Moving Days Are Dead Ahead for Broadcasters

Spectrum incentive auction and FCC decisions loom, with a remade industry on the horizon
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The FCC continues to push toward an early 2016 date for the broadcast incentive auction, with a bunch of mileposts it needs to meet in the next few months.

Since this event will help determine the future trajectory of broadcasting, it’s only natural that a lot of moving pieces in Washington still remain in flux. And given the time line of history, the sooner they’re figured out, the better.

“The auction is not merely an academic exercise. It has real impacts on businesses and consumers across the country,” says National Association of Broadcasters point man Rick Kaplan.

“The FCC must act quickly to shed each of the elements that unnecessarily complicates the auction, including, but not limited to, its proposal allowing significant market variability, dynamic reserve pricing and bending over backwards to set aside spectrum for multi-billion dollar companies like Google, Microsoft, Time Warner and Charter.”

How much spectrum the FCC gets will of course depend on how much appetite there is among broadcasters to give it up.

Fox, Ion, Tribune and Univision have all signaled they are interested at the right price and under the right conditions, likely primarily by putting one station in a duopoly into play, since they have told the FCC they are also interested in staying in the business.

At the Expanding Opportunities for Broadcasters Coalition (EOBC), the better part of 100 members are eyeing the auction, and pushing the FCC not to lowball opening prices or decrease the value of the spectrum through overly generous reserves in the forward auction for noncompetitive carriers, which would remove big-pocketed bidders AT&T and Verizon from some prime real estate.

The FCC has made that possible by agreeing to both pay broadcasters full price for their spectrum while allowing them to preserve their must-carry status on new channels if they can find ones to share with. The commission will even pay broadcasters to move from a UHF to a VHF channel, or from a high to a low V.

What the FCC has not set is a target for how much of that broadcast spectrum it plans to repurpose for wireless broadband, but it recently offered up scenarios that range from 84 MHz to 126 MHz.

A Whole New Map

Some broadcasters will be in for a huge payday, while for many others there is no money on the table and lots of potential disruption as the FCC repacks them into tighter quarters.

The court challenge to parts of the auction by the NAB and Sinclair could be decided any day now, but even if the court rules against them, that does not mean the FCC or the auction is out of the legal woods. There could be more lawsuits from low-power TV forces that are essentially the red-headed stepchildren in the auction—they can’t participate and have no interference protections in the repack—and perhaps even PBS and other noncommercial stations who at presstime would not be guaranteed a noncom channel in each market after the auction.

The commission will also have to decide whether to allow, as it has proposed, unlicensed devices to share spectrum with wireless microphone operators. The NAB recently told the FCC that “if the Commission has any interest in newsgatherers’ ability to do their job, wireless microphones must have some small exclusive home.”

Not Hurting for Cash

One thing the FCC shouldn’t have to worry about is not having enough money to pay for various government programs after it reimburses broadcasters for their spectrum.

The AWS-3 auction raised almost $45 billion for less spectrum than even the low-end estimates for the broadcast auction, and for spectrum that is less valuable for wireless, which has upped estimates for the broadcast incentive auction to as much as $60 billion-$ 80 billion according to a Kagan study commissioned by EOBC. Plus, that AWS-3 take will already more than cover the first responder network and other programs the FCC auctions have to pay for per congressional directive.

But that has not changed the commission’s view of the $1.75 billion relocation fund—which will pay moving expenses in the repack of stations after the auction—as a cap rather than a budget. Broadcasters fear that means some stations could be on the hook for moving expenses if the FCC clears more spectrum than it can pay to relocate.

“The Commission’s approach is fundamentally unfair, and needlessly penalizes broadcasters who remain on the air following the auction,” the NAB says.

The FCC has proposed a hard deadline for a move—which EOBC supports, with a waiver process to accommodate exceptions. The NAB, however, wants more flexibility.

EOBC executive director Preston Padden has a very specific FCC recipe for auction success, which in his case includes clearing 126 MHz of spectrum, sticking to an early 2016 auction date and setting prices based on a station’s value in clearing spectrum, as well as generally giving broadcasters more information about their status in the auction as it proceeds.

One sign that the auction is getting down to the short strokes is that it has united broadcasters and wireless operators, large and small, in a joint push for transparency and certainty in the way the FCC reallocates and repacks spectrum after the auction.

Only last week, Verizon and AT&T teamed up with T-Mobile and Sprint, although they have different views on how the FCC should auction the broadcast spectrum, and got together with broadcasters whose spectrum they covet—the National Association of Broadcaster and the Association of Public Television Stations—to say they would work together on “as expeditious” a transition as possible.

That’s fine, although ultimately, the FCC will determine how expeditious the process will be.

THE FCC’S 3Q AUCTION CHECKLIST

The Expanding Opportunities for Broadcasters Coalition cites these mileposts for the third quarter on the FCC’s time line for incentive auction action, with the caveat that legal challenges could change the time frame.

FCC Adopts Auction Procedures Public Notice
Petitions for reconsideration due 30 days after public notice. May require reconsideration before judicial review (60 days after Reconsideration Order).

FCC ADOPTS ORDERS IN PENDING RULEMAKING PROCEEDINGS:
✓ Mobile Spectrum Holdings Order on Reconsideration
✓ Unlicensed Devices Report and Order
✓ Wireless Microphones Report and Order
✓ Competitive Bidding Rules Report and Order
✓ Low-Power TV/TV Translators Third Report and Order
✓ Inter-Service Interference Third Report and Order and Order on Reconsideration of Second Report and Order
✓ Omnibus Order on Reconsideration
✓ Preservation of One Vacant Channel in the UHF Band for Use by Wireless Microphones and White Space Devices.
✓ Petitions for reconsideration due 30 days after publication in Federal Register (excluding reconsideration orders)
✓ Petitions for judicial review due 60 days after publication in Federal Register
✓ FCC provides initial bids to each individual station

The FCC continues to push toward an early 2016 date for the broadcast incentive auction, with a bunch of mileposts it needs to meet in the next few months.

Since this event will help determine the future trajectory of broadcasting, it’s only natural that a lot of moving pieces in Washington still remain in flux. And given the time line of history, the sooner they’re figured out, the better.

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