The FCC is planning to vote Dec. 11 on the next big item in its broadcast incentive auction process, which is the proposed details of how the commission gets from the legislative statutory auction mandate to a successful auction, in this case a first-ever, double-sided auction that has been likened to a Rubik's Cube.
That will be in the form of an incentive auction public notice (PN) seeking comment on some of the "under-the-hood" info about how the auction will be run, what the opening bid prices for broadcasters will be, and how repacking will be handled.
It constitutes a set of proposals that is issued in every auction that takes auction policy and turns it into specific proposals on how to get them done. It is normally done at the Wireless Bureau level, but given that this is a first-of-its-kind double (reverse and forward) auction, it is being voted on by the full commission.
The proposals in the notice, which is being circulated by the Wireless Bureau to the commissioners Nov. 20 for that December vote, follow the May order on the framework, and help fill in the drill-down details.
The commissioners will be voting to put the proposals out for comment, not adopt them, and there will be ample time for public comment, said an FCC official speaking on background. That will be followed by a vote next year on the final auction procedures, with enough time to accept applications for the auction in September 2015 and hold the auction in early 2016 per the new schedule.
Key among the subjects addressed in the notice are a half dozen essential elements:
1. The methodology for establishing opening bid prices for broadcasters in the incentive auction. The prices have to be high enough to encourage participation, but not so high that it takes hundreds of rounds to weed out bidders. The "right" level will also need to be not too high so that it is fair to taxpayers, who will reap the benefits of the auction surplus, which goes to the treasury.
The item proposes setting that opening bid price based on both the impact of the station on repacking—how much interference would be reduced—and the population served. It also proposes a formula for tweaking that price to take into account moves from VHF to UHF.
It also sets prices for the forward auction (selling the reclaimed spectrum to wireless companies or theoretically anyone else with enough money and who qualifies to bid). It proposes to assign bidding units to each license based on the weighted population in the license area using an index of prices from previous auctions—like the AWS-3 auction currently under way. So, in areas where spectrum has drawn a higher price, the population will be weighted higher, and the converse.
2. The draft includes the final stage rule, which was adopted in the May Report and Order and determines when the auction is over, which will be determined by whether it has enough money to pay broadcasters, cable operators, and meet other statutory obligations. Also in the rule are the average megahertz per pop price and clearing benchmarks.
3. The FCC also needs to determine an initial clearing target, which it proposes to be a "near nationwide" target, likely with some market variation. In other auctions, the FCC knows how much spectrum it has—AWS-3 has 65 MHz for example. But the FCC won't know how much it has until broadcasters give it up, as it were.
The draft proposes two categories of wireless licenses depending on how much population in a given license is subject to interference from a broadcast station that winds up in the wireless band after repacking.
The public notice fleshes out how the FCC will reserve some of the reclaimed spectrum for smaller wireless carriers. The FCC had no comment on whether the success of the AWS-3 auction would have an impact on how much spectrum will be reserved.
There is also something in the notice for stations who choose not to participate in the auction or don't offer a winning bid. At the end of the reserve auction, TV stations will get provisional channel assignments, and proposes what factors should go into the final channel assignment, like maximizing the number of stations that can stay on their current channel, minimizing the number of stations that would get increased interference in repacking, and avoiding costly reassignments given the $1.75 billion cap on repacking costs.
Look for the FCC to hold webinars and do other outreach to help explain the proposals.