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FCC delays broadcast spectrum auction until 2015

The chairman of the Federal Communications Commission says the agency only has one chance to get this auction right, and so he has decided to postpone it.

The Federal Communications Commission said Friday that it plans to delay the upcoming incentive wireless spectrum auction until 2015.

In a blog post, FCC Chairman Tom Wheeler said he believes the agency can conduct the auction in the middle of 2015.

Wheeler acknowledged the importance of getting new wireless spectrum out into the market, and he recognized the need for a successful auction to take place in order to build the construction of a nationwide public safety network called FirstNet. But he said that the FCC also needs to make sure that the complicated design of the auction actually works.

"These imperatives are balanced with the recognition that we have but one chance to get the incentive auction right," he said.

The auction is really two auctions that will happen simultaneously. The FCC must design a "reverse" auction in which TV broadcasters will offer up wireless spectrum, which can then be sold in a forward auction to wireless service providers. The proceeding is one of the most complicated that the agency has ever designed.

At this point it's still unclear exactly how much spectrum will be available. Broadcast TV participation is purely voluntary, and some experts speculate that affiliates of the nation's largest broadcasters are unlikely to participate, which means much of the spectrum will come from local broadcaster.

The spectrum auction was authorized by Congress in 2012 under then FCC Chairman Julius Genachowski. The former FCC set a target date for the auctions of June 2014. But Chairman Wheeler said in his blog post that in spite of all the hard work that has been done to prepare for the auction, the Commission simply needs more time to ensure that it's done correctly.

He added that he has spent more time working on the Broadcast Television Spectrum Incentive Auction than any other single issue. He said he's "confident in the Commission's ability to make the appropriate policy decisions." But he acknowledged that there are both policy and technology challenges ahead.

One of the key policy challenges is whether or not the FCC should draft rules that would limit participation by the two biggest wireless operators, which already own the bulk of already allocated low-frequency wireless spectrum.

AT&T and Verizon Wireless control most of the spectrum under 1 gigahertz. Smaller national carriers, T-Mobile USA and Sprint are in desperate need for low-frequency spectrum, which should help them improve the coverage of their networks.

Low-frequency spectrum is important because signals can travel over longer distances using these frequencies. Public interest groups and smaller wireless carriers have lobbied the FCC to establish rules that would ensure smaller operators also get a chance to buy some of this important spectrum. The Department of Justice even weighed in with its own letter urging the FCC to make sure rules are written to ensure competition.

The fear of these smaller firms, the Justice Department, and consumer advocates is that AT&T and Verizon could use their deep pockets to buy most of this valuable asset, essentially boxing out competitors.

Chairman Wheeler hasn't officially weighed in on whether AT&T and Verizon should be restricted in their bidding, but he has hinted that he may be open to some limitations.

While wireless companies are eager to get new spectrum into the market, they also recognize the logistics of designing the auction and making sure the policy issues are handled appropriately are also important. And even though they would rather see more spectrum the market sooner rather than later, most support the Chairman's decision to delay the auction.

"T-Mobile appreciates that the FCC has a complex task ahead of it implementing the 600 MHz Incentive Auction," Kathleen Ham, vice president of federal regulatory affairs for T-Mobile, said in a statement. "We are very supportive of getting it right and will work with the FCC to ensure the auction is a success, promoting competition, innovation and consumer benefit."