The FCC is on track to auction off 10 MHz of paired spectrum licenses in H Block as early as January 2014 and AT&T has weighed in on how it wants that auction to proceed.
The carrier is advocating for Heirarchical Package Bidding (HPB) that would allow bids for groups of licenses. In an HPB process, the H Block licenses would be divided into 176 Economic Areas (EAs) and non-overlapping package bids would be for Major Economic Areas (MEAs) consisting of several EAs, Regional Economic Area Grouping (REAGs) consisting of several MEAs, or a package bid for all EAs across the entire continental U.S.
AT&T argues HPB would be a fair approach for bidders and carriers of all sizes and that it would reduce the risks involved trying to “assemble a larger footprint by bidding and winning multiple local licenses.”
T-Mobile also supports HPB, saying in a filing that package bidding is attractive because it will “allow auction participants to bid on and obtain complementary licenses in a manner that best suits their business needs.”
Sprint does not share the GSM carriers’ proclivity and argued in an FCC filing that adopting HPB would increase complexity and participation costs and potentially chill aggressive bidding.
Sprint also pointed to a “free-rider problem,” in which bidders for individual licenses could together beat out a package bid but would likely hold out in hopes that other bidders would raise their bids without them having to. This could decrease the likelihood of trumping a package bid and potentially lower auction revenue.
U.S. Cellular also came out against HPB, saying in a filing that the format puts smaller bidders at a disadvantage and increases the likelihood that larger bidders will tie up multiple licenses in package bids and “thereby exclude smaller carriers with targeted business plans from acquiring the spectrum necessary to serve rural areas.”
The Rural Telecommunications Group jumped in against auctioning the H Block on the EA basis—as dictated in a HPB format—because EAs include metro areas and therefore become too expensive for rural carriers to bid on.
The FCC has yet to set the guidelines for the auction and has set August 16 as the deadline for comment replies.