FCC Standing By Its Auction Framework - Broadcasting & Cable

FCC Standing By Its Auction Framework

Plans to deny petitions to modify spectrum selloff
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The FCC is signaling it will stick with its original framework for the broadcast incentive auction, denying requested changes by broadcasters and others and setting the stage for possible further court challenges.

According to sources familiar with the draft report and order circulating at the FCC on its incentive auction framework, the commission has indicated that it will keep with a variable band plan—potentially freeing up different amounts of spectrum in different markets; will use the updated OET-69 methodology/data for gauging interference and determining coverage areas for TV stations after the auction; will hold to a 39-month hard date for TV stations to move to new channels after the auction; will not necessarily resolve international coordination issues with Mexico and Canada before the auction; and will cap moving costs at $1.75 billion.

The order is circulating among the commissioners for a vote, but there could be changes before any show of hands. A source confirms the draft order also denies a request by noncommercial stations that the FCC reserve at least one channel in each market post-auction for noncommercial service—in case a noncom singleton in a market decides to give up its channel and take the payout.

The Big Four affiliate associations had led the broadcaster pushback at the FCC, with the National Association of Broadcasters going directly to federal court with its complaints, though the NAB filed in the docket in support of many of the relevant issues, such as not having a variable band plan, or 39-month hard date, or capping moving expenses unless the FCC also capped station reclamation at the point that it had no money left to pay for moves.

Noncommercial stations have also been active on the issue of reserving the channel.

The Association of Public Television Stations, CPB and PBS teamed up to ask the FCC to reserve that channel in the public interest, arguing that to not do so hardly serves diversity or the public interest.

Not included in the order are some separate, and substantive, issues the FCC is dealing with elsewhere, including how much low-band spectrum it may reserve in the forward auction for use beyond current dominant low-band spectrum holders, how it treats LPTV’s and translators, and how it will price station opening and succeeding bids.

An attorney for the broadcast affiliate associations had no comment on whether they would sue if the petitions were denied, as the draft proposes. NAB spokesman Dennis Wharton also declined comment, but a broadcast industry representative said there is a “very real concern among many broadcasters that a 39-month repack deadline is simply not realistic, and all options—including a lawsuit—would have to be considered.”

WHEELER: AUCTION INFO MOSTLY OUT THERE

While broadcasters have argued that they need more information about the auction, FCC chairman Tom Wheeler last week told a Senate Appropriations Subcommittee hearing audience that, for the most part, they should already have the information they need to decide whether or not to participate.

The FCC has been conducting a series of road shows and meetings with broadcasters around the country to pitch the auction, following up on information packages the commission prepared for stations outlining pricing information and other details.

Wheeler told the senators that he had met with major broadcast CEO’s who he said were “seriously looking at whether or not” they would put spectrum up for auction. Fox, Ion, Tribune and Univision have all signaled they could be players at the right price, likely by giving up a second-channel in duopoly markets and moving the programming to a multicast channel of the primary, or giving up spectrum but making deals to share a channel with another station.

The Expanding Opportunities for Broadcasters Coalition, for one, has told the FCC it needs to provide more information during the auction—on, say, how much spectrum the FCC is looking to clear or what pricing mechanism it is using—if it wants aggressive bidding by broadcasters.

Wheeler said that while he thought there was great broadcaster interest, he would not know “until they open the doors.” He reiterated at the hearing that the auction is still targeted for early 2016.

The FCC is signaling it will stick with its original framework for the broadcast incentive auction, denying requested changes by broadcasters and others and setting the stage for possible further court challenges.

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