FCC Puts Auction Pedal To the Metal

Decisions fly as agency’s self-imposed deadline approaches
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The Wheeler FCC has begun moving rapidly toward its proposed early-2016 broadcast incentive auction, and the attendant multi-billion dollar remake of the spectrum landscape. The direction for that rapid move is not making many broadcasters happy.

A flurry of decisions, including an important one from the court, have begun to offer a clearer picture of how the forward auction (with the FCC paying broadcasters to vacate spectrum) and reverse auction (with wireless companies buying up that spectrum for smartphones and tablets) are unfolding.

The commission has released a final omnibus order—a.k.a. a final decision—denying most of the changes asked for by the major broadcast affiliate associations and one key ask for noncommercial television stations.

FCC chairman Tom Wheeler has also teed up for a July 16 vote the final rules for both auctions, blogging recently that, “it is now time to end the back-and-forth and make decisions.”

A list of auction-eligible stations was released by the commission in May. After that list is certified, the FCC will use its formula for calculating prices—also to be voted on July 16—to come up with the actual opening bid prices for stations, which it is expected to release before the end of the summer, and then start accepting applications in the fall from stations who want to participate.

How fast the auction can proceed could depend on whether lawsuits muck up that timetable. Unhappy low-power TV interests have said they will sue over the FCC’s decision not to revisit their fate in the auction, and noncommercial broadcasters are unhappy about the FCC not reserving a channel in all markets for them, post-auction.

Here is a status report on key decisions:

The FCC is sticking with its variable band plan. In order not to limit itself to the lowest common denominator—by only clearing as much spectrum in all markets as it can clear in the market with the least participation—the FCC will allow for clearing different amounts of spectrum in different markets, which means allowing for some interference between TV stations and wireless operations on the same or adjacent channels in nearby markets. That was a loss for broadcasters and a win for CTIA: The Wireless Association, which said market variability was essential.

Big Bird and his friends were not happy with a decision brought to them by the letters F, C and C. The commission said it would not guarantee a noncommercial channel would remain in every market after the auction. It did so while also conceding that it has historically frowned on allowing noncoms to give up channels, including refusing to reserve a noncommercial channel when a noncom is in financial distress, or even if the channel has been vacant. That’s as good a signal as any from the FCC that the times they are a-changin’. “While we make no determination of whether relinquishment of an NCE license amounts to a de-reservation, we note that the objective of the reverse auction is to reallocate the spectrum for new and different uses altogether, not a reversion to commercial status as is typically considered a de-reservation,” the commission said.

The commission let OET 69 petitions drop—and doesn’t have to pick it up. The FCC did not address petitions to change the OET 69 computer model and methodology for calculating interference and coverage areas for station signals after they are repacked closer together and with wireless companies for neighbors after the auction, but it didn’t have to. A federal court rejected a broadcaster court challenge to OET 69 and the FCC is under no obligation to revisit the issue, said an FCC source. Broadcasters have argued that the new OET-69 data has produced inconsistent results and are concerned the commission could use it to “move the goalposts” during the auction.

Broadcasters will be able to strike spectrum-sharing deals both before and after the auction. Responding to a petition from the Expanding Opportunities for Broadcasters Coalition, the FCC decided to let broadcasters see how much they can get for their stations before deciding on whether or not to share or get out of the business after the auction, making the sale a more attractive proposition, according to a representative for auction-interested stations.

The FCC has concluded that wireless microphones, including those used for newsgathering, will not get a separate channel. They must instead share with other unlicensed devices, which together get their own channel (37).

Border issues continue. The FCC will not necessarily conclude its coordination of border interference issues with Mexico and Canada before the incentive auction, as broadcasters had asked it to do.

The FCC will treat its $1.75 billion TV station and cable system moving expenses fund as a hard cap, not a budget. It will, however, try to minimize moving expenses to keep to that figure. Broadcasters are concerned the FCC will try to reclaim more spectrum than it can cover with those moving expenses. Some are looking to Congress to provide more money, given how much the auction is expected to raise—as much as $60-$80 billion by some estimates—and how much coin the AWS-3 auction already brought in (over $40 billion). The FCC has yet to decide on whether to keep to a 39-month deadline after the auction for TV stations to move to new channels. That petition to reconsider was not acted on, and a source said the resolution is “TBD.”

The FCC is proposing to drop its dynamic reserve pricing proposal—though stakeholders still get to comment on it. It had been panned in many quarters as a way for the commission to artificially depress station prices. The FCC will also stick with a 30 MHz reserve of low-band spectrum for competitors to Verizon and AT&T in the forward auction. Broadcasters will also get more information on the auctions within rounds, with the FCC letting them know how close they are to reaching the final price for their spectrum.

The FCC will not revisit the status of low-power TV stations and translators. LPTVs can’t participate in the auction and are not protected from interference or displacement in the post-auction repack. But the FCC has sought input on how they can get help in the transition.

The Wheeler FCC has begun moving rapidly toward its proposed early-2016 broadcast incentive auction, and the attendant multi-billion dollar remake of the spectrum landscape. The direction for that rapid move is not making many broadcasters happy.

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