At its December open meeting, the Federal Communications Commission (“FCC” or “Commission”) took a significant step toward facilitating the deployment of fifth-generation (5G) wireless advanced services. For those still wondering what exactly 5G is, we have written about the highly touted mobile broadband technology several times, including here and here.
The FCC has already cleared some important regulatory hurdles necessary for 5G deployment, but the spectrum scarcity issue remains. Many wireless carriers capitalized on the recent broadcast incentive auction to get their hands on airwaves in the 600 MHz range, but 5G will likely rely on a combination of low, medium, and high frequency spectrum, so there is much more work needed to be done by the Commission. The FCC has, for some time, had its eye on the Upper 37 GHz, 39 GHz, and 47 GHz bands to free up some all-important millimeter wave spectrum.
The most recent Report and Order set the wheels in motion for an incentive auction for those bands, which the FCC hopes to have underway by the end of 2019. An incentive auction would achieve the goal of clearing incumbent licensees in the 39 GHz band.
Importantly, the FCC announced that it will modify the band plans of the Upper 37 GHz, 39 GHz, and 47 GHz bands from 200 MHz channels to 100 MHz channels. The Commission hopes that standardizing channel width will simplify the transition of the spectrum to 5G use.
The incumbent 39 GHz licensees will not be left out in the cold. Each will be offered a reconfigured license that will conform to the new band plan and service areas. Incumbents will also have the option to submit an alternate reconfiguration that more closely aligns to current service offerings.
The band reconfiguration thus leaves incumbents with three options: (1) accept a reconfigured license; (2) choose an alternate reconfiguration of a license, subject to FCC approval; or (3) relinquish spectrum usage rights in the auction. Licensees will have the opportunity to propose modifications to their licenses before deciding whether to participate in the auction. Those that ultimately choose to relinquish their licenses will be given “vouchers” sufficient to win blocks in the auction equivalent to their current holdings, if they so choose.
Once the incumbents have decided between accepting a new license and relinquishing spectrum in the auction, the FCC will offer new licenses that will comprise spectrum in the Upper 37 GHz, 39 GHz, and 47 GHz bands. All the spectrum in these bands will be auctioned, less any quantity that must be retained to provide non-participating incumbents with modified licenses. Any party eligible to hold a license in these bands will be eligible to participate in the auction, except for the incumbents that accepted a modified license in place of relinquishment.
The auction itself will proceed in two phases, with participants bidding for generic blocks of spectrum in the first phase. This first phase will allow bidders to indicate their demand for the spectrum. The price of the spectrum will increase as long as the demand for blocks of spectrum exceeds the supply. When the number of blocks demanded by bidders does not exceed the supply, the first phase will conclude. This process is virtually the same as the broadcast incentive auction.
The second phase will determine the frequencies for the actual licenses to be assigned to the winning bidders. Winning bidders will also have an opportunity to submit sealed bids by Partial Economic Area to specify additional amounts that they would be willing to pay for licenses on particular frequencies.
Incumbents will retain their existing licenses until the auction has concluded and new licenses have been issued. In the meantime, we will continue to monitor the 5G incentive auction and progress toward 5G deployment, so check back for additional updates.