The FCC today launched a proceeding to write the rules for the TV incentive auction. But the two GOP commissioners voted against it, saying that some of the proposed rules would limit how much broadcasters can get paid for their spectrum and thus discourage them from participating.
The FCC voted 3-2 today to propose new incentive auction regulations that the agency’s GOP commissioners charged could discourage broadcast participation.
Under one of the new proposals, the agency would essentially limit the price that broadcasters could get for their channels during the auction by setting individual price caps for stations based largely on the populations the stations serve. The proposal would give larger stations more financial reward for participating in the auction than the smaller stations in the same market or adjacent markets.
The other proposal would use complex “dynamic reserve pricing” in the auction. Critics of the proposal charge that it is essentially aimed at allowing the agency to offer some stations below-market prices for their channels.
During an FCC meeting to consider the issues today, Ajit Pai, one of the agency’s two GOP commissioners, alleged that the proposal to limit the opening auction prices would undervalue spectrum rights of smaller stations.
“I worry that our proposal could ultimately jeopardize the success of the auction,” Pai said.
Pai also charged that the use of dynamic reserve pricing would mean “lower compensation and thus could discourage broadcaster participation.”
“This is just plain wrong,” added Michael O’Rielly, the agency’s other GOP commissioner, of the dynamic reserve pricing scheme. “This idea should have been dumped months ago.”
The two proposals also have been drawing flak from the Expanding Opportunities for Broadcasters Coalition, a group of about 80 TV stations that has been lobbying the agency to let market forces work as much as possible during the auction, which is currently slated for 2016.
“We will remain engaged and do our best to guide the FCC back to its promise to let market forces, not bureaucratic manipulation, drive the prices received by participating broadcasters,” said Preston Padden, the coalition’s executive director.
During his own remarks during the FCC’s meeting, agency Chairman Tom Wheeler said that the proposals had not been set in concrete. “We’re seeking comments on proposals, not making final decisions,” Wheeler said.
In a fact sheet released today, the FCC also said that the opening prices a broadcaster would be offered in the auction had to be “high enough to encourage robust participation, but not so high that the auction requires hundreds of rounds to close or prevents some of the auction proceeds to be used for Congress’ directive to promote the interests of taxpayers in getting a portion of the value of the spectrum sold at the forward auction.”
The FCC said comments on the proposals are due Jan. 30, 2015, and reply comments are due on or before Feb. 27.