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Divided FCC Okays Auction Procedures - Broadcasting & Cable

Divided FCC Okays Auction Procedures

Will put TVs in duplex gap, but explore second channel
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A politically divided FCC took the next big step toward its broadcast incentive auctions Thursday, with the Democratic majority agreeing to procedures for bidding in the reverse and forward auctions, setting spectrum clearing targets, and repacking some TV stations in the duplex gap (wireless band) after the auction, but also seeking comment on a way to make sure there is enough spectrum for unlicensed devices and microphones also using the duplex gap by reserving a second channel in the markets—the FCC says a handful—where stations might have to be placed in the gap.

The auction is scheduled to start March 29, 2016, the FCC confirmed.

The FCC voted to potentially put TV stations in the duplex gap, which is the buffer between uplink and downlink spectrum in the wireless band. Broadcasters, wireless companies, and members of Congress had all warned against putting TV stations where the FCC was already putting unlicensed devices including wireless mics. But the FCC also voted to collect comment on a proposal from some industry players (including the Competitive Carriers Associationand T-Mobile) to set aside a second channel in the TV band for unlicensed in markets where it is putting stations in the duplex gap.

The FCC is already proposing setting aside one vacant channel in each market for unlicensed, which would be getting three channels—the guard band (ch. 37), the duplex gap and the last channel in each TV market, or a second channel rather than the gap where TV stations are being repacked there.

The FCC recently suspended the comment deadline on its vacant channel proposal, likely in anticipation of opening up comment on the second-channel proposal.

The Expanding Opportunities for Broadcasters Coalition, which represents stations interested in giving up spectrum, an apparently growing group, was pleased with the outcome of Thursday's vote, or at least with the progress toward an auction it represented. The FCC addressed a number of its concerns, including already having put out auction price estimates for stations to peruse, proposing allowing channel-sharing deals post auction, and dropping the dynamic reserve pricing model.

"Based on a remarkably open and fair process, the FCC has adopted compromise auction rules that make no stakeholder, including our Coalition, 100% happy," said EOBC executive director Preston Padden.  "As a concession to the shortness of life, it is time to end the debate and get on with the auction.”  

Sinclair was another broadcaster that appreciated the price estimates the FCC had already released, saying on a conference call with investors this week those numbers had required it to think seriously about putting spectrum—as much as $2 billion—into the auction.

Senior Republican Ajit Pai said the FCC approach could jeopardize the auction, particularly putting TV stations in the duplex gap and considering reserving the second channel, which he said would relegate low-power TVs and translators to second-class citizenship between unlicensed, which he could not support.

"My most serious concern involves the 600 MHz band plan. Put simply, this item permits too many broadcasters to be placed in the wireless portion of the 600 MHz band. That matters for a couple of reasons. First, placing broadcasters in the wireless portion of the 600 MHz band will impair spectrum slated to be sold in the forward auction, thus decreasing revenues and the amount of spectrum cleared. It will also cause future interference between wireless and broadcast services," he said.

He said the positive aspects of the spectrum item were few and far between and he was unable to support it.

Commissioner Michael O'Rielly pointed to the impairment of licenses that will result from putting TV stations in the downlink spectrum as well as the duplex gap. He also has issues with the second-channel proposal and what he said was lack of sufficient information to either industry or the commissioners.

He said he had to dissent from an artificial deadline and deeply flawed process.

Chairman Wheeler said that with the public notice voted Thursday, the FCC was beginning the process that will produce the first two-sided incentive auction, and trigger first round of applications in about 60 days. He again called it a complex puzzle that no one has put together before and without the picture on the top of the box.

He said the auction has been argued from the worst-case scenario and doom and gloom perspective and that he is familiar as a former lobbyist with arguing that worst case, end-of-the-world forecast.

He said the result did not satisfy the ask of any one of the stakeholders, or commissioners, or the chairman, but it is a good, balanced, logical solution to an incredibly complex, never-tried situation.

To assault that activity with a constant litany of worst case scenarios is an assault on dealing with reality.

Wheeler appeared to take those assaults personally on behalf of the team at the wireless and media bureaus who worked to put it together. He called it an outstanding job and outstanding work product that strikes a fair balance and serves the public interest.

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