FCC Issues 2.5 GHz Spectrum Licenses, But Agency Still Needs Auction Authority

On February 29, 27, and 1, the FCC granted long-form applications to wireless providers, including T-Mobile, for several thousand spectrum licenses in the 2.5 GHz band won in Auction 108.  

The results of Auction 108 were announced way back in September 2022. Yet the Commission's authority to conduct spectrum license auctions lapsed in March 2023, and Chairman Jessica Rosenworcel has determined that the lapse of that authority prevented the agency from issuing those licenses. At the end of last year, Congress passed the 5G Sale Act, conferring on the FCC a 90-day window to grant licenses won in Auction 108. The Commission's February orders granting the 2.5 GHz band licenses were based on the Act.

 

It is welcome news that parties who successfully bid on spectrum licenses at auction receive the licenses they won and paid for. Also welcome is the news that more mid-band licensed spectrum finally will be put into use for commercial wireless services as a result of Auction 108. However, the lapse in FCC spectrum license auction authority remains, and there also remains a shortage of licensed spectrum for supplying growing wireless data demands on 5G and future 6G networks. Spectrum allocation and harmonization by the NTIA, FCC, and other agencies is a priority. But it also is necessary that Congress spectrum license auction authority to the Commission. 

 

For more on what Congress needs to do, see Senior Fellow Andrew Long's July 2023 blog post, "Congress Should Reinstate the FCC's Spectrum Auction Authority," as well as his August 2023 blog post, "Commissioner Carr to Congress: Renew FCC's Auction Authority."

2.5 GHz Band Spectrum Licensing Legislation Clears House

As I noted in a post to the FSF Blog last Thursday, two days prior the House Energy and Commerce Committee unanimously approved a bill granting the Federal Communications Commission (FCC or Commission) express authority to issue 2.5 GHz band spectrum licenses for which T-Mobile had paid $304 million prior to the lapse of the FCC's spectrum auction authority in March.

On Monday, the full House passed that legislation – the 5G Spectrum Authority Licensing Enforcement (SALE) Act (H.R. 5677) – by voice vote. Companion legislation approved by the Senate in September, S. 2787, now awaits President Biden's signature.

The text of the SALE Act is both short and straightforward:

In the case of any applicant for a license or permit for the use of spectrum in the band of frequencies between 2496 megahertz and 2690 megahertz, inclusive, that the Federal Communications Commission selected through a system of competitive bidding conducted under section 309(j) of the Communications Act of 1934 (47 U.S.C. 309(j)) on or before March 9, 2023, and to whom the Commission has not granted the license or permit as of the date of enactment of this Act, the Commission may process the application of the applicant during the 90-day period beginning on the date of enactment of this Act.

On numerous occasions, Free State Foundation scholars have emphasized the need for prompt action on the specific licenses won at auction and paid for by T-Mobile (here, here, and here) and, more broadly, reinstatement of the Commission's spectrum auction authority (here, here, here, here, and here).

In a November 17, 2023, letter to Representative Anna G. Eshoo (D-CA), FCC Chairwoman Jessica Rosenthal wrote that she was "encouraged" by the SALE Act – and that "[e]xpeditious action … will give the Commission the authority to issue the remaining 2.5 GHz licenses."

Legislation to Liberate 2.5 GHz Spectrum Reaches House Floor

On December 5, the House Energy and Commerce Committee unanimously passed a bill that would grant the Federal Communications Commission (FCC or Commission) clear authority to issue licenses for spectrum in the 2.5 GHz band won at auction and paid for by T-Mobile. It now heads to the House floor.

The 5G Spectrum Authority Licensing Enforcement Act (H.R. 5677) is companion legislation to S. 2787, a short and straightforward Senate bill that, as Free State Foundation Director of Policy Studies and Senior Fellow Seth L. Cooper described in a September 15, 2023, post to the FSF Blog, would do just one thing: establish a 90-day window within which the FCC incontrovertibly is authorized to grant those licenses for which T-Mobile paid $304 million but the agency had not yet processed when the Commission's spectrum auction authority lapsed on March 9, 2023. S. 2787 passed the full Senate without amendment by Unanimous Consent on September 21, 2023.

The underlying question – whether the FCC legally may grant these specific licenses in the absence of general spectrum auction authority – is open to debate. In a November 17, 2023, letter to Representative Anna G. Eshoo (D-CA), Chairwoman Jessica Rosenthal reiterated the Commission's position that it is barred by Section 309 of the Communications Act from doing so – and that, "[if] f the Commission were to expend funds to continue to process the licenses won in Auction 108 notwithstanding the sunsetting of our authority to do so, it would put the agency staff at risk of criminal penalties for violating the Antideficiency Act."

On the other hand, and as Mr. Cooper highlighted in a July 2023 blog post, Joel Thayer has made a "convincing case" that the agency retains the requisite legal authority to proceed even in the absence of general spectrum auction authority.

As H.R. 5677's sponsor, Congressman John Joyce, M.D. (R-PA), stated in a press release, "[t]he 5G SALE Act would cut the red tape that has kept Pennsylvania families from accessing the high-speed internet that is vital for remote workers, students who use the internet to learn from home, and patients who use telehealth to heal from home."

SALE Act Would Put Valuable 2.5 GHz Band Spectrum Licenses into Use for 5G

On September 14, Sen. John Kennedy introduced the 5G Spectrum Authority Licensing Enforcement (SALE) Act -- S. 2787. The short and simple bill, if passed, would grant the FCC a 90-day window of authority to process and grant licenses that were won through the Commission's competitive bidding auction for the 2.5 GHz spectrum band.

In March of this year, the FCC's statutory authority to conduct competitive bidding spectrum license auctions lapsed. But what about the Commission's authority to issue licenses that were already won at previously completed auctions? The Commission concluded its 2.5 GHz band auction back in August 2022. It was announced that over 7,800 county-sized licenses were won by 63 bidders. T-Mobile won over 7,100 such licenses and by late September 2022, T-Mobile submitted long-form applications and paid $304 million to the Commission for those licenses. Chairwomen Jessica Rosenworcel reportedly has taken the position that the agency lacks even the authority to issue licenses won – and paid for – in previously completed auctions. As explained in my July 2023 blog post, "FCC's Unreasonable Delay in Withholding 2.5 GHz Band Spectrum Licenses," there is strong basis for disagreement with Chairwoman Rosenworcel's apparent legal conclusion.

The SALE Act would break the impasse and prompt the FCC to finally issue the 2.5 GHz band spectrum licenses to the rightful recipients. In his press release announcing the introduction of the SALE Act, Sen. Kennedy rightly acknowledges that wireless communications are important to his home state of Louisiana, and particularly to rural areas. The same holds true for the rest of the states and their rural areas. Mid-band spectrum is critically important for 5G wireless services. And valuable spectrum licenses that were fairly won at auction and paid for ought to finally be delivered to the auction winners and put into commercial use to benefit Americans.  Sen. Kennedy deserves credit for introducing the SALE Act. Hopefully, the Senate will quickly take up and pass the bill and the House of Representatives will follow suit. 

 

For more on this topic, see Senior Fellow Andrew Long's blog post July 2023 blog post, "Congress Should Reinstate the FCC's Spectrum Auction Authority," as well as his August 2023 blog post, "Commissioner Carr to Congress: Renew FCC's Auction Authority."

 

(Note: This post has been updated to include the Senate bill number and link for the SALE Act, S. 2787.) 

FCC's Unreasonable Delay in Withholding 2.5 GHz Band Spectrum Licenses

In a July 19 blog post published by the Federalist Society, Joel Thayer made a convincing case that the FCC has statutory authority under of the Communications Act to issue licenses in the 2.5 GHz spectrum band to 2022 auction bid-winner T-Mobile, despite the expiration of the Commission's spectrum auction authority on March 1, 2023. Consider this also: The FCC's failure to issue to T-Mobile numerous licenses that it won and paid for pursuant to Commission rules appears to constitute agency action "unlawfully withheld or unreasonably delayed" under the Administrative Procedure Act (APA). 

The point of this blog post is not to address whether or not litigation should be pursued in this matter. Rather, the point is to show how the APA and court precedents regarding unreasonable delay and mandamus relief bring into sharper focus the Commission's affirmative legal duty to issue to T-Mobile the 2.5 GHz spectrum licenses. The agency should carry out its duty by promptly issuing the licenses.

 

Repurposing spectrum – especially mid-band (1 GHz to 7 GHz) spectrum – is essential for supporting 5G wireless services. The Commission recognized this when it adopted a 2019 order to put more 2.5 GHz band spectrum into the hands of wireless broadband providers to offer services using that spectrum. And in March 2022, the agency issued a public notice that set procedures by which it would conduct a competitive bidding auction and offer 2.5 GHz spectrum licenses to winning bidders. In August 2022, the FCC concluded its 2.5 GHz band auction, and the agency thereafter announced that over 7,800 county-sized licenses were won by 63 bidders. T-Mobile won over 7,100 such licenses. And by late September 2022, T-Mobile submitted long-form applications and paid $304 million to the FCC for those licenses.

Following the expiration of the FCC's spectrum license auction authority on March 1 of this year, the position of the Commission appears to be that it now lacks authority to issue the 2.5 GHz licenses to T-Mobile, even though T-Mobile has paid for them. However, Mr. Thayer's legal analysis makes a strong showing that the Commission still has authority to issue licenses to T-Mobile pursuant to Sections 307(a) as well as its special temporary authority (STA) contained in Sections 307(c) and 309(c)(2). 

 

If the FCC possesses the authority to issue the 2.5 GHz licenses, I suggest the agency also has a legal obligation to do so. Under the circumstances, the FCC's refusal to issue those licenses to T-Mobile appears to constitute an unreasonable delay by the agency in carrying out its duty, under Section 307(a) and the Commission's rules and procedures.  

 

Section 706(1) of the Administrative Procedure Act (APA) authorizes courts to "compel agency action unlawfully withheld or unreasonably delayed." According to the Supreme Court in Norton v. South Utah Wilderness Alliance (2004), "the only agency action that can be compelled under the APA is action legally required." As the court explained in Norton, "the APA carried forward the traditional practice" of writs of mandamus as codified in the All Writs Act. 

 

Decisions by the D.C. Circuit such as American Hospital Association v. Burwell (2016) treat mandamus petitions under the All Writs Act in conjunction with, or interchangeably with, agency delay claims under Section 706(1) of the APA. To establish the court's jurisdiction and entitlement to mandamus relief, a plaintiff must show: (1) that it has a clear right to the relief requested; (2) that the defendant agency has a clear, non-discretionary duty – owned specifically to the plaintiff – to perform the act in question; and (3) no other adequate remedy exists.

 

According to the D.C. Circuit in In re Core Communications (2008), if those requirements are satisfied, "[t]he central question in evaluating 'a claim of unreasonable delay' is whether the agency's delay is so egregious as to warrant mandamus." The D.C. Circuit applies, on a case-specific basis, one or more factors set forth in TRAC v. FCC (1984) – also known as the "TRAC factors" as "useful guidance" as to whether a delay warrants mandamus. In Burwell, the court stated that "in situations where plaintiffs allege that agency delay is unreasonable despite the absence of a specific statutory deadline, the entire TRAC factor analysis may go to the threshold jurisdictional question: does the agency's delay violate a clear duty?"

 

Section 307(a) of the Communications Act states that if "public convenience, interest, or necessity is served thereby" the FCC "shall grant" to any applicant a "station license." By complying with the FCC's requirements in winning the 2.5 GHz spectrum licenses at auction and timely making payment, T-Mobile has a clear right to those licenses. The Commission now has a clear and non-discretionary duty to issue them. If the agency continues to fail to issue the licenses, or at least grant the special temporary authority that T-Mobile has requested, there appears to be no remedy available other than mandamus and Section 706(1) that would achieve the result of putting those withheld licenses into the hands of the party that won and paid for them. 

 

T-Mobile reasonably relied to its detriment on the Commission's rules, the 2019 order, and the agency's auction procedures. And T-Mobile is materially prejudiced by the agency's indefinite withholding of licenses worth $304 million, as it is being denied the benefit of using the spectrum to offer 5G services to consumers. Thus, all the elements for mandamus relief based on a claim of agency action unlawfully withheld or unreasonably delayed are present. 

 

None of this is to suggest that litigation should be necessary to resolve the problem posed by the FCC's withholding of 2.5 GHz licenses that T-Mobile won at auction. But it does suggest that the APA's "unlawfully withheld/unreasonably delayed" provision offers a useful lens for discerning the Commission's obligation to issue licenses that were validly won at auction and timely purchased. Indeed, it suggests that the case for the Commission to act by issuing the 2.5 GHz licenses, or at least granting T-Mobile's request for special temporary authority, and enabling use for 5G services is stronger than the case for the agency to continue doing nothing except hang onto the money of a private party that followed the rules. 

Ookla Report Shows U.S. Progress in 5G Mobile Wireless Speeds

The boost to mobile wireless speeds from 5G networks – and increasing use of C-band spectrum for 5G – are reflected in Ookla's Speedtest Global Index for the United States for the third quarter of 2022. According to Ookla: 

T-Mobile had the fastest median 5G download speed in the U.S. at 193.06 Mbps during Q3 2022, a slight increase over Q2 2022. Verizon Wireless remained second, and saw a slight increase to 119.80 Mbps in Q3 2022. AT&T remained third at 81.22 Mbps — a slight increase from Q2 2022.

For the third quarter of this year, Ookla found that the median download/upload speeds for mobile wireless broadband in the U.S. – encompassing 5G as well as earlier generation networks – was 68.34 Mbps/8.56 Mbps and the mean speeds were 141.54 Mbps/15.48 Mbps. Ookla's report also includes comparative evaluations of latency and video support capabilities by the three competing nationwide mobile wireless providers.

 

Again, speed and other performance figures can be expected to continue to improve by the end of this year and well into 2023 – particularly for 5G – as AT&T and Verizon continue to phase-in their licensed C-band spectrum for 5G services and T-Mobile brings online additional licensed spectrum in the 2.5 GHz band that it has acquired through the FCC's Auction 108. 

FCC Concludes Auction for Spectrum Licenses in the 2.5 GHz Band

According to news reports by Multichannel News, Telecompetitor, and other outlets, the FCC's competitive bidding auction of 2.5 GHz spectrum licenses has concluded. After 73 rounds, the completed auction apparently raised close to $428 million, subject to discount for certain bidding credits provided by the Commission's rules. The auction reportedly yielded 7,872 winning license bids, and 145 licenses drew no bids.

Importantly, the Commission concluded the 2.5 GHz spectrum auction in a timely manner. Attention should now be directed toward making more spectrum available for private commercial and personal use, including for commercially licensed use. As pointed out in my August 2 blog post, the next swath of lower 3 GHz spectrum, as well as the 4 GHz and 7-8 GHz bands, are candidates for repurposing and licensing for commercial use. Also see my February 2021 Perspectives from FSF Scholars, "Fast Action on the Lower 3 GHz Band Will Secure America's 5G Future."

FCC's 2.5 GHz Band Spectrum License Auction is Underway

The FCC is currently conducting Auction 108 – the 2.5 GHz band spectrum license auction. It has been reported that the Commission is selling 8,017 county-sized licenses in this band, also known as the Educational Broadband Service (EBS) spectrum. Sasha Javid has reported that, at the end of the third round of auction bidding, nationwide gross proceeds total more than $115.2 million. Some reports have suggested reasons for why the auction proceeds for the 2.5 GHz band will be much lower compared to other recent auctions for mid-band spectrum, including the 3.45 GHz band auction. In any event, repurposing even small swaths of spectrum is important for expanding next-generation wireless services. And there may be no other spectrum available for auction until the next swath of the lower 3 GHz band is readied. The Commission deserves credit for having commenced the 2.5 GHz band auction on schedule. 

FCC to Auction Spectrum Licenses for the 2.5 GHz Band in July 2022

In a March 1 speech delivered to the Mobile World Congress 2022, FCC Chairwoman Jessica Rosenworcel announced that the FCC will commence its public auction of flexible use licenses for 2.5 GHz spectrum in July of this year. The announcement of the auction date is welcome news. As Free State Foundation scholars have explained on many, many,many occasions, putting more mid-band spectrum into use for commercial services is critical to timely realizing the full benefits of 5G networks.