FCC Seen Likely to Hold Multi-Round Auction in 2.5 GHz Band

The FCC appears likely to adopt an ascending-clock auction in the 2.5 GHz band, or some version of a multi-round auction, rather than the sealed-bid approach favored by wireless ISPs, AT&T, Dish Network and others concerned about T-Mobile’s potential to dominate a more traditional auction, industry experts said. The auction is expected to start in July.

Chairwoman Jessica Rosenworcel hasn’t commented on the format, but Commissioner Brendan Carr recently telegraphed he's leaning against a single-round auction (see 2202180054). In January, the FCC sought comment on an ascending-clock auction as an alternative to sealed-bids or a simultaneous multiple-round (SMR) format (see 2202090068). Then-Chairman Ajit Pai initially proposed a sealed-bid auction, but the FCC ended up seeking comment on that and an SMR approach (see 2101130067).

“Typically when the FCC releases a notice seeking comment on a new proposal not contained in the original notice, it is because staff already believes that it is the best option moving forward and that they need to put the new proposal in the record,” Sasha Javid, BitPath chief operating officer, told us. “In all likelihood, bidders such as AT&T advocating for a single-round sealed-bid auction will be out of luck,” he said. The more interesting question to Javid is “whether the FCC gambles on this new variation of a clock auction or sticks with the proven SMR design.”

The revised clock auction that “FCC staff appears to be promoting will have some speed advantages over an SMR auction,” Javid said: “Because this auction will not have generic blocks, the speed difference may not justify the gamble. Either design is good news for T-Mobile, which would have a much higher chance of overpaying in a single-round auction.”

“An ascending clock auction seems to be where the commission is heading, because, with the potential for a 2-2 split, the chairwoman may want to engage in the option that has some bipartisan buy-in to get this spectrum to market expeditiously,” said Digital Progress Institute President Joel Thayer: “The traditional ascending clock option … seems to be that proposal.”

A multiple-round auction “is what is generally used, and any change would need a good reason,” said Recon Analytics’ Roger Entner. “T-Mobile is probably in favor of ascending clock because it expects low participation and has a sense of how much it takes to win rather than have to take into account some wildcard bids,” he said.

An advocate of a single-round auction said Rosenworcel and Commissioner Geoffrey Starks are concerned about licenses going to some smaller players, but timing and Republican support for a multi-round auction likely weigh in favor of a more traditional auction format. The FCC didn't comment.

The Wireless ISP Association “remains hopeful that the FCC will adopt the single-round, sealed-bid auction design format, largely because of the reasoning and statements” in the January public notice, emailed Louis Peraertz, vice president-policy. The FCC acknowledged “a single-round auction format may help overcome some of the inherent advantages of incumbent rights holders in the band and increase overall competition in the auction,” he said: “A multiple-round auction will always give a bidder an opportunity to outbid its competitors, and given that the majority license-holder in this band is a nationwide service provider and is likely to be better funded than many other entities that are potentially interested in Auction 108, these other, smaller entities may feel as though they have little chance of winning when competing against the larger license-holder.’”

AT&T declined comment Thursday, but a spokesperson referred us to recent filings by the carrier in docket 20-429. AT&T said most recently it normally favors multiple-round auctions. But in 2.5 GHz “a clock auction, like any multiple-round auction, would give T-Mobile overwhelming advantages that would deter participation by other bidders and would allow T-Mobile to win all of the available spectrum.”

The 2.5 GHz spectrum T-Mobile got when it bought Sprint “is well known for having a ‘Swiss Cheese problem’ of containing geographic holes,” New Street’s Blair Levin said in a recent note to investors: “The FCC has moved to rationalize the footprint by planning an auction for overlay licenses. The general view is that this auction will benefit T-Mobile by enabling it to buy a complete and continuous coverage map.”