Editorial: FCC Reworking Its Best-Laid Plans

Another mile marker was passed last week in the FCC’s march toward
broadcast spectrum incentive auctions. That was the deadline
for reply comments on the FCC’s proposed auction framework.

The FCC will now vet those comments and,
likely sometime late this summer, vote on that
plan. It remains to be seen whether FCC chairman
Julius Genachowski still will be around to take
ownership of the auction; if the Washington tea
leaves are being read correctly, he will likely leave
the implementation of the auction to his successor.

Broadcasters, however, whether they sell out
or stay put, will still be around to deal with
whatever the FCC decision dictates.

If there’s one remarkable achievement the
FCC’s plan can already boast, it is that it made
allies of the formerly feuding broadcast and
wireless industries, joining them in opposition
to the commission’s repacking proposal that
would intersperse broadcast and wireless companies
rather than giving them their own space.

That strange alliance was one of the first signs
that there could be trouble in paradise.

OK…it was never paradise. If last week’s reply
comments are any indication, and they clearly
are, the signs are plenty, and some are of the flashing neon variety.

Broadcasters in both camps have their issues.

The 40-plus stations in the coalition of the
spectrum-willing—or, to be technical, the Expanding
Opportunities for Broadcasters Coalition—
are worried that the FCC is looking to
lowball the payments to broadcasters so the government
can make more revenue on the resale
to wireless companies. The EOBC argues that a
megahertz is a megahertz, whether it is in the
keeping of a struggling independent or a powerhouse
market leader.

“The wireless carriers will be buying spectrum—
not broadcasting businesses. It would be
arbitrary, capricious and a clear violation of the
Spectrum Act for the FCC to attempt to ‘manage’
the prices paid to broadcasters based on any
metric other than the station’s impact on spectrum
clearing,” the EOBC said in its comments.

The National Association of Broadcasters is
worried that the FCC auction economists are
creating more blue-sky theories than a blueprint
for success. “The result so far has been an
economist’s academic ideal of a reverse auction
untethered from engineering realities,” the NAB
said. The FCC had said it wanted to keep the
complexity of the auction under the hood, but
by the NAB’s and others’ reckoning, the FCC has
made it unnecessarily complicated.

One non-engineering reality is that if the FCC
does not make the auction attractive to broadcasters,
it won’t get enough spectrum. And if it
doesn’t make sure that broadcasters that remain
in the business are held harmless
in repacking—to the extent
that is possible, given that
many will have to move channels
again—the agency will
have violated the prime directive
of the statute.

The NAB also says the FCC
needs to publicize its repacking
methodologies, complete
border spectrum coordination
with Mexico and Canada, seek
separate comment on its band
plan and hold some workshops
or form a working group to deal
with administering the broadcaster
relocation fund in what FCC commissioner
Robert McDowell last week called the “the most
complicated auction in world history.”

The FCC has said it is open to suggestions,
that it expects to tweak the plan in response to
the input, that it’s a work in progress, etc. We
hope that was more than diplomatic boilerplate
to grease the skids, particularly given last week’s
comments, which indicate there is still much
work to do and not that much time if the FCC
is going to try to meet its self-imposed deadline
of the end of 2014 to complete both the reverse
and forward auctions, which the FCC says may
happen simultaneously.

At a Senate Commerce Committee oversight
hearing last week, all the commissioners said
they would work toward that 2014 goal, though
McDowell advised legislators not to be surprised
if there was a slip between that cup and lip. Our
advice to the FCC parallels that of commissioner
Ajit Pai, who repeated last week that it is better
to get the auction right than to do it right away.

We wonder if there is a metaphor in an auction
that is trying to go in two directions at the
same time. We hope not.