NAB Ready To Fight Over Auction Rules

Broadcasters will fight to reform critical parts of the FCC’s new incentive auction regulations to ensure that broadcasters who choose to remain in the business don’t get hammered, says Rick Kaplan, National Association of Broadcasters EVP.

Among NAB’s major beefs is that the incentive auction regulations released June 2 don’t protect broadcasters from the possibility that they may get stuck with at least part of the cost for moving to new TV channels during the post-auction channel repacking process, Kaplan said in an interview.

“It’s clearly unacceptable,” said Kaplan, who shared his thoughts with TVNewsCheck after combing through the ream of fine print in the FCC’s 484-page order laying out the rules. “That’s sort of the bottom line, and we will take any means we have to ensure that the will of Congress is executed.”

Under the legislation authorizing the auctions, the FCC is supposed to make all reasonable efforts to protect broadcasters’ service areas during the repacking process, and to reimburse their expenses if they are required to move to new channels to achieve the auction’s key goal of clearing broadcast spectrum for smartphones and other wireless services.

NAB is concerned that the auction regs that the FCC adopted in a 3-2 vote on May 15 fall short on both of these critical fronts.

On the repacking, the FCC is using what NAB regards as unproved computer programming software to carve out the industry’s new post-auction channel assignments and service areas — software that could constrict the service areas of broadcasters who sit the auctions out.

There are also serious concerns that the $1.75 billion fund established by Congress to reimburse the industry for auction-related relocation costs may not provide enough cash to go around.

In its new auction rules, the FCC said it had no reason, “at this time,” to believe that the $1.75 billion would fall short.

“If future developments suggest that the $1.75 billion is insufficient to cover eligible costs, the commission delegates authority to the Media Bureau to develop a prioritization scheme for reimbursement claims,” the FCC said in its auction rules.

Said Kaplan, however: “The entire auction framework is turned on its head if suddenly broadcasters lose coverage area in the process and have to pay out of pocket to make way for AT&T and Verizon to get more spectrum. That’s not what we signed up for, and that’s not what Congress says” for the FCC to do in the authorizing statute.

“The [FCC] majority didn’t think it was important enough to take steps to minimize repacking in a meaningful way,” Kaplan continued. “The result, unless it changes, is going to be that broadcasters are going to have to go out of pocket, if it’s a successful auction, to move.”

Kaplan also said the possible lack of reimbursement funding would be particularly hard on smaller-market broadcasters, who aren’t likely to be sitting on spectrum that they could sell during the auction but who may still be forced to move to new channels during the repacking.

“Frankly, it harms mostly small and medium-size market broadcasters, where $100,000 out of pocket is a very big deal,” Kaplan said. “It’s sort of a double whammy for them.”

Broadcasters are also upset about the possible lack of sufficient reimbursement funding because it means that broadcasters who sit the auctions out could still be hurt financially, adding pressure for them to consider participating, Kaplan said.

“The auction is no longer voluntary, because you have to factor something new in, that, ‘Oh, the auction itself is going to cost me money,’ ” Kaplan said.

Also of concern to NAB is that the new auction regulations would reduce the amount of spectrum earmarked exclusively for the wireless microphones that broadcasters use for live sports and breaking news programming — albeit not as severely as the FCC had originally been contemplating, said Kaplan.

“It’s a step in the right direction, but still not what we need,” Kaplan said.

The FCC rules also fall short, Kaplan said, because they fail to protect the digital replacement translators that many stations are using to reach homes within their coverage areas that they lost during the transition from analog to digital. “We think the FCC could have protected digital replacement translators and should have; in fact, we believe they are required to,” Kaplan said.

“And now, lots of viewers — up and down the East Coast especially — who are in harder-to-reach-terrain areas, are going to have no service if their station relies on a translator,” Kaplan said.

Exactly how the industry will try to fix the incentive auction rules has yet to be determined, he added. But Kaplan told TVNewsCheck that he thinks the industry will be able to persuade the FCC to reconsider some aspects of the rules.

“I think, and we feel fairly confident as an industry, that some of these issues, when reconsidered by the commissioners, may turn out differently,” Kaplan said.

On the positive side, Kaplan said the FCC included some important broadcaster-backed technical revisions in the agency’s repacking plan, and in the agency’s proposal for a new spectrum use band plan. “A number of technical changes we suggested were adopted, and we’re pleased about that,” Kaplan said. “Where they had to listen, they listened.”

NAB’s bottom line to the FCC, said Kaplan: “If we’re staying on the air, just let us keep doing what we’ve been doing,” adding: “The auction will be enormously disruptive. There will be enormous costs for our industry anyway. But don’t do it through a rule that you know in advance is really going to hurt us.”