The Federal Communications Commission continues to make progress on crafting rules for the planned 600 MHz incentive auction, this week rolling out an information package targeted at television broadcasters.
The package is being sent to the owners of “Class A broadcast stations that Congress determined to be eligible to participate in the incentive auction,” and is designed to provide insight for broadcasters in deciding whether to participate in the auction process.
“The package describes how the incentive auction will work and reviews the flexible multiple bidding options for broadcasters,” the FCC noted. “It also includes FCC staff estimates of high end compensation that could be paid for broadcast spectrum rights in each market, and a letter from the IRS providing guidance on the tax implications of the incentive auction.”
Prepared by Greenhill & Co., the package includes information on the various bidding options set up for broadcasters in the reverse-auction process; estimates that broadcasters could reap up to “hundreds of millions of dollars” in proceeds, with some of the highest estimates coming from small and mid-sized markets; and a note that “robust” participation from broadcasters is needed in order to ensure a successful auction process.
The FCC has been aggressively moving on the incentive auction proceedings, taking great pains to talk up the financial windfall awaiting television broadcasters that agree to give up some of the spectrum holdings that will then be auctioned off to mobile operators. FCC Chairman Tom Wheeler has noted that the greatest challenge for the planned 600 MHz incentive auction process will be in convincing broadcasters to participate in the “reverse” auction process, noting at a recent speech that the opportunity was a once-in-a-lifetime chance to garner financial compensation for underutilized airwaves.
“Seldom have I seen such a risk-free opportunity as that represented to broadcasters by the incentive auction, including the opportunity to continue their existing business on shared spectrum and take home a check for the spectrum they vacate,” Wheeler said in March at an event at the Brookings Institute in Washington, D.C.
The process hit a bump in August when the National Association of Broadcasters filed a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit, claiming the FCC in its 600 MHz incentive auction rulemaking changed the “methodology used to predict local television coverage areas and population served, which could result in significant loss of viewership of broadcast TV stations after the FCC ‘repacks’ TV stations into a shrunken TV band.”
“Under this new methodology, many broadcast licensees, including NAB’s members, will lose coverage area and population served during the auction’s repacking and reassignment process, or be forced to participate in the auction (and relinquish broadcast spectrum rights),” the NAB lawsuit stated.
The NAB claim also states that the FCC did not take steps to “preserve licensees’ coverage areas in repacking and that the FCC erred in failing to ensure proper protections for broadcast translators, which are transmitters that help boost the coverage of broadcast TV programming to more rural and remote viewers.”
The petition is expected to receive a decision by the end of the year.
Wheeler took to the stage at the recent Competitive Carriers Association and CTIA trade shows to encourage mobile operators to participate in the proceedings, which are currently scheduled to begin in mid-2015.
Both CCA and CTIA came out in support of the FCC’s releasing of the information package, noting it was an important step in the auction process.
“CTIA is encouraged by the release of the Greenhill Report, which is another important step toward meeting consumer demands for mobile broadband access via the incentive auction proceeding,” noted Scott Bergmann, VP of regulatory affairs at CTIA. “As we transition from a policy issue to a business opportunity for thousands of broadcasters across the country, this report will underscore the once-in-a-lifetime opportunity for broadcasters to monetize their spectrum assets. With our $53 billion track record of participating in spectrum auctions, the wireless industry will be active bidders in the incentive auction. While today’s U.S. wireless story is one of remarkable success, making additional spectrum available remains critical to promoting economic growth and enhancing our nation’s global competitiveness to benefit Americans.”
“The FCC’s information package clearly shows that there is a lot of value for both broadcasters and carriers in the upcoming auction, and I appreciate the detailed look at pricing at the market level,” added CCA President and CEO Steve Berry. “The information package affirms what competitive carriers already know — low band spectrum is incredibly valuable and is in high demand, and greater participation by the broadcaster community will benefit consumers and the economy. I thank the commission for moving another step in the right direction with today’s information package. The more spectrum available for carriers to bid on — the better, and we look forward to our continued work with the commission on this critical issue.”
RCR Wireless News spoke with Berry at the CCA event in Las Vegas to get his view on how the FCC was handling the auction proceedings.
—The FCC this week also today adopted a declaratory ruling clarifying how the repacking of spectrum from broadcasters it adopted in the initial auction rulemaking meets Congress’ mandate to “make all reasonable efforts to independently preserve TV station coverage areas and population served.”
“Given the importance of this issue, the commission took today’s action to ensure that its approach is fully understood by the public and by broadcasters that could be affected by the repacking that follows the incentive auction,” the FCC noted.
Approval of the declaratory ruling came down to party lines, with Wheeler and Democratic commissioners Mignon Clyburn and Jessica Rosenworcl voting in favor, and Republican commissioners Ajit Pai and Michael O’Rielly opposed.
—Despite the impending launch of the AWS-3 auction set to begin in mid-November and the planned 600 MHz incentive auction, a new report from Recon Analytics warned that the government needed to work on freeing up more spectrum assets in order to feed growing consumer demand for mobile broadband services.
The report, “Spectrum Fuels Speed and Prosperity,” looks at how the United States stacks up compared with established European countries in terms of mobile broadband services, and the impact a lack of new spectrum resources is having on service levels. The report concludes that for the United States to remain a leader in mobile broadband services, the government must produce new spectrum resources in which to feed what is a continuing growing consumer demand. Recon Analytics founder and lead analyst Roger Entner noted that the planned AWS-3 and scheduled 600 MHz incentive auctions are steps in the right direction, but that the domestic industry is going to continue to need more spectrum in order to meet demand.
“Additional licenses need to be made available quickly so that the United States shores up the fundamentals it needs to maintain leadership in innovation and customer satisfaction as well as increase the prosperity of the country,” Entner said in the report.
RCR Wireless News spoke with Entner this week about the report’s findings.
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