Spectrum Hold 'Em: FCC Updates Spectrum Holding Policies

[Commentary] Not all spectrum is created equal. Low-band spectrum gets special treatment in the upcoming “Incentive Auction” and in the Federal Communications Commission’s case-by-case analysis of secondary market transactions.

More specifically, for mobile telephony/broadband applications, low-band (i.e., below 1 GHz in frequency) spectrum offers better signal propagation for enhanced geographic coverage than high-band (i.e., above 1GHz) spectrum, but high-band is better at transmitting larger amounts of data (albeit over shorter distances).

Low-band spectrum, which wireless carriers covet due to better coverage capabilities and lower deployment costs, is in shorter supply than high-band spectrum. AT&T and Verizon will be most constrained by the new rules when it comes to bidding on 600 MHz spectrum in the Incentive Auction.

But the ultimate success of that auction depends largely on maximizing the proceeds from the “forward auction” component. Those proceeds will have to pay for the First Responder Network Authority, the Next Generation 911 program and federal deficit reduction (all as required by Congress) while also paying off broadcasters in the “reverse auction”. That last element is particularly important because the amount of spectrum available for the “forward auction” may depend to a significant degree on how much spectrum broadcasters opt to make available in the “reverse auction”. And, obviously, the financial incentive for broadcasters to do so may be seriously compromised if the returns from the “forward auction” will be artificially depressed by the partial exclusion of the two deepest pocketed bidders.