Chairman Wheeler's Response Regarding Incentive Auction
The Honorable Juan Vargas
U.S. House of Representatives
1605 Longworth House Office Building
Washington, D.C. 20515
Dear Representative Vargas:
Thank you for sharing your views on the importance of the Broadcast Television
Spectrum Incentive Auction. The Incentive Auction is a once-in-a-lifetime opportunity to
expand the benefits of mobile wireless coverage and competition to consumers across the Nation
particularly consumers in rural areas -
offering more choices of wireless providers, lower
prices, and higher quality mobile services, while also providing a game-changing financial
opportunity to broadcasters and fully funding the Public Safety Trust Fund (PSTF) for FirstNet. 1
I agree that finding an approach that maximizes participation by both broadcasters and wireless
providers in the auction is crucial to achieving these goals.
With increased demand for wireless services comes an increased need for spectrum. But
not all spectrum frequencies are created equal. Spectrum below 1 GHz, referred to as
"coverage" spectrum, has physical properties that increase the reach of mobile networks over
long distances at far less cost than spectrum above 1 GHz, while also reaching deep into
buildings and urban canyons. While other cost-related factors exist, access to a sufficient
amount of low-band spectrum is a threshold requirement for extending and improving service in
both rural and urban areas.
Today, most ofthis low-band spectrum is in the hands of just two providers. The lack of
competition in many areas means diminished choices for millions of Americans: 92 percent of
non-rural consumers, but only 3 7 percent of rural consumers, are covered by at least four or more
3G or 4G mobile wireless providers networks. The Incentive Auction offers the opportunity,
possibly the last for years to come, to make low-band spectrum available to multiple mobile
wireless providers that are willing and able to compete in markets across the Nation, including in
Every American should be able to enjoy the benefits of a competitive mobile wireless
marketplace. Accordingly, the Commission adopted the Mobile Spectrum Holdings Report and
Order on May 15, 2014, that ensures that all who want to participate in the Incentive Auction
1 Proceeds from the Commission's recent H Block auction, and A WS-3 auction, to be held later this year, will also
be used to fund the PSTF for FirstNet. I expect that these two auctions will nearly or fully fund the PSTF with
amounts needed for FirstNet, even before the Incentive Auction in 2015.
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will be able to bid and win significant amounts of low-band spectrum in every market. At the
same time, the auction will preserve and promote competition by ensuring that all providers and
new entrants have access to the low-band spectrum they need to compete effectively. One or
two providers with significant low-band spectrum holdings will not be able to "run the table" and
win all of the low-band spectrum that will be available in the auction.
The Mobile Spectrum Holdings Report and Order reserves a modest amount of this low-
band spectrum in each market for providers that lack significant low-band spectrum. The rules
also contain safeguards to ensure that all bidders for reserved spectrum licenses bear a fair share
ofthe cost of making incentive payments to broadcasters who voluntarily relinquish some or all
of their spectrum usage rights.2
The Mobile Spectrum Holdings Report and Order will provide
benefits to all Americans and is fully consistent with the Middle Class Tax Relief and Job
Creation Act of 2012, which affirmed our authority to implement any rules concerning spectrum
aggregation to promote competition.
I agree that low-power television (LPTV) stations play an important role in providing
information to consumers and businesses. In the Middle Class Tax Relief and Job Creation Act,
Congress did not provide LPTV stations additional protections or provide an opportunity to
participate in the Incentive Auction. To help accommodate some of the needs ofLPTV
following the Incentive Auction, the Incentive Auction Report and Order permits these stations
to remain on their existing channels during the transition period after the Incentive Auction,
unless or until notified that they interfere with the primary service. We will also open a special
filing window for displaced stations to request new channels.
Additionally, we will initiate a proceeding in the near future to address other LPTV
issues related to the Incentive Auction. This proceeding will explore options for LPTV to
continue to serve their communities, including seeking comment on possible extension of the
low power digital transition deadline and channel sharing for LPTV stations.
Thank you again for apprising me of your views on this important matter. I look forward
to working with you toward our mutual goal of a successful Incentive Auction.
2 The recent H Block auction did not include such a reserve. There also will be no reserve for the upcoming A WS-3
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