Washington

CEA, Spectrum Willing To FCC: Nix Bidding Conditions

Unveil analysis arguing limiting bidders and scoring stations could do a number on revenue 11/04/2013 12:01:00 AM Eastern

The Consumer Electronics Association and the "coalition of the spectrum willing" (The Expanding Opportunities for Broadcasters Coalition [EOBC]) are on the same pages, literally, when it comes to the incentive auctions.
 
They plan to release a report Nov. 4. urging the FCC not to put conditions on bidders that could reduce the revenues by almost $6 billion and jeopardize the success of the auction. If the forward part of the revenue — the auction of reclaimed broadcast spectrum — does not raise enough money, the FCC has to start the reverse part — paying broadcasters to clear off — all over again.
 
The analysis, "Maximizing the Success of the Incentive Auction" concludes that a combination of bidding restrictions and "scoring" TV stations could reduce the auction take by nearly $5.8 billion. The incentive auctions, combined with a couple more spectrum auctions — H block and AWS — the FCC has been told by Congress to conduct — need to raise enough money to pay broadcasters — billions — and pay for moving and relocation expenses for the spectrum of unwilling TV stations — $1.75 billion budgeted — and for an interoperable broadband public safety network — many more billions.
 
According to CEA and EOBC, the costs to the auction revenues of FCC bidding restrictions "would outweigh any potential benefits to competition among the four national wireless firms in the upcoming incentive auction."
 
The FCC is contemplating adjusting its local market spectrum screen, including by taking into account the relative values of low-band and high-band spectrum, which could limit what spectrum carriers, particularly AT&T and Verizon, could bid for in some markets.
 
Competitors Sprint and T-Mobile have been arguing for rules that insure that Verizon and AT&T can't dominate, but Verizon and AT&T have countered that Sprint and T-Mobile are plenty big enough themselves to compete for spectrum, a point the CEA/EOBC report also makes.
 
The report also concludes that "scoring" stations on criteria such as population covered — rather than pricing them on their value as spectrum for wireless or in freeing up the necessary spectrum in a market — would lower the prices paid to broadcasters and discourage participation.
 
The report estimates that bidding restrictions could reduce revenues by almost $5.8 billion.
 
The analysis was written by Fred Campbell, a veteran communications attorney, former wireless adviser to FCC chairman Kevin Martin, chief of the FCC's Wireless Bureau and an adviser with experience in auction policies.
 
"New options are emerging for TV stations to use their existing spectrum licenses," said EOBC Executive Director Preston Padden in announcing that CEA and EOBC had teamed on the study. "To attract the critical mass of broadcasters necessary to make the auction a success, we need competitive bidding among all wireless carriers for every license and the assurance that every TV station will be fully compensated for its spectrum rights."
 
Those new options include multicast channels that give broadcasters multiple market entry points, as well as possible wireless offloading and data services depending on what flexibility the FCC gives broadcasters to use their spectrum.

The FCC has proposed to allow broadcasters to use some of their spectrum for non-TV broadcast purposes in lieu of moving and repacking expenses, so long as they maintain a TV channel as part of the mix.
 
EOBC represents more than 70 TV stations willing to consider giving up spectrum if the price is right.

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