FAQs for FCC CBRS PAL Auction

SHARE THIS ARTICLE

Share on facebook
Share on google
Share on twitter
Share on linkedin

In light of the upcoming Citizens Broadband Radio Systems Priority Access License Auction, Federated Wireless compiled a list of questions and answers regarding the process and procedure of the FCC-run event. The auction originated in February of 2020, when the FCC issued a Public Notice establishing the competitive bidding procedures for PALs in the 3.5 GHz band, citing the value of the band for increased investment and deployment in mid-band spectrum for 5G. 

Below is a sampling of some of the questions. For the full list, go to the Federated Wireless website.

Q: What kind of auction proceeds are expected? Is there anything based on prior auctions or other clues?

A: Industry analysts are predicting that auction proceeds could be ~$4.4B in total at $0.20 per MHz-POP.

Q: What are some key differences of the PAL auction versus traditional licensed frequency auctions in the past?

A: By design, the FCC structured the auction so that it would be similar to previous auctions, using an ascending clock auction format, and applying common forms, deadlines and payments for the application and bidding process. Due to the nature of the CBRS band, however, there are some differences to this auction:  

The auction covers a total of 22,631 PALs nationwide—the largest number of spectrum licenses ever made available for bidding in a single auction. 

An individual PAL will not be identified by specific spectrum blocks. PAL license holders will not be assigned channels as in a normal auction, rather licensees will be dynamically assigned a specific channel by a frequency coordinator – the Spectrum Access System.  

The rules allow bidders to bid for no more than four generic blocks of spectrum per county. The spectrum aggregation limit of 40 megahertz will ensure the availability of PALs for at least two users in the counties where there is the greatest likelihood of high demand for such spectrum. 

For the first time in an FCC spectrum auction, it incorporates an activity upper limit to mitigate the possibility of a bidder losing bidding eligibility. The auction applies bidding credit caps of $25 million for small businesses and $10 million for rural service providers, as well as a $10 million cap on the overall amount of bidding credits that a small business bidder may apply to winning licenses in smaller markets.

Q: What are the general mechanics of the auction process and an estimated timeline of when the auction will be completed?

A: Under the clock auction format, the auction will proceed in a series of rounds, with bidding being conducted simultaneously for all spectrum blocks in all counties available in the auction. During each bidding round, the bidding system will announce a per-block clock price in each county. The bidding rounds will continue until, for all counties, the total number of blocks that bidders demand does not exceed the supply of available blocks. At that point, those bidders indicating demand for a block at the final price will be deemed winning bidders. 

The auction is currently scheduled to start on July 23, 2020. Our best guess is that the auction will take roughly two months to successfully complete all rounds of bidding.

Q: How does one qualify to be in the auction?

A: Applications for participation in the auction were due to be filed with the FCC by May 7, 2020. The FCC will review each application to ensure compliance with their requirements.

Q: When will the FCC tell us who is qualified to bid?

A: Once the FCC has completed its review of the applications, it will release a Public Notice listing the qualifying bidders, usually 30-40 days before the start of the auction. 

Q: Who is bidding?

A: This is being run as an anonymous auction, so we won’t know exactly who is bidding until all bidding officially closes. While a list of qualified bidders will be released by the FCC, live bidding doesn’t start until July 23, 2020. After each round of live bidding concludes, the FCC will make public the aggregate demand for licenses, the prices at the end of the last completed round, and the prices for the next round for each county. The identities of bidders placing specific bids and the net bid amounts would not be disclosed until after the close of bidding. 

Based on our discussions, it is safe to say that the top mobile and cable operators will be bidding, especially in dense urban counties where contention for spectrum will be highest. We expect to see applications from some WISPs and small businesses, who will be eligible for credit caps. We expect that a few individual enterprises might bid for a particular county where they have a venue – eg a sports arena in a dense urban environment – but these are likely to be few and far between since GAA will provide them with 80 MHz of spectrum within their control. 

Q: When will we find out who the winners are?

A: Live bidding is currently scheduled to start on July 23, 2020, and will continue in successive bidding rounds until no new bids are placed on any of the 22,631 PALs that will be available for purchase. This process is likely to take at least two months. This schedule reflects a one-month delay from the originally announced schedule due to COVID-19. Because the auction is an automated system, we don’t expect further delays, and early auction deadlines leading to the July 23rd start date have now successfully concluded (eg the May 7 application deadline).

Q: What is the geographic license size for a PAL?

A: Per the final licensing rules that the FCC adopted in October 2018, the geographic license size is county-based – for example Cook County in Chicago and Kings County in New York. The auction will offer up to seven PALs in each county-based license area, for a total of 22,631 PALs nationwide – the largest number of spectrum licenses ever made available for bidding in a single auction.

Q: Are there caps on the amount of spectrum any one bidder can acquire?

A: The auction permits bidding on a county-by-county basis and allows any one bidder to bid for no more than four generic blocks (40 MHz) of spectrum per county. Each PAL will consist of a 10-megahertz unpaired channel in the 3.55-3.65 GHz band, dynamically assigned by the Spectrum Access System (not static). The spectrum aggregation limit of 40 megahertz is designed to ensure the availability of PALs for at least two PAL users in the counties where there is the greatest likelihood of high demand for CBRS spectrum. This aggregation limit will also apply to spectrum acquired through the secondary market (such as leasing).

Reader Interactions

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.