Washington

Padden: FCC Has Auction Order 'Substantially Drafted'

Says it should stick to 2013 deadline, NAB's Kaplan says no need to rush for self-imposed deadline 11/20/2013 01:38:41 PM Eastern

Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, says that the FCC has an order on incentive auction rules "substantially drafted" and is waiting on resolving only a couple of issues.

Saying it was based on “information," Padden said: "I believe there is a very lengthy order," which is awaiting decisions on "key policy issues" to be directed by the new chairman and commissioners. "But it is not like we are sitting here at the beginning of November with nothing on paper in terms of rules for this auction.” He wants the FCC to make its proposed 2013 deadline for the rules and 2014 deadline for the auction.

Padden made that point during a webinar this week hosted by the Digital Policy Institute in Washington.

Moderator Barry Umansky of DPI had suggested that the FCC was unlikely to come out with auction rules by the end of 2013, which has been its goal. NAB spectrum auction point man Rick Kaplan, who was also participating in the webinar, was fine with not rushing it--"any rush is self-imposed," he said, but panelist Randolph May of the Free State Foundation and Padden agree the FCC should not delay and apply whatever resources necessary to get it done as soon as possible.

Kaplan said it has always been odd to him that the FCC was signaling the order had to be out by 2013 and the auction by 2014, given that Congress gave the FCC 10 years to complete the auction and repacking. He also pointed out that the FCC has to hold several other spectrum auctions. He said his hope is that FCC Chairman Wheeler will take the deadline pressure off the auction, while not delaying it artificially.

May said the reason he hoped it would happen sooner than later was that wireless needs more spectrum, and that will benefit consumers and the economy. "I think most people agree that in order to keep up with the rest of the world and serve our own economy, having more mobile spectrum sooner than later is a good thing."

Padden pointed to the draft and said the last official word from the commission was to get the rules done by 2013. "Until we hear differently, that is the operative word out of the commission. He said he believed there was a substantial order already drafted.

A large majority of broadcasters want to stay in the business rather than sell their spectrum act auctions, and the FCC wants them to, Kaplan said.

The Expanding Opportunities for Broadcasters Coalition represents stations that are looking to sell if the price is right. The Free State Foundation is a communications policy think tank. Both Kaplan and May are former FCC staffers (Kaplan was the chief of the Wireless Bureau), while Padden is a former top exec at Disney and News Corp. and onetime lobbyist for the independent stations most likely to be looking to sell.

Kaplan suggested one of the reasons the FCC might want to keep broadcasters around is that the FCC has regulatory powers over TV stations that it lacks over the wireless carriers who will be buying up the spectrum (and delivering video). "We're heavily regulated," he said, including a public interest standard, mandates on diversity and localism, and ownership limits. He pointed out that no one broadcaster can reach more than 39% of the country, while AT&T, Verizon, Sprint and T-Mobile can reach virtually 100%.

Kaplan said broadcasters just want to be held harmless in the auctions, which means having the wireless and broadcast industries working together after the auctions to make sure they are not interfering with each other. It also means broadcasters should not take a hit on their finances or coverage areas.

All three panelists said they wanted it to be a successful auction, but their definitions were not the same. For Kaplan, success is broadcasters unharmed. For Padden, success means top dollar for TV spectrum.

Padden said his members were "absolutely committed" to a successful auction, but his view is that broadcasters need to consider "success" in the context of an immediate payout of as much as 10 times their spectrum's value for TV.

May said a successful auction also means not limiting who can bid, which could limit the payout (Padden agrees). He said bidders should not be saddled with extraneous conditions. Wireless carriers T-Mobile and Sprint have been pushing the FCC to insure that AT&T and Verizon, the two largest carriers, cannot corner the market on the new, beachfront, low-band broadcast spectrum.

The FCC has an open proceeding proposing changes to its local market spectrum screen that could have that effect by limiting the low-band spectrum holdings of any one company in a market. The screen is not an absolute cap, but triggers further FCC scrutiny.

May says reducing the revenue would make it less likely that broadcasters will participate and provide less money to pay for the broadband, interoperable first responder network that FCC spectrum auctions need to cover.

Padden seconded May's concern, and added that the FCC does not have the spectrum it is proposing to auctions and if they limit wireless bidders, they may not get enough to meet broadcaster prices, "with the result that the auction would fail."

One thing that could hold up the auction is litigation. "There will be litigation no matter what," said Kaplan, "which always happens with any controversial order. "The key he said is frivolous vs. meritorius litigation," which will depend on how closely the FCC sticks to the incentive auction legislation. He said as long as the FCC stays within the bounds of the statute, the auction should not be held up. But if it strays, say, in the broadcast protection or auction competitiveness areas, "then you may see litigation that may tie up the auction for some time."

 

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