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Friday, December 28, 2012

Is it PCS H or AWS H? FCC H Block Auction Rulemaking

Last week the FCC released its Notice of Proposed Rulemaking for the Service Rules for the Advanced Wireless Services H Block.  So despite the fact that the H channel in discussion here are virtually adjacent to the PCS block of spectrum, they are referred to as AWS H.  I'll continue to call them PCS H because that have no relationship with the spectrum commonly referred to as AWS (1.7 and 2.1GHz).  My primary question as I reviewed this rulemaking, was how the auction would be structured so there would be interest for this spectrum block, beside Sprint.

Clearly, this spectrum block is more valuable to Sprint, since it can be combined with its nationwide PCS G block to enable Sprint to migrate to a 10x10 LTE channel from its current 5x5 LTE channel.  Doubling their channel size will get this LTE deployment on par with Verizon, AT&T, and T-Mobile's initial deployments.

Interestingly, the FCC doesn't comment to the use of the channel for LTE, they consider a deployment with CDMA more likely.  This is probably the only way to think that there will be bidders beside Sprint.  A T-Mobile or AT&T could purchase this spectrum for additional WCDMA capacity since a WCDMA channel would fit perfectly in this block, but I believe that a deployment of WCDMA in this block would be delayed by the 3GPP standards board in the same way that Sprint's LTE deployment would be waiting for standards body support for a new band plan.

Two other interesting notes from this rulemaking.  The FCC is proposing to issue the spectrum with Economic Area (EA) Geographical Licensing.  Above is a FCC map depicting the recognized Economic Area boundaries.  Evidently EA licensing was chosen to encourage build outs in rural areas.  Given that the build out requirements are easily met by building only the large cities first, I don't agree with this logic.  More likely, the EA licensing allows the FCC to receive a higher price for rural areas since their POPS roll up within a more valuable metropolitan area.

The licensees will receive 10-year licenses with the requirement that 40% of the POPS are covered within 4 years and that 70% are covered before the license is renewed after year 10.  Neither of these requirements will drive investment into rural areas.

This spectrum will be challenging to utilized near the borders: San Diego, Detroit, Buffalo, and McAllen/Brownsville since Canada and Mexico are running 3-4 years behind the US in spectrum policy.  The use of this spectrum in border markets has to be done without interference with the Canadian and Mexican systems currently using this spectrum.

Lastly, this spectrum comes with a requirement to share the microwave relocation costs that Sprint and UTAM incurred to make the PCS G block usable.

2 comments:

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