H Block Auction EndsFCC's Floor Price Met at $1.564 Billion 2/27/2014 1:41 PM Eastern
The FCC's H Block auction has closed after no new bids were received and the auction having generated exactly $1.564 billion, the FCC's aggregate floor price.
The H block is the first of three spectrum auctions Congress mandated to free up spectrum for wireless broadband. The other two being the AWS auction, which must be conducted by February 2015, and the broadcast incentive auction, currently slated for mid-year 2015.
The New York market drew the highest bid in the auction at $216 million.
The bidders are mostly regional carriers rather than the major players, but Dish was bidding--though under another name, according to reports--and had promised to bid at least that minimum, insuring the FCC would not have to start over.
The FCC was under a congressional mandate to auction and reassign the H Block spectrum by next year.
The money from the auction will be used to fund FirstNet, the interoperable broadband first responder communications network.
The FCC will release the names of the winning bidders in a few days.
"With this successful auction, the Commission makes good on its commitment to unleash more spectrum for consumers and businesses, delivering a significant down payment towards funding the nationwide interoperable public safety network," said FCC Chairman Tom wheeler. "The H Block auction is a win for the American people, and we thank Chairwoman Clyburn for her leadership scheduling it. We also commend everyone who worked so hard to resolve technical issues that made this previously unusable spectrum valuable."
The FCC tried to guarantee the success of the auction through what many saw as an unusual quid pro quo with Dish.
It cleared the way for Dish to bid on H block spectrum by granting a Dish petition to waive some technical rules on its use of adjacent spectrum. DISH had said it wanted to bid, but needed some help from the commission, which it got.
In a December 2012, the FCC voted to reallocate 40 MHz in the advanced wireless services (AWS)-4 band for satellite spectrum for terrestrial broadband, so dish could potentially use that spectrum for a wireless broadband network, and to approve the auction of adjacent H Block spectrum.
But to bid on that adjacent H Block spectrum, and to bid at least the reserve price of $1.564 billion, Dish told the FCC it would need more flexibility to use that AWS-4 spectrum for downlink as well as uplink, and asked for a one-year extension of its buildout commitment for those AWS-4 licenses.
In exchange, Dish promised to let the commission know how it would be using the AWS-4 band (whether uplink or downlink) within 30 months after the petition was granted, and agree to be a bidder at the reserve price in the H block, essentially guaranteeing that at least that price would be met, which it was.
The FCC granted the petition with some conditions. The flexibility to use the spectrum for downlink is subject to interference protections. "Beyond the benefits inherent in flexibility," said the FCC in granting the petition, "the technical waivers DISH seeks offer the potential for compelling public interest benefits, including improved spectrum management."
The FCC rejected Sprint’s request that it impose a specific cost-sharing payment condition on DISH should it be a winning bidder in the H Block auction, and said it "declined to address in this particular adjudication" Sprint’s request for a blanket waiver to future H Block licensees of "certain H Block technical rules."
Wheeler had said he would walk with a signboard advertising the auction if it would generate participation. Potential winners in the auction include Cspire, nTelos, Piedmont Rural and James Valley Cooperative Telecom, but not other big-pocketed majors like AT&T, Verizon, Sprint or T-Mobile.