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TR Daily: FCC Adopts Further Notice for 37, 39, 47 GHz Bands

August 3, 2018

The FCC today unanimously adopted a fourth further notice of proposed rulemaking, proposing steps to get the 37 gigahertz, 39 GHz, and 47 GHz bands ready for a planned auction in the second half of next year.

“The Fourth Further Notice of Proposed Rulemaking proposes to transition existing spectrum holdings in the 39 GHz band (38.6-40 GHz) to the new flexible-use band plan in a manner that will promote the efficient use of this spectrum by incumbents and new licensees for new wireless services. The Fourth FNPRM also proposes related service rule changes for the Upper 37 GHz (37.6-38.6 GHz) and 47 GHz (47.2-48.2) bands,” the FCC noted in a news release on the item, which was adopted in GN docket 14-177.

The news release noted that the item “[p]roposes to modify the 39 GHz, Upper 37 GHz, and 47 GHz band plans from 200 megahertz to 100 megahertz channels.”

It also “[p]roposes an incentive auction that would offer contiguous blocks of spectrum throughout the 39 GHz, Upper 37 GHz, and 47 GHz bands. The proposed incentive auction would have two phases: a clock phase, in which bidders bid on generic license blocks; and an assignment phase, in which clock phase winners can bid on specific frequencies. Incentive payments would be offered to incumbents who choose to relinquish their spectrum usage rights to make new licenses available.”

The item also “[p]roposes a pre-auction voucher exchange that would allow incumbent licensees to consolidate and rationalize their holdings before the auction” and “[p]roposes to repack any incumbent licensees that choose not to participate in the incentive auction and seeks comment on various options for repacking.”

The fourth further notice adopted today follows up on earlier items the Commission adopted in its spectrum frontiers proceeding (TR Daily, July 14, 2016; Nov. 16, 2017; and June 7).

“As part of our strategy to extend U.S. leadership in 5G, we intend to hold a single auction of the upper 37 GHz, 39 GHz, and 47 GHz spectrum bands in the second half of 2019. This auction will make available 3.4 gigahertz of millimeter-wave spectrum for the commercial marketplace, including 2.4 gigahertz of contiguous spectrum. But not all of this spectrum is ready to be auctioned. In particular, there are too many incumbent interests in the 39 GHz band, and efforts to resolve these encumbrances voluntarily haven’t solved the problem. This calls us to act. And act we will,” FCC Chairman Ajit Pai said.

“Specifically, we propose today to hold an incentive auction to resolve the encumbrances in the 39 GHz band. Incumbent 39 GHz licensees will be able to sell their old licenses and receive vouchers that they can use to purchase new licenses in the upper 37 GHz, 39 GHz, and 47 GHz band auction. This market mechanism will eliminate encumbrances while maximizing bidding options for incumbents and new entrants alike. Moreover, we propose to reconfigure the band plan for the upper 37 GHz and 39 GHz bands from 200 MHz blocks to 100 MHz blocks, which will make it easier for us to hold a simultaneous auction of upper 37 GHz, 39 GHz, and 47 GHz spectrum,” Mr. Pai added.

“Today’s Notice of Proposed Rulemaking (NPRM) makes some rule tweaks to harmonize licensing across these three bands, but the majority of the item will facilitate discussion about the best means to rationalize – or reduce encumbrances in – the 39 GHz band. The NPRM proposes a mechanism using an incentive auction, vouchers, and a repacking process to enable the greatest amount of clean, contiguous spectrum to be auctioned for 5G networks. Of course, if it were only as easy as it sounds,” Commissioner Mike O’Rielly said.

“Some of the possible voucher and repacking concepts are novel, complex, or just a tad confusing. To analogize, this effort is a little like trying to trade Monopoly properties. Here, it is not only trading with your co-players, but also with the bank. And, to make things even more complicated, an entity may currently hold only a portion of some of these properties, because current licensees do not hold their licenses in 100 MHz blocks, as proposed in this item, in Partial Economic Area market sizes. So, if an entity tries to trade 25 percent interest in St. James Place, half of New York Avenue, and 75 percent of Illinois Avenue, does that equate to all of Boardwalk? While this is very simplified, these are the types of questions that confront the Commission. Obviously, we still have a lot of work to do to solidify all of the necessary details,” Mr. O’Rielly said.

“As we figure out the specifics, we must ensure that incumbents are made whole, the maximum amount of contiguous spectrum is available for auction, and the process is as simple as possible so that we can finish this review, obtain any required software, and take the necessary pre-auction steps in time to meet the 2019 timeline,” Mr. O’Rielly stressed.

“Millimeter wave spectrum can give our country a boost towards winning the race to 5G. Particularly when it’s allocated in wide channels, this spectrum is well-suited to the high throughput and low latency that are the hallmarks of next-gen networks. Taken together, two of the millimeter wave bands that are the focus of this item offer 2,400 MHz of spectrum. In one (the 37 GHz band), there is no commercial wireless, and in the other (the 39 GHz band) the Commission has about one third of the spectrum sitting unused in our inventory,” Commissioner Brendan Carr said. “So, what’s holding us up? The short answer is that the 39 GHz band is messy. It’s fragmented in terms of geography and frequency. And that’s due to its history.”

“Through this Notice, we take steps to clean up the mess to reflect changes in technology,” Mr. Carr added. “We propose to do so by clearing and auctioning the spectrum, modeled on our broadcast incentive auction. We start by giving incumbents vouchers equal in value to their existing licenses. If bidding drives up the price of spectrum, incumbents can take the opportunity to sell. Incumbents that choose not to sell will be guaranteed contiguous spectrum in the band. This process will maximize the number of 100 MHz channels in the band, return revenue to the Treasury, and help the United States win the race to 5G.”

Commissioner Jessica Rosenworcel agreed that “before we can realize the full potential of these airwaves, we have some cleaning up to do. To ensure big swaths of this spectrum are available for auction in the not-too-distant future, we need a framework to address existing encumbrances. Accordingly, today’s rulemaking proposes an incentive auction in which incumbents would receive vouchers in exchange for current licenses. This approach is critical, because holding an auction with the existing fragmented band would result in higher costs and deployment delays.

“I appreciate that here my colleagues have agreed to auction the revamped 39 GHz band along with spectrum in the 37 and 47 GHz bands. This is the right way to go. Going forward, we should put a premium on auctioning 5G bands together, instead of offering them one-by-one,” Ms. Rosenworcel added. “I also appreciate that the Chairman has agreed to my request to permit incumbents in the 39 GHz band to use their vouchers to acquire new spectrum rights in any of the millimeter wave bands we will auction here. By granting bidders greater flexibility, we can generate more interest in the auction and allow bidders the ability to assess which bands work best for them. In other words, a more thoughtful auction will result.”

Wireless Telecommunications Bureau Chief Donald Stockdale told reporters after the meeting that there weren’t any “significant, substantive changes” to the item between the time it was circulated and voted. “There were some changes in the text that were made to clarify the proposals based on questions that were raised by parties. … They were simply clarifications.”

In response to questions from reporters, Mr. Pai defended the FCC’s plan to auction spectrum, which Ms. Rosenworcel has criticized as being faulty because the agency has not released a detailed schedule for when frequencies will be made available and has not agreed to auction more spectrum at the same time.

“The auction timetable that we have announced is the one that will promote U.S. leadership in 5G. Some of the proposals that others have suggested would end up delaying the auctions substantially,” he said.

He added that not all of the spectrum is ready for auction because of incumbents. “So tying everything together would require, effectively, delaying all auctions, in this case, until the end of 2019,” he said. “We’ve been quite clear on our timetable and on the aggressive actions that are necessary to promote U.S. leadership in 5G.”

Mr. Pai also said the FCC is working hard on a 6 GHz band NPRM, which he has said would be adopted in the fall. “We hope to be able to move in the near future,” he said, noting that there are four more monthly FCC meetings in 2018.

In response to a question about limitations on the FCC’s auction software that apparently make it difficult to auction bands with many licenses, he said the House and Senate has authorized the FCC to reprogram funds for IT upgrades, and that the FCC’s auction software is one thing it will look at.

But an FCC spokesman told TR Daily later that the reprogrammed funds mentioned by Mr. Pai actually are going to upgrade the electronic comment filing system and the Form 477 filing system and other improvements, and that reprogrammed and additional funding to upgrade the auction software actually was approved in fiscal year 2017. That’s why the FCC will be able to auction the three bands next year, the spokesman said.

Commissioner O’Rielly told reporters that he doesn’t know how much funding has been reprogrammed, but that the current software is not capable of auctioning the hundreds of thousands of priority access licenses (PALs) in the 3.5 GHz band if smaller geographic areas are used and so the FCC planned, under its current framework, to make to those licenses available via “sealed bids” rather than a traditional auction.

The Commissioner said he wants to see the FCC’s software enable the agency to be able to auction all the bands and licenses it wants. “We don’t have that today,” he said. Mr. O’Rielly said the FCC would currently be able to auction the three bands in the second half of 2019 because they would not involve a huge number of licenses.

Commissioner Rosenworcel bemoaned the situation that the auction software could hinder the agency’s plans. “In the past, we figured out our policies first and then identified how to make our software accommodate them,” she told reporters. “Using software as an excuse, to me, strikes me as misguided and wrong and not particularly good for the future of spectrum policy.”

She also reiterated her call for “a public schedule for spectrum auctions. All we have now are a blitz of bands under consideration.”

Wireless industry entities commended the FCC today for adopting the further notice, as well as a separate public notice setting rules for upcoming auctions of the 28 GHz and 24 GHz bands (see separate story).

“Today’s forward-looking action by Chairman Pai and the FCC will help the United States win the global 5G race. High-band spectrum is critical to meeting growing demand for connected devices, and will enable the Internet of Things and the smart cities of the future,” said Scott Bergmann, senior vice president-regulatory affairs for CTIA.

Joan Marsh, AT&T, Inc.’s executive vice president-regulatory & state external affairs, said, “The 39 GHz band is essential to advancing 5G leadership in the United States. AT&T commends the FCC for moving the band forward expeditiously and for looking for solutions to make the band viable for flexible 5G use. Now that an auction date has been set, we are looking forward to working with the Commission on the path forward to a successful auction and efficient repacking of the band.”

“For America to win the global race to 5G, we must continue to expand the availability of our airwaves for next-generation connectivity. Today, the Federal Communications Commission continued progress on its 5G spectrum agenda, by approving rules for the 28 GHz and 24 GHz auctions and adopting proposed rules to facilitate an auction of the 37, 39, and 47 GHz bands,” said Margaret McCarthy, executive director of Mobile Future. “Thanks to the FCC’s actions, the United States is currently leading the world in high band frequencies being readied for 5G use. And the Commission has [opened] proceedings, including 3.5 GHz and 3.7-4.2 GHz, that will give us an opportunity to match our global competitors in mid-band spectrum availability. Mobile Future urges the Commission to keep its foot on the gas in order to free up more of the spectrum that will further fuel America’s 5G leadership.”

Jonathan Adelstein, president and chief executive officer of the Wireless Infrastructure Association, also praised today’s FCC actions. —Paul Kirby