NAB To FCC: Keep Incentive Auction Simple

The NAB criticized the FCC’s plan for the reverse auction it plans to use to buy TV spectrum from broadcasters early next year, saying that it adds “layers of complexity and uncertainty to an already inherently complicated auction.”

Rather than relying on academics and attempting to address every ancillary issue, the trade group said Friday in formal FCC comments on the incentive auction planning, that the agency should follow the road map it used in the just-completed AWS-3 auction that yielded $40 billion.

That road map calls for “keeping the incentive auction rules simple, reducing the amount of government tinkering in the market-based process Congress envisioned and striving for a framework that embraces the auction’s enormous potential rather than being driven by an irrational fear of failure.”

In particular, the NAB made three recommendations:

The FCC should drop its proposed use of dynamic reserve pricing. “Rather, the FCC should assure broadcasters that it will not interfere with market results by artificially depressing payouts to participating broadcasters. Broadcasters interested in participating in the auction are interested precisely because they see a great opportunity in the thriving spectrum market. Interfering with that market through government price-fixing mechanisms will surely undermine broadcaster interest, a cornerstone of the auction.”

The FCC should abandon its proposal to allow 20% variability in its band plan. “The FCC’s … approach does not merely account for a rogue market along the border unable to meet the spectrum recovery figures of all other markets, but rather builds in a different series of band plans for some of the most significant markets in the country …. [N]ot only will this approach lead to countless disputes for many years following the auction — all to the detriment of consumers — but also it will reduce the amount of money available to pay broadcasters in the reverse auction.”

The FCC should offer wireless carriers as much nationwide, paired, unencumbered spectrum as possible. Relocating television stations in the wireless portion of the 600 MHz band is not only bad for broadcasters and their millions of viewers, but also has a dramatic impact on the amount of spectrum available for auction, particularly in areas where the demand for additional spectrum is high.

The NAB’s comments were among others filed by small groups of broadcasters and individual station groups, including Sinclair and Media General.