The Federal Communications Commission has issued application instructions for the forward part of the broadcast incentive spectrum auction, which include more stringent requirements for wireless carriers wishing to apply for designated entity (DE) discounts.
The Federal Communications Commission has issued application instructions for the forward part of the broadcast incentive spectrum auction, which include more stringent requirements for wireless carriers wishing to apply for designated entity (DE) discounts.
The US$3.3bn in small business discounts sought by affiliates of Charlie Ergen’s Dish Network (NASDAQ:DISH) at the AWS-3 auction prompted the FCC to reform bidding rules last July, introducing a first-ever US$150m cap for small businesses and a US$10m ceiling on the overall amount that any entity, other than a small business or rural service provider, can receive in smaller markets. The commission has also prohibited joint bidding and multiple applications by parties with common controlling interests.
Last October, the Dish affiliates surrendered US$3.
Applications to participate in the forward part of the upcoming auction, set to begin on 29 March, are due by 6.00pm ET on 9 February. The reverse part of the auction will see broadcasters sell spectrum to the FCC, while the forward part will see wireless carriers bid for it.
Applicants for the forward auction may apply for either small business or rural service provider DE bidding credits, but not both.
To qualify for a 15% small business discount, an applicant’s average annual gross revenues for the previous three years must be between US$20m and US$55m, including attributable assets.
To be eligible for a 25% small business discount, an applicant’s annual gross revenues over the same period must not exceed US$20m.
Rural service providers may claim a 15% discount.
Up to 30 MHz of spectrum in each market will be set aside for smaller carriers. Operators are eligible to bid on these airwaves if they either hold an interest in less than 45 MHz of below-1 GHz spectrum in a given licence area, or are a non-nationwide provider. If a member of a long-standing rural partnership wishes to bid on reserved spectrum as a non-nationwide provider, and has a relationship with AT&T, Verizon, Sprint or T-Mobile US, it must provide further details explaining why it qualifies.
Applicants are also required to provide details information on their affiliates and ownership structures, particularly if they are claiming small business discounts.
Number four carrier Sprint has already announced that it intends to sit out the auction, saying it has decided its existing spectrum is sufficient, but its three bigger rivals, AT&T, owner of satellite broadcaster DirecTV, Verizon and T-Mobile US, have said they will take part, as has Dish.
Broadcasters had until 12 January to notify the FCC of their intentions to take part in the reverse auction, although they have until 29 March to commit. The FCC will not reveal which broadcasters will participate until the auction is over.
Wells Fargo analyst Marci Ryvicker has said she expects “widespread” broadcast participation in the auction, but she is less sure about the forward part given wireless carriers “have waivered in their commitment to this massive event”.
“Our sense is that something around 60MHz will likely be sold at what we hope to be US$1.75MHz per pop, which (if we’re right) would net out to US$30bn-ish in proceeds,” she said.
