The Federal Communications Commission (FCC) has sought comment on Auction 108’s bidding procedures for new geographic overlay licenses in the 2496-2690 MHz band (or 2.5 GHz band). Approximately 8,300 licenses – up to three blocks of spectrum (50.5, 49.5, and 16.5 megahertz) – will be available on a county basis. Inquiries from the public notice focus primarily on the auction format: should the FCC implement a single-round auction with user-defined package bidding or a simultaneous multiple-round (SMR) auction?

Single-round auction

Under this format, the FCC would offer every license in one bidding round, and bids would need to meet the activity rule. The option provides “bidders ample time to submit, review and potentially resubmit, and confirm their bids”; allows package bidding, where a bidder may submit a collection of bids for two or three licenses in a single county; and could be complete within one week and therefore shorten the prohibited communications quiet period. But it is not a commonly used auction format and precludes price discovery, where bidders modify bidding strategies based on multi-round observations on how prices differ across geographic areas or frequency blocks.

The FCC seeks comment on several issues, including:

• whether this design may help overcome some of the inherent advantages of incumbents;
• if overall competition and participation will increase;
• how to ensure that certain potentially critical aggregations of licenses can be bid on with an either/or indicator so that a bidder can show that it wishes assignment for only one of a group of substitutable licenses; and
• any specific aspects of this format, such as the potential time savings when compared to the multi-month SMR auction, whether the format would disproportionately favor a given bidder, or if the FCC misunderstands what types of entities are likely to participate in this auction.

SMR auction

Under this format, the FCC would offer every license in successive bidding rounds until bidding stops on every license. The option is familiar to past bidders, allows price discovery, and gives “a bidder more confidence in its bid amounts in cases where there is a significant ‘common’ value element to the licenses being auctioned beyond the particular value to the bidder in its business plan.” But it may dissuade participation from certain bidders – many seeking only a few licenses – because of the demanding resource commitment to monitor multiple rounds, preclusion of package bidding, and longer auction duration and prohibited communications period.

The FCC seeks comment on several issues, including:

• the importance of using a familiar format to help potential participants feel more comfortable;
• whether allowing price discovery through a multiple-round auction is particularly important;
• if the significant timing difference between formats warrants consideration; and
• the potential benefits of an SMR auction outweighing the potential advantages of a single-round auction for a smaller entity.

Next steps

Comments are due 60 days after the notice’s forthcoming publication in the Federal Register.

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