Epstein: FCC Will Start Broadcast Spectrum Bidding Very High

Also promises auction Web site will work, start to finish

The FCC plans to offer broadcasters a "very high" starting price for their spectrum in the incentive auction, and one not just based on their value as TV stations.

That is according to Gary Epstein, chairman of the FCC's incentive auction task force and special advisor to FCC Chairman Tom Wheeler, who was testifying Tuesday at a Senate Commerce Committee oversight hearing on the broadcast incentive auctions.

A light snow that shut down the Federal Government did not manage to dissuade the Senators or witnesses from hashing out auction issues at the hearing, where there were mostly encouraging words for the progress of topics such as border coordination, station pricing and the decision by FCC Chair Tom Wheeler to move the auction.

Preston Padden, executive director fo the Expanding Opportunities for Broadcasters Coalition, said that the most important factor in the success of the auctions was attracting enough broadcasters willing to give up spectrum. If the FCC doesn't do that, he said, the rest of the issues are moot. And that means the most important piece of information broadcasters need is what the FCC will be willing to pay, or at least a range of its starting price.

Epstein agreed that attracting broadcasters was crucial. He said making it attractive would include a very high service price, not simply reflected fair market value of the spectrum as a broadcast channel, but including other factors like what it would be worth in the hands of wireless companies.

One issue of general concern was the computer software and hardware that the FCC will use to conduct its unprecedented double-sided, in-real-time incentive auctions (a low-bid-wins FCC auction for broadcasters giving up spectrum, a high-bid-wins auction of that spectrum in the forward auction).

Not wanting a repeat of the healthcare.gov problems, both Democrats and Republicans wanted to know whether the FCC was up to the task.

Epstein pointed out that getting the auction software and hardware right was one of the reasons Wheeler moved the auction deadline back by six months to mid-2015--the Republicans had suggested in their memo for the hearing that it had been a year delay (2014 to 2015).

Epstein said that would provide for testing and mock auctions, where participants would be able to "stress test" the auction. He also promised that the auction software would work from the moment the first bid is placed until the last broadcast station is repacked.

Rick Kaplan, representing the National Association of Broadcasters, said that the FCC should release its auction for testing before, not after it votes an order on the auction framework.

Kaplan joined others in saluting Wheeler for stepping back, "taking a deep breath" and deciding to get the auction right rather than rush it given the complexity of the undertaking, something NAB has been saying all along.

He said the keys to a successful auction were unprecedented public engagement with the process, including perhaps further notices on a band plan and co-channel interference and preserving broadcast station coverage areas.

Kaplan also said the FCC needs to resolve the border issues with Canada and Mexico so the band can be repacked in one effort, rather than a staggered, incredibly complex, repacking. Epstein said that was a "huge" priority, and pointed out that both those countries had recently expressed their recognition of the need of a unified band plan.

Although pressed by Sen. Richard Blumenthal (D-Conn.), Epstein would not say whether the FCC planned to impose any limits on bidders to give smaller players a shot at the beachfront, low-band spectrum up for grabs.