FCC Chairman Julius Genachowski announced today that the FCC is ready to move forward with preparations for incentive auctions in anticipation of receiving Congressional authority for such auctions at some point in the future. In a speech at the Spectrum Summit held today at the FCC in Washington, DC, Genachowski invoked President Eisenhower, FDR, and the transcontinental railroad, among other historical figures and events, to emphasize his belief that America is at a critical time in its history and that ensuring a steady flow of spectrum for wireless use in the next five to twenty years will be crucial to the growth and prosperity of the United States of America. This is potentially welcome news for wireless carriers eager for new spectrum, but also a clear warning to television broadcasters that as far as the FCC is concerned it is not a matter of if, but rather when, the FCC will have the authority to conduct incentive auctions to facilitate the recapture of television spectrum and the repacking of the television channels.
Since the release of the National Broadband Plan in March, which advocated the reclamation and re-purposing of 120 MHz of spectrum currently allocated for free over-the-air broadcast television, the FCC has quietly proceeded to meet with broadcasters and prepare for the possibility of incentive auctions. Now, following on the heels of the recent TV White Spaces order, which we wrote about recently here and here, Genachowski has announced that the Commission will consider a Notice of Proposed Rule Making at its November 30th open meeting "that would lay essential groundwork for implementing incentive auctions quickly should Congress act." According to the Chairman’s speech, the forthcoming item will explore a licensing framework that would allow stations to "voluntarily" share channels and examine new ways to improve the digital television reception of VHF channels in hopes of making that spectrum more attractive as a home for relocated television stations. This last issue is particularly interesting, given that the Engineering Forum held by the Commission in June explicitly explored the issue of improving VHF reception and found that there was little or no way to improve the reception of digital stations operating on VHF channels. But the Commission will have to find someplace to move broadcast stations, and it will undoubtedly explore all options in the effort to meet the challenge of freeing up spectrum.
At a recent seminar held by the Federal Communications Bar Association, an economist from the FCC described how the process would work. Essentially, broadcasters would make a bid for what they would accept to do one or more of the following (i.e. "how much would it take before you’d…"): 1.) share a channel with another broadcast station, 2.) move to a VHF channel, or 3.) cease broadcasting altogether. Then, new entrants would make offers as to what they would bid for new spectrum. The Commission would compare and reconcile the two elements, consummate the transactions, and then repack the television spectrum to accommodate the amount and location of the new spectrum sold. This is a grossly simplified version of what the FCC, auction experts, and economists anticipate the incentive auctions will look like, but it was clear that the FCC has given incentive auctions a lot of thought and is eager for the opportunity to put the theory into practice. It will be interesting to finally have the FCC put this theory on paper and present it for public comment in the forthcoming NPRM. It will also be interesting to see how the FCC will conduct a rule making in the abstract, as it is almost guaranteed to not have any statutory authority for the type of auctions it will be seeking to draft regulations to govern.