NAB Blasts FCC Incentive Auction Rules

Incentive auction regulations adopted 3-2 by the FCC Thursday may not adequately protect broadcasters who opt to sit the auctions out — and may even force them to pick up at least part of the costs for moving to new channels to clear a band for wireless services, at least according to the National Association of Broadcasters.

“We are disappointed that today’s vote fails the mandate of Congress to hold harmless those broadcasters who choose not to participate in the spectrum auction,” said Dennis Wharton, an NAB spokesman, in a statement.

The FCC’s long-anticipated vote establishes the rules that will govern many of the technical details of an auction that the agency has targeted for next year. With the auction, the FCC is hoping to clear as much broadcast spectrum as possible for smartphones and other wireless services.

Under the law authorizing the auctions, however, broadcast participation in the auctions is voluntary, and the FCC is supposed to protect to the services of stations that choose not to participate in the auction and may subsequently have to move to new channels to make spectrum available for wireless.

But at least according to NAB’s Wharton — and the FCC’s two GOP commissioners, who dissented from the new regulations — the new rules fail to provide adequate protections for broadcasters who are forced to relocate to new channels in the wake of the auction, and the regulations don’t insure that the $1.75 billion that Congress provided to reimburse relocation costs will cover all moving expenses.

“The incentive auction may produce a repacking plan that will cost two or three billion dollars to implement, with repacked broadcasters stuck footing much of the bill,” said FCC Commisioner Ajit Pai.

“Congress was abundantly clear that it wanted to hold harmless non-participating broadcasters in their ability to serve their over-the-air viewers,” added Commissioner Michael O’Rielly. “I am disappointed to see this directive not sufficiently honored.”

“The FCC cavalierly concluded that broadcasters forced into a shrunken TV band won’t be guaranteed full compensation for this disruptive move — as was the express intent of Congress,” Wharton said.

O’Rielly also said he believed the rules adopted left too much critical decision making to FCC staff.

“The Media Bureau is given broad authority to determine how the commission reimburses repacking costs, including how to prioritize allocation of funds if $1.75 billion does not cover all repacking expenses,” O’Rielly said.

“The Media Bureau will also decide the specific construction deadlines for individual stations, what service rule waivers will be allowed in lieu of reimbursement of repacking costs, and the priority in which the commission will consider certain broadcaster requests to change channels following the repacking process,” O’Rielly continued. 

“The order today threatens diverse programming sources and diminishes a vibrant free and local news, entertainment and information source for millions of Americans who can’t afford $200 a month pay TV and broadband bills,” Wharton continued. “NAB will pursue every avenue to get the auction back on track and ensure that broadcasters and our viewers are protected — as Congress mandated in the Act” authorizing the auctions.

Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, which represents stations that are considering participating in the auction, said he was encouraged by an agency announcement that it intended to start advising broadcasters how much money they might be able to get for participating in the auctions this summer — information the stations need to determine whether to participate or not.

“That’s huge,” Padden said.

The FCC released only a general description of some the new regulations during the agency’s meeting, leaving even insider lobbyists largely in the dark.

“The devil’s in the details and the details are part of a 450-page order that may not come out for another week or so,” Wharton said.