With the FCC last week announcing the results of the reverse auction portion of the incentive auction and setting the timetable for the repacking of the TV spectrum, the next question on everyone’s mind will be how successful the television industry will be in adhering to the schedule established by the FCC for clearing
repurposing of TV spectrum for broadband
Stage 3 of the Reverse Auction is in the Books at $40 Billion – Forward Auction to Begin on Monday
The FCC last week announced that Stage 3 of the reverse auction portion of the FCC Incentive Auction is now complete, and the amount necessary to be paid to TV stations to vacate the required spectrum in this stage is $40,313,164,425. This represents a drop from the $54,586,032,836 clearing cost that resulted from Stage…
Broadcast Incentive Auction Moves Forward – Specific Auction Procedures and Opening Bids Released, Applications to Participate Due By December 18
By David Oxenford on
At the end of last week, the FCC took the expected steps of releasing its public notice setting out the specific procedures for broadcasters interested in participating in the incentive auction by selling their spectrum back to the FCC to be repurposed for wireless broadband, and a notice setting out the specific opening prices that each full-power and Class A TV station will be offered in the auction. These notices also set December 18 as the deadline for stations to submit a new Form 177, declaring if they are interested in participating in the auction. While the dollar numbers to buy out stations perhaps got the most attention, stations need to remember that they are only opening prices – prices which will fall in the reverse auction process until the FCC has only enough interest in stations selling their spectrum to meet its spectrum clearing target. But the release of the numbers and the deadline for participation highlights for many stations the need to focus on the realities of the auction and make their plans for participation (or non-participation) accordingly.
The incentive auction procedures public notice is one that broadcasters need to carefully review and, for those intending to offer their spectrum for sale, to have their economic advisors review as well. Not only does the notice provide information about forms to be completed and the specific steps to be taken by broadcasters to participate in the auction, but it also includes exhibits setting out the mathematical models used by the FCC to determine the descending prices to be offered to broadcasters as the auction continues and when the offers will be frozen (meaning that the FCC has accepted the station’s offer to vacate their current channel, subject to the success of the forward auction raising sufficient funds to pay out the amounts offered to the broadcasters). Exhibits setting out the formulas used to calculate interference between broadcasters remaining after the auction and wireless users are also included in exhibits to the notice. What are some of the other specific issues for broadcasters addressed in the notice?
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TV Incentive Auction Timing and Procedures Become Clearer – A Presentation on the Process, and More on Upcoming Important Dates
By David Oxenford on
The Incentive Auction, by which the FCC is to pay TV stations to surrender their spectrum and then resell that spectrum to wireless carriers, is to begin on March 29, 2016 (see our article here which broke that news). At the end of last month, my law partner Jonathan Cohen and I presented a webinar to members of 11 state broadcast associations on the auction process, as clarified by the FCC last month in its Incentive Auction Bidding Procedures Public Notice (here). The slides from our state association presentation are available here. These slides set out the background of the proceeding, the process that broadcasters will go through to participate in the auction, an outline of the issues that come up in channel sharing agreements, the post-auction repacking of the TV spectrum into the fewer channels that will remain dedicated to TV use, and the deadlines for stations to either end their service or implement any facility changes ordered as part of the repacking.
Even more light was shed on the process yesterday, in remarks made by FCC Chair Tom Wheeler at the CTIA convention in Las Vegas. In his remarks, he reiterated the intention of the FCC to begin the auction next March. He also indicated that more specific advice about auction procedures would be coming by a subsequent FCC Applications Procedures public notice in October. Chairman Wheeler said that broadcasters will be indicating their intent to participate in the auction around Thanksgiving (by filing initial auction applications), and wireless companies will be filing their initial applications around the first of the year indicating their intent to participate in the second phase of the auction to buy up the spectrum surrendered by broadcasters. Note that these dates are all very general, so you’ll need to watch as specific guidance is provided by the FCC. Given that the FCC has said that broadcasters will be given 60 days of advance notice of the amount that they will be offered to surrender their spectrum before being required to file their initial application, if the Applications Procedures public notice is the document where the opening bids are provided, the Thanksgiving date, for instance, may well actually be sometime in December.
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FCC to Conduct Channel Sharing Webinar after Revising Rules for Post-Incentive Auction Channel Sharing
A webinar to explain the new rules for TV stations that want to share 6 MHz channels after the incentive auction (so that the broadcasters sharing the channel post-auction can enjoy the financial benefit of selling one of their channels during the auction), will be held by the FCC on July 22 from 2 to 3 PM ET. Information about the webinar and a place to register can be found on the FCC website, here. This webinar follows the FCC’s recent decision to provide more opportunities and flexibility for post-auction channel sharing, and the FCC’s other recent actions (see our article here) in moving the incentive auction forward. The webinar will also be on the heels of the decision to be announced on Thursday as to specific auction bidding procedures – including issues such as how the amounts of the initial monetary offers to TV stations to surrender their spectrum will be set, and how much those offers will be reduced in the subsequent bidding rounds until the FCC reaches its target amount of TV spectrum to be cleared for sale to wireless users. Today, let’s look at the channel sharing changes made in the FCC’s order released last month.
Channel sharing has been pushed by the FCC as a way for broadcasters to have their cake and eat it too in the incentive auction. By agreeing to share a 6 MHz channel with another broadcaster, a broadcaster can stay in the TV business and, at the same time, offer a channel for sale in the incentive auction and, if they are successful in that auction, reap the financial benefits of the sale (of course, they will have to share some of those benefits with the other station with which they plan to share). The FCC has even promised that stations that share will still be considered independent stations, so they can each sell their stations independently, and each station on a shared channel will have all the must carry and retransmission consent rights that they had when they independently operated on separate 6 MHz channels. But these agreements cannot be entered into without significant planning and forethought.
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The Latest on the TV Incentive Auction – More Regional Information Sessions by the FCC for Auction that Still Appears Targeted for 2016
The FCC yesterday announced a number of new regional information sessions on the TV incentive auction, by which the FCC proposes to purchase the spectrum of some TV stations to resell that spectrum to wireless users. At these seminars, the FCC representatives will answer questions from the stations attending, and schedule private meetings with TV owners to discuss the specifics of the amounts that they will initially be offered to surrender their spectrum and other issues unique to their stations. These seminars are just part of the FCC’s efforts to hold that auction in 2016, with preliminary filings by parties interested in participating potentially due later this year.
At the recent NAB Convention, there were repeated statements by FCC officials, including the Chairman himself, that the auction is on schedule to happen next year, and these officials do not seem to be concerned that the wireless companies that will buy this spectrum have stretched their financial resources to a point that would limit their participation in a 2016 auction through their spending in the recently concluded AWS-3 auction. Instead, seemingly the only thing that would slow the auction would be an adverse result in the appeals of the auction rules filed by Sinclair Broadcasting and the NAB – appeals that have been briefed and argued in front of the US Court of Appeals in the District of Columbia. A decision in this case appeal is expected by June, although the court has no official timeline for issuing its ruling. There are other potential appeals of the FCC’s auction rules that could also play into auction timing, though this case is the most advanced. FCC statements have suggested that even an adverse result could be remedied in time for the auction to occur next year – though such optimism may depend on exactly how the court rules, if the court ultimately has concerns about the issues raised in the appeal. Otherwise, the FCC is moving forward, and we expect some clarifications of some other issues very shortly.
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FCC Announces New Locations for TV Incentive Auction Seminars and Private Meetings
By David Oxenford on
The FCC continues to take its show on the road, announcing incentive auction seminars for TV broadcasters in several new cities. At these seminars, FCC officials meet with TV broadcasters in a general meeting to outline the mechanics of the proposed incentive auction to reclaim a portion of the TV band to be resold to wireless users for wireless broadband purposes, and the subsequent “repacking” when remaining TV stations will be assigned channels on which to operate in a smaller TV band. The new seminars are to be held at the following locations:
March 30, 2015: Cincinnati, OH
March 31, 2015: Columbus, OH
April 1, 2015: Cleveland, OH
April 7, 2015: Louisville, KY
April 8, 2015: Indianapolis, IN
April 14, 2015: Las Vegas, NV (in conjunction with the NAB Show)
TV broadcasters should contact the FCC to make reservations to attend. At the same time, broadcasters can schedule a private meeting with the FCC officials to talk about the likely opening bids to be offered to stations to surrender their frequencies and other details specific to the situation faced by their stations.
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More Incentive Auction News – LPTV Webinar Postponed; NAB Study Looks At How Many Stations Per Market Will Need to Surrender Licenses for Successful Auction; More Auction Seminars Scheduled
As we accelerate toward next year’s planned TV incentive auction, it seems like there is news almost every day of interest to television broadcasters who may be affected by the FCC’s efforts to clear TV spectrum so that it can be repurposed for wireless broadband use and sold to wireless companies and the subsequent repacking of remaining TV stations into a smaller TV band. Some of the broadcasters most directly affected by the auction and repacking will be LPTV stations who, thus far, have been promised no compensation should their operations be displaced by the repacking of the TV band, and offered no promises that they will have channels on which they can operate after the auction. The issues for LPTV stations, and the FCC’s proposals to deal with them, were to be addressed at a webinar on Tuesday, but the session was cancelled when the Federal government shut down because of snow in the DC area. The FCC yesterday announced that the webinar has been rescheduled for next Tuesday, February 24 – details in the Public Notice here. We wrote about the FCC’s rulemaking looking at what to do with LPTV stations after the auction here.
One of the big questions that many broadcasters have asked since the FCC rolled out the recent Greenhill Report (see our article here), setting out expected opening prices that will be offered to TV stations to surrender their TV channel, was how many stations could actually expect to be bought out in any market. The NAB released a study yesterday, suggesting that in some markets, it is very likely that the FCC will not need to buy out any stations, whether the auction tries to clear 120 MHz (20 TV channels, the maximum that the FCC has looked at clearing) or only 84 MHz (which some have thought was a more realistic goal). On the other hand, in several large markets and in markets in congested spectrum areas near some of those large markets, the FCC may need to get more than half of the stations in those markets to give up their licenses. The NAB computations are taken from FCC data, and the NAB provides many disclaimers that this information may change as auction plans change over time as different assumptions are made, and also are very dependent on the number of participants in adjoining markets. But the study is nevertheless one that gives some broadcasters an idea of how likely it is for them to really need to be an auction participant. See the NAB explanation of their procedures here, and the complete market-by-market chart of likely TV clearing needs here.
Continue Reading More Incentive Auction News – LPTV Webinar Postponed; NAB Study Looks At How Many Stations Per Market Will Need to Surrender Licenses for Successful Auction; More Auction Seminars Scheduled
FCC Continues Meetings to Explain TV Incentive Auction – California Meetings in Early March
With the recent release of the FCC’s report setting out the potential opening bids to buy out the spectrum of TV stations so that it can be resold to wireless companies for wireless broadband, station owners and operators around the country have many questions about how the auction will play out, and what they really …
FCC Releases Tentative Amounts for Opening Offers to TV Stations to Surrender their Spectrum in the Incentive Auction – and the Numbers Are High
On Friday, the FCC released a new report by the investment bankers advising them on the incentive auction, Greenhill and Company. This report summarizes proposed auction procedures, but also sets out, on a market-by-market basis, the expected opening bids to be offered to TV broadcasters for the surrender of their spectrum so that the spectrum can be repurposed for wireless broadband use. And these numbers are high – seemingly meant to attract broadcasters to consider possible participation in the auction process. The opening numbers suggested by this report range from a high offer of $870 million in New York City, to a couple of million even in the smallest TV markets.
While this report, and the table of expected opening offers that is part of that report, are in a format similar very to the Greenhill report that was released several months ago (about which we wrote here), those two reports actually represent two very different numbers. The report released in the Fall set out prices that stations willing to surrender their frequencies might be expected to actually receive in an incentive auction. The numbers in this report are merely the opening offers that will be made to stations to surrender their spectrum. If these numbers attract more broadcasters willing to surrender their spectrum than the FCC needs to meet their spectrum-clearing targets (as they quite well may given the numbers being proposed), then the Commission will lower the offer in subsequent rounds of the auction, and the FCC will continue to lower the bids until they receive willing sellers of just the right amount of spectrum necessary to clear the FCC’s targets (which are yet to be set) for spectrum to be resold to wireless users.
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