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.
FCC’s Pai, O’Rielly Oppose New Auction Rules
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.”
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“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.
Comments (5)
Ellen Samrock says:
December 11, 2014 at 3:23 pm
Well, you know the old hucksters saying; If something seems too good to be true… You can apply those words to the Greenhill document.
Mark Stolaroff says:
December 11, 2014 at 3:51 pm
Only the government can complicate situations like this. A company offers a price for spectrum and the station says yes or no. What am I missing?
Liz Sidoti and Bob Lewis says:
December 11, 2014 at 4:00 pm
Wheelernomics. Stranger than Alice in Wonderland. Get out of the way and let the market decide, Mr. Chairman.
Blair Faulstich says:
December 11, 2014 at 4:32 pm
This auction is based on extracting as much value as it can off of the less powerful, Class A to a slight degree with the balance of the burden being placed upon LPTV. LPTV does more to serve the small but influential ethnic markets than any other broadcast segment and deserves a better fate than that envisioned by a thuggish FCC element. Understand, the majority of the FCC staff are fair and impartial, while others are only there to screw the broadcast group (LPTV) that is supplying the bulk of the “incentive”auction plunder.The jury is still out on the legality of what is planned, regardless, just because you may be able to do something doesn’t make it right.
Ellen Samrock says:
December 11, 2014 at 5:23 pm
Rumor has it that someone who is legal counsel to an FCC Commissioner has been telling folks who meet with him/her that LPTV is “secondary to everything”, contrary to current law which states that LPTV is secondary only for interference purposes, and only to primary television services. If the rumor is true, then it seems that a few people within the Commission are desperately trying to muddy the water for LPTV by spreading mis-information. This may come as a surprise to some at the FCC, but staff does not have the authority to make or change the laws, only to see to it that they are carried out.