FCC Covers Plenty of Ground in Auction Workshop

Pledges to be transparent and make auction as easy for broadcasters as possible

By John Eggerton -- Broadcasting & Cable, 10/26/2012 4:38:33 PM

FCC senior adviser and co-lead of the FCC's Incentive Auction Task Force Gary Epstein said Friday that the FCC is committed to voluntary incentive auctions that will 1) honor Congress' statutory language, 2) work with include the industry in a transparent repacking process, and 3) provide viable reimbursement and transition mechanism.

That came at the FCC's first workshop for broadcasters on its spectrum incentive auctions on Friday at FCC headquarters in Washington.

FCC bureau chiefs and other staffers outlined various options for the auctions as outlined in the FCC's framework released last month.

While the workshop was targeted at broadcasters, according to one self-identified broadcaster at the workshop who said he was considering participating, a show of hands at the event revealed only three others in the room, though it was also webcast, so remote broadcaster participation could have been larger.

FCC commissioner Mignon Clyburn kicked off the workshop by hammering home that the auctions were voluntary, though Bill Lake pointed out that repacking of TV stations after the auctions was not. Julie Knapp, head of the FCC's Office of Engineering and Technology, who headed that repacking portion of the workshop, pointed out that the majority of stations would probably not have to move.

Media Bureau chief Bill Lake made the point that the auction part of the equation would only involve (roughly) the top 25-35 markets, and maybe a few others, though repacking would affect those others. He also echoed Clyburn in saying there had been great interest from broadcasters in the auctions.

Clyburn tried to set a broadcaster-friendly tone from the outset by saying that TV stations remained the most important vehicle for serving the informational needs of local communities.

Much of what the FCC staffers talked about were proposals that were put out for comment, with the final look of both auctions and repacking far from set. Lake made the point that this was very much the beginning of the process.

Among the proposals/questions covered in the workshop:

Anti-collusion measures: The auction will have anti-collusion rules to make sure bidders can't get together to inflate prices, but the FCC recognizes that if stations are being given the opportunity to share channels as an incentive to give up theirs, and those are expected to be private negotiations, those broadcasters will have to be talking and sharing information.

Eligibility: The FCC is proposing to allow stations with pending enforcement actions -- indecency fines, for example -- to participate, but not ones whose license has expired or who have had their license cancelled or revoked, even if it is subject to appeal. Only full-power and class A full-power stations, which excludes other low powers and translators. Stations won't be allowed to share outside of their community of license unless they can continue to cover that community as well. Noncoms and commercial stations can share, and all must-carry rights would carry over to each of the channel sharers.

New channels under repacking: Unlike the DTV transition, stations that are moved to new channels to free up blocks of spectrum for wireless will not get to choose those channel numbers. But Lake pointed out the FCC is considering allowing stations unhappy with their new channels to apply to the FCC to change them.

Timing: Lake said the repacking transition process presents challenging timing issues. The FCC is asking whether there should be a hard date or a phased transition. The FCC is planning for an 18-month transition, pointing out that some TV stations in the DTV transition were about to do it in 12 months.

Money: The FCC has $1.75 billion to cover any broadcaster and MVPD moving expenses. The statute creating the auctions also allows broadcasters to pass on cash for the chance to use their broadcast spectrum for more than broadcasting, so long as they continue delivering their primary broadcast channel. The FCC has proposed various compensation plans, including upfront payments based on market size, or a partial payment and "true up" after the real costs are incurred, or waiting until the expenses are filed and reviewing them.

In all these, the FCC is looking to make the auctions as easy for and attractive to broadcasters as possible. Epstein has said that most of the complexity will be "under the hood" and the province of FCC staffers rather than broadcasters.

After often densely-packed presentations on auction framework proposals -- combinatorial and simultaneous multiple round ascending clock auctions, and the like -- the staffers opened the floor for questions.

One broadcaster -- the one who said he was only one of four -- asked why, if the FCC wanted to encourage broadcasters to participate, he didn't let them go dark before the auction, so they would save money, including the expense of complying with FCC rules like the new CALM Act and the commercial loudness mitigation equipment it requires.

Lake pointed out that the FCC has rules and responsibilities for holding a license, but that he should flesh out that suggestion and the FCC would consider it along with other comments.

Asked by a public interest representative whether the FCC would publicize the private sharing agreements between broadcasters since they could involve a large transfer of value of public spectrum to a private company, Lake did not rule it out, pointing out there are other types of private contracts the FCC requires stations to file.