Station Coalition Warns FCC Against Lowballing Spectrum

Says market forces, not FCC opinions, should determine spectrum prices; disses unlicensed set-asides

By John Eggerton -- Broadcasting & Cable, 3/10/2013 9:54:32 PM

TV stations willing to consider giving up spectrum for a government payout in the incentive auctions are concerned that the FCC is trying to manage the auction so as to reduce payments to broadcasters.

That's according to comments filed by the Expanding Opportunities for Broadcasters Coalition, a group of 40-plus stations, mostly in major markets, represented by coalition executive director Preston Padden, former head of the Association of Independent Television Stations and a top exec at News Corp. and ABC/Disney. 

"[T]he participation of willing broadcasters is the linchpin of a successful incentive auction," the coalition said. "As such, the FCC's primary focus should be convincing broadcasters that their price expectations are likely to be met in the reverse auction."

But according to Padden, who filed the comments, "[t]hrough meetings and attendance at Commission related events, Coalition members have received the impression that some FCC staff and some FCC consultants are spending considerable time developing strategies to "manage" the auction results to reduce payments to broadcasters. This is not the statutory scheme and is not the way to attract broadcasters to the auction. It is a prescription for a failed auction."

"Our main point is that it should be the market forces of the auction, not the opinions of some FCC staff and consultants, that determines the prices to be paid to broadcasters," Padden told B&C. 

Among the coalition's concerns would be limiting the participation of the two largest wireless carriers. The FCC has a separate proceeding open that could potentially do that by changing the local market spectrum screen it uses to decide whether concentration of spectrum should trigger additional review.

"Restricting forward auction participation, especially by the largest providers -- Verizon Wireless and AT&T -- would create a daisy-chain effect, reducing broadcaster expectations and participation, the amount of spectrum transferred for mobile broadband use, auction proceeds, and available funding for public safety and deficit reduction," said the coalition.

The coalition also wants the FCC to auction all the spectrum reclaimed in the auction, including the guard bands. The FCC has been considering allowing for unlicensed use in the guard bands, but the coalition argues that "Siphoning off some of that spectrum (for which the FCC may pay large sums) for unlicensed use will artificially distort demand and disrupt the market-based mechanisms."

It also wants the FCC to reclaim at least 120 MHz. That was the original target, but the FCC has backed off setting any kind of mandatory minimum. 

The coalition members are not identified. The FCC has said that comments can be filed anonymously since broadcasters understandably don't want to publicized their willingness to sell. But Padden says there are more than 40 members, all in major markets.