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FCC Puts Incentive Auction On Fast Track

The reallocation of TV spectrum is moving ahead, with the FCC voting unanimously to adopt a rulemaking on how to acquire spectrum now used by TV stations, with compensation, and auction it for broadband development. The auction could come as soon as 2014.

As promised, the FCC today launched a rulemaking aimed at shifting a large, but undefined swatch of TV spectrum to wireless broadband services through a so-called incentive auction.

“This is a big deal,” said FCC Chairman Julius Genachowski, who has championed the idea since his arrival at the agency in 2009.

“Today, the U.S. became the first nation in the world to launch a spectrum auction, a new paradigm in spectrum policy that uses market forces to repurpose beachfront spectrum for licensed and unlicensed wireless broadband,” he said at an open meeting immediately prior to the adoption of the rulemaking by unanimous vote.

“We are in a global bandwidth race. It is similar to the space race in that success will unleash waves of innovation that will go a long way to determining who leads our global economy in the 21st century.”

“Because of innovative American companies and entrepreneurs – and smart government policies – the U.S. has regained global leadership in mobile over the past few years. Incentive auctions will help keep us there.”

Authorized earlier this year by an act of Congress, the incentive auction would encourage and reward broadcasters who voluntarily offer their spectrum up for auction by allowing them to share in the proceeds.

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FCC officials said they hope to finalize the incentive auction plan sometime next year, and conduct the actual auction in 2014.

The initiative is an outgrowth of the FCC’s National Broadband Plan, which concluded that demand for wireless broadband spectrum would soon outstrip the supply and proposed the reallocation of up to 120 MHz of TV spectrum through an incentive auction and other means.

The incentive auction is really two auctions, perhaps simultaneous. In the reverse auction, the FCC will determine how much broadcasters are willing to give up and how much they want for it. In the forward auction, they will seek out the highest bidders for the spectrum on the open market.

Demand for TV spectrum is expected to be highest in New York, Los Angeles and other major markets where populations are large and concentrated and wireless broadband use is greatest.

Even though the incentive auction recognizes that they hold value in their spectrum, mainstream broadcasters who intend to hang on to their spectrum have been wary of the auction.

In readying the spectrum for auction, the FCC will have to “repack” the TV band – that is, reorganize the band to aggregate the returned spectrum. This may involve changing channel assignments and power levels.

The broadcasters fear the repacking will degrade their over-the-air coverage. At their request, Congress included language in the authorizing legislation saying that the FCC must protect broadcasters’ current coverage. Broadcasters, led by the NAB, will make sure they do in the rulemaking.

At a press conference following the meeting, FCC officials wouldn’t guess how many stations would answer the agency’s call and participate in the auction.

“We are well aware that there are many broadcasters who are not going to seriously consider this,” said Genachowski. “We completely understand and expect that there will continue to be a vibrant broadcasting industry after the auction.

“It is also quite clear, particularly in major markets, there are many stations that are interested, that are looking carefully….”

With the rulemaking underway, he said, he hopes it get input from interested broadcasters on designing the auction to maximize participation.

Gary Epstein, head of the FCC incentive auction task force, also declined to make a prediction. “What our job is is to construct an auction that makes it relatively easy for broadcasters to participate,” he said. “But whether or not they participate…is a voluntary question. And so that is going to be up to them.”

On a conference call with reporters after the vote, NAB President Gordon Smith said the trade group has no “firm count” on interested broadcasters, but didn’t believe the number was large. “If there is a stampede coming, we certainly aren’t hearing any hooves.”

Genachowski’s belief that there are “many” broadcasters considering an auction exit “may be predicated on some misbegotten belief that broadcasting is an industry in decline. That is simply false. Broadcasting is a great business. Advertising is huge. Local newsrooms are hiring and over-the-viewership continues to grow….This is a very good year for broadcasting. They have a smile on their faces about next year.”

Smith also called the FCC timeline for an auction in 2014 “ambitious….It’s more important to get this process right than to get it done fast.”

Rather than the full 150-page rulemaking, which won’t be ready until next week, the FCC released the following synopses on key elements of the rulemaking.

Auction design. We invite comment on auction design choices and the tradeoffs they present. For both the reverse and forward auctions, we invite comment on different procedures to collect bids, determine which bids are accepted, and what each bidder pays or receives in payment.  We also seek comment on methodologies for the repacking process, which is part of the process for determining which broadcaster bids will be accepted in the reverse auction. And we seek comment on an Incentive Auction Rules Option and Discussion report prepared by Auctionomics and Power Auctions illustrating a comprehensive approach to the auction design choices presented. Further, we invite comment on how to design the incentive auction so as to facilitate the participation of a wide array of broadcasters and make it as easy as possible for them to submit successful bids.

Participation in the Reverse Auction. We interpret the Spectrum Act to limit eligibility to participate in the reverse auction to commercial and noncommercial full power and Class A broadcast television licensees. We invite comment on whether to establish reverse auction bid options including but not limited to those identified in the Spectrum Act (to go off the air, to move from a UHF to a VHF television channel, and to share a channel).

Repacking. We invite comment on how to implement Congress’s mandate to make “all reasonable efforts” to preserve the “coverage area and population served” of television stations as of the date of enactment of the Spectrum Act. In particular, we propose to interpret “coverage area” to mean a full power television station’s “service area” as defined in the Commission’s rules, and we seek comment on  several approaches to preserving population served.

600 MHz Band Plan. We seek comment on a band plan for reclaimed broadcast television spectrum using 5 megahertz blocks, in which the uplink band would begin at channel 51 (698 MHz) and expand downward toward channel 37 based on the amount of reclaimed spectrum, and the downlink band would begin at channel 36 (608 MHz) and likewise expand downward. We seek comment on establishing 6 megahertz guard bands between mobile broadband use and broadcast use…and propose to make this spectrum available for unlicensed use. In addition, we seek comment on a number of alternative band plan approaches.

Channel 37. We invite comment on whether or not to relocate the Radio Astronomy Service and wireless medical telemetry systems now operating on channel 37, and on whether and how to address the post-auction availability of UHF band spectrum for fixed broadcast auxiliary stations, low power auxiliary stations, and unlicensed wireless microphones.

Unlicensed Use of Spectrum. We invite comment on measures that would make a substantial amount of spectrum available for unlicensed uses, including a significant portion that would be available on a uniform nationwide basis for the first time. Television white spaces will continue to be available for unlicensed use in the repacked television band.  In addition, we seek comment on making the guard bands spectrum in the 600 MHz band plan available for unlicensed use, making channel 37 available for such use, and making two channels currently designated for wireless microphone use available for white space devices. 

Transition.  We seek comment on how to implement the repacking of broadcast television spectrum and clear the reclaimed spectrum as expeditiously as possible while minimizing disruption to broadcast television stations and their viewers. In particular, we propose streamlined broadcast license modification procedures, invite comment on reasonable deadlines for stations to transition to any new channel assignments or cease broadcasting, and propose to allow stations eligible for reimbursement of relocation costs to elect between actual cost-based payments or advance payments based on estimated costs. 


Comments (6)

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Colin MacCourtney says:

September 28, 2012 at 12:46 pm

We still have some DMA’s where OTA remains over 20%. According to TVB, Milwaukee is 21%, and Boise is 28%.

    Gregg Palermo says:

    September 28, 2012 at 2:10 pm

    “according to TVB” — what’s wrong with that qualifier?! So two cities stand in the way of intelligent use of spectrum for the entire USA? Crazy. It’d be cheaper for the government to subsidize a lifeline of local-only channels on cable or satellite for those holdout homes, just to free up underutilized spectrum!

Christina Perez says:

September 28, 2012 at 1:45 pm

How come the Republicans aren’t calling spectrum payments to licensees, who do not OWN the public airwaves, a taxpayer BAILOUT benefitting TV station owners? Because that’s what it is. Licensees have no property rights and not right to profit from the auction of the publicly owned airwaves — and the courts surely will agree. The real intent here is to kill off free, over-the-air TV in America, which would be a serious threat to democracy and the public’s right to know.

    Christina Perez says:

    September 28, 2012 at 1:46 pm

    That’s “no right to profit…”

Joanne McDonald says:

September 28, 2012 at 4:16 pm

I would take a bet that Daystar, Trinity, Ion and all the other religious and minor broadcast network plus all the diginets multicast networks would round up being regulated to cable only network that would be made available to customers with FTA systems and be made available on all cable systems as well as on both Directv and Dish Network and also be allowed to stream their programming online for internet users at no cost. I like the idea in which NBC stations on 1080 share their channel with Telemundo on 480 in widescreen, CBS stations on 1080 sharing with CW on 1080 in widescreen, FOX stations on 720 sharing with MyNET on 720 in widescreen, Univision and Telefutura share a channel together on either 480, 720, or 1080 in widescreen, and ABC would continue to not have to worry about sharing their stations with another network or another station and still on 720 in widescreen, but could likely share it with other network affiliated channels on either 480, 720, or 1080 in widescreen. PBS stations would likely be forced to merged and share it’s stations on the same channel frequency and still be able to transmit in 1080 widescreen. The stronger PBS stations would end up sharing the channel space with the weaker PBS stations in markets where there are multiple PBS affiliates in the same market. The mid-sized and smaller TV markets could end up carrying 2 to 3 subchannel feeds in widescreen SDTV or HDTV on the same channel frequency. I would recommend that all the TV stations that are now on the UHF 14-51 band in digital that were on 7, 8, 9, 10, 11, 12, and 13 in analog be forced to move on 7, 8, 9, 10, 11, 12, and 13 in digital and all the TV stations that are now on the UHF 14-51 band in digital that were on 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30 in analog be forced to move back to those channels in digital plus all the TV stations that are now on the VHF 7-13 high band with different RF physical channel numbers on the VHF high band in digital that were on 7, 8, 9, 10, 11, 12, and 13 in analog to be forced to move back to those channels in digital as the best way to not mess up on frequency assignments in the future maybe by around 2020. I like the idea of all the TV stations be allowed to transmit all HDTV and SDTV as well as mobile programming in the MPEG 4 format in the future maybe by around 2020. I like the idea of both IVI TV and FilmOn HDi be allowed to go in business again and be able to transmit all the local stations to the viewers on the net for free without any interference from the government for violating any copyright laws with benefits for online viewers that want to watch their favorite stations programming such as local news and shows even after the spectrum auction and plan becomes very mandated and very hard for TV stations to be able to stay on the air without being able to stream all their programming online to the viewers online. Me wanting IVI TV and FilmOn HDi transmitting the locals online for free to the viewers on the internet would be very beneficial when it comes to very severe weather outbreaks and breaking news that the viewers would want to be very informed the sooner and the better. I’m afraid that my take of what channels the TV stations ought to be on with the planning of an spectrum auction.

Thank you for my understanding to this crisis in the TV business lately as it relates to the spectrum crunch going on right now.

My comment to this matter is not a negative attack but a opinion and theory on my own terns to the spectrum auction in the future.

Ellen Samrock says:

September 28, 2012 at 6:49 pm

When is Congress going to step in and put the brakes on this auction until their demands for an AOM and spectrum inventory from the FCC are satisfied? Simply writing letters in support of broadcast television is not enough.


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