Pai on Incentive Auction: Show Broadcasters the Money...Soon - Broadcasting & Cable

Pai on Incentive Auction: Show Broadcasters the Money...Soon

Says aution process, not government fiat, should set prices
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FCC commissioner Ajit Pai says if the FCC wants to get broadcasters into the incentive auction, it needs to give broadcasters an idea ASAP of what they might get out of that auction, and make sure it does not limit the pot by limiting potential bidders.

That came in a speech at an APCO International public safety technology forum. Those are the public safety officials whose national interoperable broadband network (FirstNet) is being funded by the auction.

Pai was in fine, phrase-turning form. "In order to have a successful incentive auction that raises the funds FirstNet needs, both broadcasters and wireless carriers must participate," he said. Pointing to the complexity of the auction, which has heretofore been branded most often a Rubik’s cube of a challenge, he said. "It may take only two to tango, but this is more like Cirque du Soleil."

Pai wants the FCC to give broadcasters the information they need to make their decisions and doesn't want the commission to limit the ability of carriers like AT&T and Verizon, who serve some 70% of wireless subs, to bid for broadcast spectrum.

"To get broadcasters to the table, we need to turn the abstract concept of an incentive into the concrete reality of cash," he said.

That is a point made often by Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, who is representing 70-plus TV station owners who may be willing to pony up spectrum if the price is right.

"That means letting broadcasters in the United States know—sooner rather than later—just how much they could receive for participating in the incentive auction," said Pai. "That also means letting the auction process, not government fiat, determine the prices paid to broadcasters for their spectrum."

Sprint, T-Mobile and some public advocacy groups have pushed the FCC to insure that AT&T and Verizon can't corner the market on low-band spectrum, pointing out that they already have some 80%.

But those carriers have countered that both T-Mobile and Sprint have the wherewithal to bid for, and win, spectrum in an open auction if they want it.

Pai said getting wireless carriers to the table should be easier than broadcasters. "The only question right now is whether we will let them do so or whether we will snatch defeat from the jaws of victory," he said. "To maximize net revenues for public safety, all wireless carriers should be able to participate without restriction.

"Last year, a study found that limiting participation by wireless carriers could result in a 40% loss in gross auction revenues, or about a $12 billion reduction," he said. "That could easily be the difference between success and failure when it comes to the incentive auction. And because how much spectrum we clear depends on the revenues we raise, less revenue means less spectrum cleared, which in turn means even less revenue. It’s a vicious cycle that could cause the auction to collapse and leave no money for FirstNet."

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