FCC Delays Auction Again

Next-generation wireless Internet services delayed again.

by Patricia Fusco ISP-Planet Managing Editor [August 3, 2000]

The Federal Communication Commission bowed to Congressional and industry pressure to delay its upcoming spectrum license auction for a third time.

Originally scheduled for June 6, but moved to the first week of September, the FCC again moved the auction for the 700-meganertz licenses to March 6, 2001.

Stating that the Commission needed additional time for bidder preparation and planning, federal regulators closed the application window for filing in the 31st spectrum sale.

Any applications that were in the system will be purged and applicants wishing to participate in the bidding must re-file in compliance with new deadlines set to close early in February.

William Kennard, FCC chairman, said the postponement of the 700-megahertz auction is necessary as a matter of sound spectrum management.

"As the expert agency charged with managing the nation's airwaves, the Commission must allocate and assign the spectrum in the 747-762 MHz and 777-792 MHz band in a manner that comports with the specific statutory requirements of the Communications Act," Kennard said.

Incumbents
The factors surrounding the spectrum, including the incumbency of the UHF television broadcasters in the band, make the auction unusually complex. UHF operators are obliged to abandon the frequency and migrate to digital delivery for their broadcasts by 2006.

Controversy has surrounded the lucrative spectrum that holds the hopes of next-generation wireless Internet services and advanced cellular communications in its finite frequencies.

Discord
Commissioners Harold Furchtgott-Roth and Gloria Tristani issued a joint statement that condemned the decision to postpone the auction.

"We cannot support today's decision to delay the 700 MHz auction until March 2001," the statement read. "This action is in stark disregard of this agency's statutory obligation to ensure that all proceeds of such bidding are deposited no later than September 30."

"No spectrum or fiscal policy consequence, no letters from members of Congress, and no interpretation of the overall statutory scheme can overcome the Commission's clear obligation to proceed with this auction consistent with the statute," they said. "As Commissioners, we are sworn to uphold the law. We are obligated to object to this direct violation of our governing statute."

Meanwhile, industry leaders like AT&T Wireless Services, Inc. applauded the FCC decision to delay the spectrum sale.

Gregory Landis, AT&T Wireless senior vice president and general counsel, said postponing the 700-megahertz auction has done a great service for the American wireless consumer.

"By exercising its authority over spectrum management, the Commission has gone a long way to ensure that this spectrum can be put to its highest and best use when it is auctioned next year," Landis said. "The real winners today are wireless consumers, who gain the most when spectrum decisions are based on sound long-term policy."

Money and the law
According to industry analysts, the law that requires the FCC sell the airwaves was short sighted. The 1997 Balanced Budget Act ordered the agency to deposit the proceeds from the sale in the U.S. Treasury by Sept. 30 so monies would count toward the 2000 federal budget revenues.

Several members of the House Commerce subcommittee on telecommunications urged that the FCC delay the sale because the auction may only raise $2.6 billion.

Rep. Rick Boucher (D-VA) said the uncertainty of when the airwaves would be available damaged the value of the spectrum. He noted that a similar auction in the United Kingdom raised about $30 billion.

Boucher contends that the migration of television signals off from the airwaves depressed the market price of the spectrum.

Verizon Corp. also requested that the FCC delay the auction because its was busy reorganizing its assets from recent mergers and aligning join ventures with other wireless firms. The company again called for a delay last week, asking Congress to step in to delay the auction since it was Congress that passed the law requiring the sale.

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