Last month, we blogged that one of several things that must happen for the U.S. to lead in 5G deployment is an auction of spectrum in the 28 and 37-40 GHz bands. Since then, we have been working with a couple of economists who specialize in auction design and, today, we filed a paper with the FCC that was written by those economists. The paper lays out an innovative proposal for the design of an auction for 5G spectrum, or what the FCC calls “millimeter wave” spectrum.
One of the challenges to a millimeter wave auction, especially in the 39 GHz band, is that there are incumbent licensees with holdings scattered throughout the band, typically in 50 MHz chunks. To make matters even more complicated, incumbents hold different types of geographic licenses that in many cases overlay each other. In order for the auction to be successful, the FCC must find a way to reorganize the band into block sizes that are more favorable for 5G, ideally 200 MHz blocks, and maximize the number of blocks available for auction.
The paper that we filed proposes to achieve these objectives by offering vouchers to incumbent licensees that wish to participate in the auction. The vouchers would be based on the number of MHz-pops associated with their current licenses. The value of the vouchers would be determined by the bidding in the allocation phase of the auction. Following the allocation phase, there would be an assignment phase in which all successful bidders from the allocation phase would be guaranteed contiguity in the band.
This proposal has several important characteristics. First, it puts incumbent licensees and other potential bidders on a level playing field. Incumbents would have no advantage in the auction based on the size or frequency assignment of their current holdings. Second, it provides an elegant solution to the mish-mash of existing holdings in a way that maximizes the value and usability of the band. Third, by guaranteeing contiguity to successful bidders, the proposal allows winning bidders to maximize the bandwidth that will ultimately be available to consumers.
We believe this proposal sets out the best possible design for a millimeter wave auction, and we look forward to discussing it further with all stakeholders and public officials. It’s critical for our 5G future that we get this right.