Upcoming FCC Spectrum Auctions Bryan N. Tramont Wilkinson Barker Knauer, LLP

2 Upcoming Spectrum Auctions/Opportunities AWS-1: 90 MHz – scheduled for June 29, MHz: 60 MHz – legislation requires FCC to begin auction by Jan. 28, 2008 (broadcasters will exit the band by Feb. 2009) AWS-2: 40 MHz – service rules not yet set; auction not yet scheduled To put this 190 MHz in perspective, approximately 180 MHz of spectrum is currently allocated for all of cellular/PCS Other spectrum opportunities include: BRS/EBS, MHz, and White Spaces

3 AWS-1 Auction History November 2002: FCC allocates AWS-1 spectrum November 2003: FCC adopts initial band plan and service rules for AWS-1 December 2004: Commercial Spectrum Enhancement Act (CSEA) becomes law –Establishes Spectrum Relocation Trust Fund and sets reserve price mechanism for spectrum, tied to NTIA estimate August 2005: On reconsideration, FCC revisits AWS-1 band plan to make more spectrum available in smaller areas, and promises rule making proceeding on Designated Entity (DE) issues December 2005: NTIA produces estimate of relocation costs (as required by CSEA) –Estimate lower than anticipated –CSEA requires six month period before auction can begin January 2006: FCC schedules AWS-1 auction to begin on June 29, 2006 February 2006: FCC initiates NPRM to evaluate DE program April 2006: FCC announces that typical bidder information available after each bidding round will likely be withheld in this auction April 2006: FCC also substantially limits DEs’ ability to lease or resell spectrum acquired in the AWS-1 auction

4 AWS-1 Band Plan (adopted August 2005) BLOCK FREQUENCIES (MHz) SVC. # OF LICENSES AREA Block A: 20 MHz / MSA/RSA 734 licenses Block B: 20 MHz / EA176 licenses Block C: 10 MHz / EA176 licenses Block D: 10 MHz / REAG 12 licenses Block E: 10 MHz / REAG 12 licenses Block F: 20 MHz / REAG 12 licenses TOTAL 1122 licenses

5 AWS-1 License Areas

6 AWS-1 Specific Issues Auction Procedures Revised Designated Entity Rules Incumbent Relocation

7 Auction Procedures Auction Procedures Proceeding –Short form applications were filed May 10, 2006; FCC to release list of applicants soon –Typical bidder identity information available after each bidding round likely to be withheld in this auction Auction must raise 110% of CSEA Relocation costs for auction of ($1.029 billion). Total revenue from paired blocks must exceed $2.06 billion

8 Bidding Credits: DE Two tiers of DEs –“Small Business” 15% bidding credit $40 million in revenue (average gross revenue past three years) –“Very Small Business” 25% bidding credit $15 million in revenue (average gross revenue past three years) No spectrum set aside in this auction

9 Bidding Credits: DE Designated Entity (DE) Rulemaking –NRPM – Feb. 3, 2006; Order – April 25, 2006 –The FCC decided not to adopt specific restrictions on the ability of bidders that qualify for bidding credits to partner with any group or class of investors, but it substantially limited their ability to lease spectrum or offer it for resale. –The FCC adopted a 2 nd Further Notice seeking comment on whether additional restrictions are warranted to safeguard the DE program and DE benefits.

10 Incumbent Relocation MHz – USG Operations Relocation funded by auction proceeds 2240 assignments to be relocated –Includes 904 fixed systems, 12 nationwide systems, 460 mobile systems 31 DoD classified systems –Location, frequency unknown 21% will be relocated within 12 months; 49% within 24 months; 90% within 36 months; and 96% within 48 months FCC/NTIA established coordination procedure to allow AWS licensees to begin service during the transition without causing harmful interference to federal operations. –Interference analysis based on TIA Bulletin 10F

11 Incumbent Relocation MHz – Microwave Links Approximately 5,500 links to be relocated AWS licensee to perform a frequency coordination analysis; in the event of interference, the incumbent must be relocated prior to AWS operation. Rules are largely identical to the rules used to relocate fixed services from the PCS bands beginning in the mid 90s. –But now “rolling” date will begin 2-year mandatory negotiation period for each incumbent facility, triggered by new entrant –Involuntary relocation follows mandatory period; incumbent is entitled to comparable facilities only –Relocation rules will sunset 10 years after the first AWS license is issued.

12 Incumbent Relocation MHz – BRS Approximately BRS systems to be relocated AWS licensee to determine whether proposed facility will cause interference; if so, AWS must relocate the incumbent (both hub and subscribers) prior to AWS operations Rolling date will begin 3-year mandatory negotiation period, followed by involuntary relocation period Relocation rules will sunset 15 years after the first AWS license is issued

MHz Band Congress decreed broadcasters must turn back analog broadcast spectrum in the 700 MHz spectrum band by February 19, MHz ( MHz) –24 MHz has already been allocated to public safety –24 MHz has already been auctioned for commercial use –The remaining 60 MHz must be auctioned no later than January 28, 2008

MHz Band Plan 60 MHz of Spectrum to be Auctioned BLOCK FREQUENCIES (MHz) SVC. AREA # OF LICENSES Lower Block A / EAG 6 licenses Lower Block B / EAG 6 licenses Lower Block E EAG 6 licenses Upper Block C / EAG 6 licenses Upper Block D / EAG 6 licenses TOTAL 30 licenses Lower 700 MHz Band ABCDEABC Upper 700 MHz Band ACDB Public Safety ACDB

MHz Issues to Watch Led by Morgan O’Brien, Cyren Call Communications filed a petition for rulemaking in April 2006 with the FCC asking to reallocate 30 of the 60 MHz to public safety and issue a single nationwide license to a trust that would auction off rights to lease spectrum and build out a public safety broadband in exchange for the right to commercial use In July 2005 Rural Cellular Association asked the FCC to revisit the 700 MHz license area sizes and provide for smaller area licenses In the 24 MHz of spectrum previously auctioned 700 MHz spectrum, the 6 MHz Guard Band spectrum may be reassessed; some licenses available for repurposing (Nextel returned much of it in the 800 MHz re-banding proceeding)

16 Other Spectrum Opportunities BRS/EBS (2.5 GHz) –Band plan conversion –Relocation of MDS Channels 1 & 2 White Spaces (in broadcast spectrum) –FCC NPRM on whether to allow unlicensed devices to operate on a non- interference basis in the TV spectrum –Legislative proposals pending

17 Other Spectrum Opportunities AWS-2 –“H” Block ( / MHz) and “J” Block ( / MHz): service and technical rule proceeding initiated in 2004 – reallocated to AWS in 2005 May 2005 M2Z filing seeks nationwide license to offer free broadband service MHz –Order adopted in 2005 creating non-exclusive licensing regime for broadband or backhaul offering with new interference mitigation technique –Petitions for reconsideration pending

18 For additional information: Bryan N. Tramont Wilkinson Barker Knauer, LLP 2300 N Street, NW Suite 700 Washington DC P: F: