Local and Regional Licensing for the US 600 MHz Band (Incentive Auction)

01 January 2014
Richard Marsden, Dr. Chantale LaCasse, et al.

A NERA team led by Senior Vice Presidents Richard Marsden and Dr. Chantale LaCasse was commissioned by NTCA - The Rural Broadband Association (NTCA) and Rural Wireless Association (RWA) to assess proposals published by the US Federal Communications Commission (FCC) for the design of the so-called Incentive Auction. If successful, the Incentive Auction will reallocate 600 MHz spectrum away from broadcasters and create a new band suitable for the provision of mobile wireless services. A key component of the Incentive Auction is the Forward Auction, in which spectrum will be awarded to wireless operators. The FCC has proposed licensing this spectrum using Economic Areas (EAs) that divide the US into 176 regions.
In this report, NERA explores the arguments for and against using smaller geographic license areas for the Forward Auction, and any changes to the auction rules that could facilitate using smaller license areas. NERA concludes that there is a compelling case for defining smaller areas that are more tailored to the demands of potential bidders. NERA also proposes that the Forward Auction be conducted in two sequential bidding phases: one phase for urban areas primarily based on the EA licensing structure, followed by a second phase of bidding for rural areas based on the Rural Service Areas licensing structure. This approach, referred to by NERA as a Sequential Forward Auction, is designed specifically to address concerns about aggregation risk and implementation complexity associated with expanding the number of license areas in the Forward Auction.