FCC Auction Item Prep Creates More Bad Blood - Broadcasting & Cable

FCC Auction Item Prep Creates More Bad Blood

Some stakeholders are sure to be unhappy after being briefed on outlines of broadcast incentive auction
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According to multiple sources, FCC staffers have been briefing stakeholders, including broadcasters, wireless carriers and public interest groups, on the outlines of the agency’s incentive auction framework, and some broadcasters will likely be keeping their lawyers on speed-dial.

The item is said to be a work in progress, but it is probably pretty close to the final version.

That the FCC under chairman Tom Wheeler would outline the draft item even before it was circulated to the other commissioners— even though he did brief those commissioners— was described as an unprecedented transparency-related move according to one stakeholder. But it was, however, what the transparency revealed that troubled broadcasters.

According to multiple sources familiar with the FCC’s outline, the new band plan for broadcasters and wireless operator sharing broadcasters’ former home in the 600 MHZ band will be the “down from [ch.] 51” plan broadcasters were OK with. What they are not so OK with is that it will be a variable band plan with market variations in how much spectrum the FCC reclaims. That, says broadcasters, could allow for adjacent and co-channel interference as the FCC tries to reclaim as much spectrum as possible while also putting wireless carriers and broadcasters too close together for broadcasters’ comfort. Also sure to raise red big red flags is the FCC’s plan to use the new so-called OET-69 methodology for calculating television station coverage areas and potential interference in the station repacking.

In comments to the commission two weeks ago, the National Association of Broadcasters as much as signaled that this move constituted a gilt-edged invitation to a lawsuit, saying the FCC’s issuing of the new calculations, rather than relying on those in existence when the incentive auction legislation passed, is in fact illegal.

The commission has counter-argued that it is not changing the method of calculation but rather, plugging in newer and better data.

Voices Mandate

According to sources, the FCC also will not wind up penalizing broadcasters for the commission’s own move to reduce the number of voices in a market.

If the FCC reclaims spectrum in a market that has the effect of reducing the number of voices from the requisite eight to allow duopolies, those duopolies will be grandfathered. But one broadcaster points out that if that grandfathering does not transfer to a new owner, that station’s value will be diminished nonetheless.

The commission is expected to circulate the item four weeks before the May meeting, which would make the date sometime next week.

Other auction takeaways include:

  • Wireless microphones will lose their dedicated channel and must fend for themselves elsewhere in the band.
  • The FCC is said to be looking at 6-11 MHz for the guard band between broadcast and wireless. Both wireless companies and Google had been seeking more space—for wireless—in that guard band than now appears feasible.
  • There will be device interoperability for the 600 MHz band, as there was for the 700 MHz band broadcast spectrum when it was auctioned in 2008.
  • Broadcasters and wireless companies will be considered coprimary users. Broadcasters had wanted to remain the designated No. 1.
  • The FCC is looking at a near national plan, where there would be at least 84 MHz cleared in most of the country, with something less than that on the border and in some crowded urban markets.
  • After each round of the reverse auction of broadcast spectrum, the FCC will run a feasibility check on those bidders remaining to see if the commission needs to buy them at the current price or can let it go lower.
  • Broadcasters who give up their spectrum will have three months after the auction to turn it in. Broadcasters who agree to share or move from UHF to VHF will have a 39-month series of rolling deadlines to make that transition.
  • The FCC is planning to score stations—though they may not refer to it exactly that way—looking at factors such as population coverage to determine which stations are optimal for clearing.

TV’S POLITICAL ‘PRICE’ OF DISCLOSURE

It looks like broadcasters in markets large and small will have to start making their political ad files, including the prices those spots are commanding, available for easy inspection by cable companies competing for those ad dollars.

The top four stations in the top 50 markets have been required to post those files to the FCC’s searchable online database since August 2012, but other stations were given until July 1, 2014, to start posting them, unless the commission found reason to change that. Apparently, the FCC has not found reason, despite broadcaster protestations that the filings gave their competitors sensitive pricing information.

The contracts have been part of station public files, but those were a lot harder to access than a searchable online database.

The National Association of Broadcasters had suggested that if the FCC was going to continue to require the online political file posting, it should ask the same of cable and satellite operators, particularly as it expands the requirement to all stations. “We note the particular disparity of requiring even the smallest television stations to disclose their most sensitive pricing data via the Internet, while pay TV operators with millions of subscribers and the largest online entities are not so required,” the NAB said in comments last August.

In a reminder from the FCC’s Media Bureau, every other commercial television station was advised that they would have to start the online posting July 1 as initially planned.

Those stations have already had to post their other public files—children’s programming lists, for example—so the bureau suggested the additional effort should not be tough from a tech standpoint.

“By moving forward with the online filing requirement for the political prices, the FCC’s policy will help ensure that viewers have the information they need to assess for themselves the messages they are viewing,” said the Campaign Legal Center, which pushed for the online disclosures. “We commend FCC chair Tom Wheeler and the Commission for letting a little more sunshine break through in the multi-billion dollar business of political advertising, despite pushback from some FCC licensees.”

According to multiple sources, FCC staffers have been briefing stakeholders, including broadcasters, wireless carriers and public interest groups, on the outlines of the agency’s incentive auction framework, and some broadcasters will likely be keeping their lawyers on speed-dial.

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