Strike five for 60-69

FCC delays spectrum auction again; broadcast and wireless companies happy with extra time to calculate its worth

The government-ordered auction of spectrum now used for TV channels 60-69 was delayed for the fifth time last week as federal regulators continued to struggle with spectrum-clearing rules aimed at getting broadcasters off the frequencies before a 2006 deadline.

The delay was good news to broadcast and wireless companies that have been trying to work out compensation proposals sufficient to persuade TV owners to give up one of the two channels they are allowed to operate during the transition to digital TV.

The latest auction date had been set for Sept. 12, but the agency has now decided to leave the date open rather than take a chance on continuing the postponement streak. The auction was originally slated for May 10, 2000, but has been repeatedly moved back as broadcasters and wireless companies debated the ground rules for spectrum clearing.

Bud Paxson, chairman of Paxson Communications and owner of 18 of the 138 stations with allotments on the 700 MHz band, was one of those broadcasters "extremely excited" by the postponement and said it "bodes well" for TV owners' chances of improving their compensation.

Wireless companies, as well, have been arguing for the delay because they have no idea what to pay the government for permanent spectrum rights until they know when they will be able to use the spectrum and how much it will cost to evict broadcasters early.

In January, the FCC upheld broadcasters' right to demand compensation for leaving the spectrum ahead of schedule. Now the FCC is considering a request that stations with an allotment of only one channel remaining after vacating a channel early be allowed to make the switch from analog to digital at their leisure.

Currently, all stations are required to begin offering digital services by next May. Nearly all stations have two-channel allotments, however, which will allow them to continue analog broadcasts until 85% of TV homes can receive a digital signal. At that point, the second channel will be returned to the government. The added flexibility would greatly benefit stations in small towns because they are having trouble raising funds to pay for construction of DTV facilities, which can cost $4 million or more.

Lawrence Ausubel, co-president of Spectrum Exchange Group, a company brokering buy-out deals between broadcasters and wireless companies, said the FCC's announcement is "a good sign" that many stations will be given leeway to decide when they begin digital transmission.

National Association of Broadcasters President Eddie Fritts said he is encouraged that the FCC is mulling the question, because few households are now equipped to receive digital signals and, without more flexibility, stations that give up a channel early would not reach most viewers.

"The FCC has recognized that a delay is in the best interest of consumers," he said.

Both the Paxson and Ausubel groups have asked the FCC to auction the channels in January. Ausubel said the FCC should not go much beyond that date: "If the auction is indefinitely postponed, all they'd be doing is letting an extremely valuable resource go to waste."