The Public Notice addresses the pre-bidding procedures for Auction 103, which will allocate upper microwave flexible use service (“UMFUS”) licenses in the bands referenced above. The spectrum in each of the three bands will offer 100 megahertz blocks of spectrum to be licensed in 416 Partial Economic Area (“PEA”) service area nationwide. The number of licenses that will be available for auction in the upper 37 and 39 GHz blocks in any given PEA will depend on commitments made by incumbent licensees in an initial phase to accept a reconfigured assignment or relinquish their license altogether in exchange for a portion of the auction proceeds.

The FCC seeks input on its proposal for Auction 103 to use an ascending clock auction format in both auction phases for licenses held by the FCC as well as those given up by incumbent licensees. The first phase will involve successive clock bidding rounds in which bidders request categories of generic license blocks in specific PEAs while in the subsequent round, bidders will bid on frequency-specific license assignments. During the clock phase, the FCC auction bidding system will announce prices for blocks in each category in each PEA, and qualified bidders will submit quantity bids for the number of blocks they seek. Simultaneously with the Public Notice, the FCC also published a technical guide with mathematical details about the proposed auction procedure and algorithms for the clock and assignment phases.

In addition, the auction procedures would include an aggregate net revenue requirement that must be met to ensure that the auction’s proceeds will be able to cover the cost of payments to incumbents that relinquish their spectrum. Bidders will be provided with an estimate of the shortfall to meeting the net revenue requirement after each round of bidding until the requirement has been met. If the revenue requirement has been met by the end of the clock phase bidding, the system will determine the winning bidders of generic blocks, and the auction will proceed to the assignment phase. If the net revenue requirement has not been satisfied at the time bidding stops in the clock phase, the auction will end, no new licenses will be assigned, and incumbents will retain their licenses while the FCC reassesses the matter.

After the winning bidders for the generic blocks have been determined, the FCC also proposes to conduct separate assignment rounds for each of the top 20 PEAs. The PEAs will be assigned sequentially, beginning with the largest PEAs. Assigning the PEAs sequentially will make it easier for bidders to incorporate frequency assignments from previously assigned areas into their bid preferences for other areas and acquire contiguous blocks of spectrum within PEAs and common spectrum among contiguous PEAs. Of note, the FCC proposes to implement a cap on bidding credits for winning bidders in the amounts of $25 million for small businesses and a $10 million for rural service providers.

Rounding out the major actions that will be voted on later this month at the Open Meeting, the FCC released a draft item that would offer regulatory relief to rate-of-return carriers providing Business Data Services (“BDS”). The proposed items are sure to impact every sector of the communications industry, from the largest wireless carriers to the smallest broadband providers and device manufacturers to business, industrial, and public safety radio users, while potentially transforming large-scale data transport services.

Enabling Unlicensed Use of the 6 GHz Band: The FCC has long been pressed to expand unlicensed use of the 6 GHz Band. It now seems poised to commence a rulemaking to consider just that, while ensuring incumbent licensees are protected. The draft proposed rulemaking would allow unlicensed devices to operate in the 6 GHz Band, subject to certain restrictions that vary depending on the specific frequencies used. The FCC proposes that devices using the 5.925-6.425 GHz and 6.525-6.875 GHz sub-bands would only be allowed to transmit if an automated frequency control (“AFC”) system determines that such use will not cause harmful interference. The FCC noted that these sub-bands currently are occupied by licensees operating point-to-point microwave links and some satellite systems. Meanwhile, devices using the 6.425-6.525 GHz and 6.875-7.125 GHz sub-bands would only be allowed to operate indoors and at lower power levels, but use of these frequencies would not depend on an AFC system. The FCC asserted that these sub-bands are used for mobile and satellite services whose itinerant operations make the use of an AFC system impracticable, while the proposed operating restrictions would seem to offer sufficient protection to incumbents.

Reforming the 3.5 GHz Band Rules: Major wireless carriers have peppered the FCC for almost two years with proposed changes to the geographic license areas for PALs, favoring auctions over larger geographic areas, with longer license periods and expectations of renewal. Smaller providers have supported retaining the smaller census tract licenses adopted in the original PAL framework several years ago. The FCC draft order contains a compromise approach that would issue PALs across the country at the county level. The FCC also would increase the license term for PALs from three years to ten years and make PALs renewable in order to foster long-term investment. Moreover, the FCC would seek to promote greater spectrum utilization through the enhancement of secondary markets in PALs by permitting partitioning and disaggregation of the licenses.

Expanding PLMR Operations in the 800 MHz Band: The FCC has worked for years to increase the efficiency of PLMR operations in the 800 MHz Band. A draft order would, among other things, add 318 new “interstitial” PLMR channels in the 800 MHz Band and terminate a freeze put in place in 1995 that prevented PLMR licensees from gaining access to other license category pool frequencies the 800 MHz Band without a waiver. The FCC also would extend conditional licensing authority above 470 MHz to PLMR stations that operate in the 800 MHz Band and the 700 MHz narrowband, allowing entities to operate for up to 180 days while their applications remain pending. In addition, other changes included in the draft include making new channels available in the 450-470 MHz band for industrial/business radio use in gaps located between PLMR spectrum and other services.

Restructuring Rate-of-Return BDS: The FCC took action in 2017 to deregulate most BDS, which provide dedicated point-to-point transmissions at guaranteed speeds over high-capacity data connections for major businesses, governments, and other large institutions. Under the draft order and proposed rulemaking, certain small rural carriers would be allowed to move from longstanding rate-of-return regulation to “incentive” price cap regulation for some of their BDS offerings. Critically, the FCC would not require these carriers to comply with tariffing, cost assignment, and jurisdictional separations requirements. The draft item would also seek comment on the appropriate regulatory treatment for these carriers’ other transport services, including the need for price controls.