Rulemaking (Oct. 2012)
“The FCC issued a Notice of Proposed Rulemaking on October 2, 2012, which launches the process which will leverage the collective expertise of the leading authorities in telecommunications, computer science, engineering, economics and law, as well as members of the public at large, to craft the best possible incentive auction.”
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Broadcast Incentive Auction: Key Components
Reverse AuctionReverse Auction
Forward AuctionForward Auction
Broadcasters•Offer to relinquish spectrum usage rights
Broadcasters•Offer to relinquish spectrum usage rights
Mobile Broadband Providers
•Offer to purchase spectrum licenses
Mobile Broadband Providers
•Offer to purchase spectrum licenses
IntegrationIntegration
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2 3 4
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1. Broadcaster Options
2. Reverse Auction Design
3. Repacking of Broadcast Stations
4. Forward Auction Design
5. 600 MHz Band Plan
6. Integration of Forward and Reverse Auctions
7. Unlicensed Use/TV Whitespaces
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Three Basic Design Elements
• The NPRM discusses three basic auction design elements for both the Reverse and Forward Auctions as well as the assignment stage of the Forward Auction1. Bid Collection2. Assignment / Winner Determination3. Determining Payment Amounts
• The NPRM includes Appendix C, prepared by auction experts proposing one possible auction design
• The Commission has also released a Supplement to Appendix C, prepared by its auction experts, that provides additional details about several of the Forward Auction proposals discussed in the NPRM
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Incentive Auction Decision Tree
Reverse Auction
Forward Auction
Maximum Opening Bids
Minimum Opening Bids
Initialspectrum clearing target (# channels)
Initialspectrum clearing target (# channels)
No
Yes
Close AuctionClose
Auction
Reduce spectrum clearing target,
continue auctions
Reduce spectrum clearing target,
continue auctions
Ascending clock stopping rule: Stops for a license category when there is no excess demand for that category. (The stage ends when all clocks have stopped.)
Reverse auction: Winning bidders paid last offer they accepted, channels assigned to others
Forward auction: Winning bidders go to assignment stage to be assigned specific frequencies
Closing Rule Met?
Descending clock stopping rule: Stops for a station when it either has exited or must be cleared to achieve the clearing target. (The stage ends when all clocks have stopped.
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Eligibility for Participation in the Reverse Auction
Who is eligible?
• Spectrum Act authorizes full power and Class A stations only– Primary interference protection
– Ceded in exchange for auction proceeds
Who is not eligible?
• Station whose license is expired, cancelled or revoked• LPTV and translator stations
– Interference protection is secondary to full power and Class A stations, and new wireless services
Three ways to participate: Go off air
Channel share
Move from UHF to VHF
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Participate and Stay on the Air: Channel-Sharing
Stations share single transmitter and antenna
• Pairing through private negotiations• Capital infusion from contribution of
spectrum• OpEx and CapEx savings
Each station is licensed portion of 6-megahertz channel
• Two stations on a channel share 19.4 Mbps• Can allocate bandwidth dynamically as
needed
Each station remains a primary FCC licensee
• Call letters, channel guide number (PSIP), other indicia of station identity remain
• Includes all current licensee rights (e.g., must carry)
Current: 12 MHz for Broadcasting
6 MHz
Channel 17
6 MHz
WXXX
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WYYY
Channel
6 MHz
21
Former 17
Former 21
Potential: 6 MHz for Broadcasting 6 MHz for Auction
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Participate and Stay on the Air: UHF to VHF
Station contributes a UHF channel in exchange for auction proceeds and the promise of a VHF channel
Retain 6 megahertz
Can still multicast
Retain must-carry rights
Coverage area may have more interference
Mobile broadcast more difficult
Current: 6 MHz in UHF
Future: 6 MHz in VHF
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Repacking
FCC is looking to recover contiguous blocks of spectrum (contiguous channels) on a nationwide or market-wide basis
Broadcast service will continue after the auction:
–Stations not participating
–Stations not purchased in the auction
Stations remaining on the air will be repacked into channels remaining for TV use
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Legislative Mandates and FCC Goals
• “the Commission shall make all reasonable efforts
to preserve, as of [February 22, 2012], the coverage area and population served of each broadcast television licensee, as determined using the methodology described in OET Bulletin 69”
• Transition expeditiously to:o minimize viewer disruptiono Make recovered spectrum available sooner
• Minimize channel change requests
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What is OET-69 ?
Interfering Station
B
Green = coverageYellow = no coverageRed = Interference
Green = coverageYellow = no coverageRed = Interference
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Effect of Repacking
2121 5050
Potential for service loss from co-channel interference
2121
Service POP A (New)
Service POP A (New)
Station on Ch 50
receives new
allotment on Ch 21
ChannelChange
Service Impacts Service
POP A
(Old)
Service POP A
(Old)
Service POP B
(Old)
Service POP B
(Old)
Interference (POP C)
New interference must not reduce population coverage by more than 0.5%
2121
Service POP B (New)
Service POP B (New)
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Interference Protection Constraints
• Operating U.S. Stations (Full-power and Class A) as of February 22, 2012
• Land Mobile operations on UHF television channels• Protected television stations and allotments in
Canada and Mexico near the common border respect international commitments
• Radio Astronomy and medical telemetry• Offshore Radiotelephone Service
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Incentive Auction NPRM
• Flexible framework rather than fixed band plan– Amount of spectrum not known until conclusion of auction, depends on final results of
both reverse and forward auctions
• Generic 5 MHz blocks– Location not known, so must promote fungibility, including the use of guard bands
• Building blocks– Bidders bid on one or more building blocks– Mechanism to contiguously assign a winner’s blocks in a license area
• Market variation– Allow limited variation in band plans across areas– May increase amount of spectrum returned by preventing border markets or other
markets with poor clearing from limiting nationwide clearing
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Geographic Exclusions
• Market variation means that some frequencies have both TV and wireless• These services need to be geographically separated, that is, wireless can
only be auctioned at a sufficient separation from TV• The areas in which wireless can be offered based on interference
calculations will not necessarily align with license areas such as EAs• These exclusions will apply only to the blocks that are not cleared
nationwide• Level of coordination with Canadian and Mexican TV stations has a major
effect on the extent of geographic exclusions• How much of a license area should be clear to be auctioned?• Can bidders specify how exclusions impact their bid for an area?