FCC’s Wheeler Circulates Incentive Auction Item - Broadcasting & Cable

FCC’s Wheeler Circulates Incentive Auction Item

Draft will use new OET-69 data, but attempt to recreate exact station contours in repack
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FCC chairman Tom Wheeler is indeed planning to vote on a broadcast incentive auction rule framework at the May 15 meeting, according to senior FCC officials speaking to reporters on background. The auction will include what they said was high first offers for broadcast spectrum, but that the auction would be entirely voluntary.

Wheeler circulated the draft to the other commissioners April 17. In a blog posting, he reiterated that, for broadcasters, the auction would be "a once-in-a-lifetime opportunity for an infusion of cash to expand their business model and explore new innovations, while continuing to provide their traditional services to consumers. We will ensure that broadcasters have all of the information they need to make informed business decisions about whether and how to participate."

The officials outlined the band plan framework to be voted on, though making clear it was a draft that could be changed in negotiations with the other commissioners.

The officials emphasized that the goal of the auction was to free up spectrum for wireless, but that it would have to balance that goal with the other goal of giving broadcasters a one-time-only financial boost and preserving the service for those who want to stay in the broadcast business.

The auction item will be divided into four parts, dealing with the band plan, auction process, post-auction transition, and post-transition regulatory issues (see below).

The outline was generally along the lines of the framework as reported in B&C.

The band plan will feature paired spectrum of both uplink and downlink spectrum with a gap between, and a guard band separating wireless and broadcast spectrum. Wireless companies will bid for 5 MHz generic blocks of spectrum rather than licenses.

The officials said that, in the repacking, the FCC would attempt to preserve the exact coverage areas (contours) of stations as of February 2012, not just the same number of viewers. But it will use the new OET-69 data to calculate interference protections for repacked stations, something broadcasters are strongly opposed to.

The auction will be successful, statutorily, if it covers broadcasters' bids to give up spectrum plus a $1.75 billion broadcaster relocation and repacking fund.

The FCC is holding three auctions to raise money to free up spectrum for mobile wireless and pay for FirstNet, the interoperable broadband first responder network. FCC officials predict that by the time of the broadcast incentive auction, it will have raised most if not all of the $7 billion in estimates that network will cost, with the broadcast auction going to pay for compensating broadcasters for giving up spectrum, moving from UHF to VHF or sharing channels, plus deficit reduction.

The plan is still to hold the auction in mid-2015.

The chairman signaled earlier this week that, in a separate item, some of the low-band spectrum up for bid will be set aside so that carriers who do not have as much of that below-1 GHz spectrum will be able to bid on it. AT&T and Verizon together account for about 70%.

The officials would not discuss the separate spectrum aggregation/screen item or the timing of its vote.

AT&T has warned it may skip the auction if its bidding options are too circumscribed by that separate spectrum aggregation limits item the FCC is expected to vote on at the same meeting.

Based on early reports about the item. The National Association of Broadcasters has also warned that it could take the FCC to court if the rules stray from what they argue is the statutory mandate for protecting TV station's coverage areas and interference protections in the repacking of stations post-auction.

The FCC Friday issued a fact sheet outlining the elements of the framework.

Band Plan:

 Adopts a 600 MHz band plan with specific paired uplink and downlink bands (which enables two-way communications), comprised of five megahertz “building blocks,” consistent with the wireless industry’s technical standards;

 Accommodates variation in the amount of spectrum recovered from broadcasters in different geographic areas in order to prevent the “least common denominator market” from limiting the quantity of spectrum we can offer generally across the nation;

 Adopts Partial Economic Areas (“PEAs”) as the licensing area for the 600 MHz band to permit entry by providers that contemplate offering wireless broadband service on a localized basis, yet permit providers that plan to provide service on a larger geographic scale to aggregate PEAs;

 Adopts technical and services rules similar to those governing adjacent 700 MHz band;

 Requires interoperability across the entire new 600 MHz band.

With respect to other incumbent services in the television band, including low power television, translators, and wireless microphones, which may be displaced, the draft R&O:

 Adopts a transition allowing for continued operation until new license holders become operational.

 Anticipates the Commission considering issues surrounding these displaced services in separate proceedings contemporaneous or shortly following the adoption of the R&O.

Unlicensed Spectrum: Unlicensed spectrum refers to spectrum that is not licensed to an individual private user, such as the spectrum used for Wi-Fi and Bluetooth. The draft R&O:

 Makes the 600 MHz guard band and channel 37 available for unlicensed use, thereby making spectrum available for unlicensed devices nationwide.

 Anticipates initiating a separate rulemaking proceeding shortly following the adoption of the R&O to consider changes to existing technical rules to govern the use of unlicensed devices in the 600 MHz band and channel 37 while protecting other users on the same or adjacent frequencies.

Auction:

 Integrates the reverse and forward auctions in a series of stages. Each stage will consist of a reverse auction and a forward auction bidding process aimed at a specific spectrum clearing goal.

 For the reverse auction, adopts a descending clock format in which the price offered to each station for the participation options they select (go off the air, channel share, move from UHF to VHF,) will be adjusted downward as the rounds progress. Simply put, the price offered to broadcasters will drop with each successive round of bidding.

 For the forward auction, adopts a multiple round ascending clock format in which the prices will generally rise from round to round as long as the demand for licenses exceeds the amount available. When the clock price stops rising, the bidders who are still demanding the licenses become the winners.

 Determines that the auction will close when a stage meets the “final stage rule” -- namely, when the auction proceeds meet a specific reserve that will be determined by the Commission.

 If the final stage rule is not satisfied, we will reduce the clearing goal and begin another stage of the auction

III. Repacking Methodology: Repacking is the term used to describe the process of assigning new channels to broadcasters who remain on the air following the incentive auction.

Repacking:

 Adopts a repacking methodology that makes all reasonable efforts to preserve the coverage area and population served by broadcasters as of February 22, 2012 (the date of the enactment of the Spectrum Act).

 As required by Congress, adopts the methodology described in OET 69 to determine the coverage area and population served by each station, using updated computer software and current, accurate data.

Post-Auction Broadcaster Transition:

 Commits to making the transition as smooth as possible.

 Requires repurposed spectrum to be cleared no later than 39 months after the repacking process becomes effective.

 Requires broadcasters that successfully bid to give up their licenses or to share channels to cease operations on their pre-auction channels three months from the receipt of their auction proceeds.

 Provides broadcasters remaining on the air after the auction up to 39 months to transition to their new channels. Because repacking will not impact every broadcaster the same way, each station will be assigned a transition deadline within that period tailored to its individual circumstances.

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