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Jonathan Cohen, one of my partners at Wilkinson Barker Knauer LLP, has been closely following the incentive auction by which the FCC is looking to clear a significant part of the television band and take that spectrum, slice it up into different size blocks, and resell it to wireless companies.  He has been guiding numerous companies through its complexities. We’ve written much about the auction on these pages, and now Jonathan offers these observations about the auction. – DDO

With the FCC’s Incentive Auction poised to move into its next phase with the August 16th start of active bidding in the forward auction, where companies looking to provide mobile broadband services will bid on licenses carved out of the spectrum vacated by TV broadcasters, we thought it might be helpful to address a few of the myths that seem to be floating around about the auction.

Myth:      In the initial stage of the reverse auction, broadcasters were greedy, demanding that the government pay $86.4 billion for their spectrum.

Reality:   This line of thinking demonstrates a fundamental misunderstanding of the way the Incentive Auction was designed to work. In each round of the reverse auction, the FCC makes price offers to TV stations, who decide whether or not to accept them. Not the other way around. The FCC decided to set opening price offers at very high levels. The highest opening “go off-air” price offer was $900 million (for a station in New York City), but nine-figure opening offers were plentiful, including to a station in Ottumwa, Iowa (DMA #200). These high prices apparently encouraged a lot of stations to make the initial commitment to accept its opening price offer, which led the FCC to try to clear 126 MHz of spectrum in the initial stage – the most the rules would allow. Under the FCC’s auction design, as prices decline, a TV station can reject the FCC’s offer at any point, but the FCC can continue to reduce its clearing price offers to a station still in the auction only as long as it was still feasible to repack that station given all the other stations that would remain in operation after the auction. At the 126 MHz clearing target, only channels 14-29 are available in the repacked UHF band, and this apparently caused the auction prices for many stations to “freeze” at high levels (once it was determined that a station could no longer be repacked), resulting in the $86.4 billion total clearing cost announced at the end of June. For all we know, however, a great many TV stations that are now possible “winners” in the reverse auction might have been willing to keep accepting price offers below their frozen prices. It was the auction design – freezing station’s buy-out prices when that station could no longer be repacked – that set the prices, not the broadcasters.
Continue Reading Debunking a Few Myths about the FCC’s Incentive Auction

There are so many legal issues that facing broadcasters that it is sometimes difficult to keep up with them all. This Blog and many other activities that those at my firm engage in are meant to help our clients and other broadcasters keep up to date on all of the many regulatory challenges with which…

Yesterday, the FCC released a Public Notice setting out the agenda for the May 24 Workshop to explain the process of bidding in the reverse auction. The reverse auction is of course when broadcasters can bid to surrender their current channel to the FCC so that the FCC can repackage the surrendered spectrum and…

This morning, the FCC released a Public Notice, announcing that the spectrum clearing target for the initial stage of the Incentive Auction will be 126 MHz.  That means, that if the Incentive Auction is completed in the initial stage with the 126 MHz spectrum clearing target, TV channels 30-36 and 38-51 will be reallocated for mobile broadband and unlicensed wireless services, leaving UHF channels 14-29 for broadcast TV stations (along with VHF channels 2-13 which are not being auctioned).  Channel 37 will remain allocated for wireless medical telemetry and radioastronomy services, with unlicensed services permitted. This is the maximum amount of spectrum that the FCC had initially indicated that it would potentially reclaim from broadcasters.

The Public Notice also announces that the actual bidding in the reverse auction, the so-called “clock rounds,” will begin on May 31, 2016.  The initial two days of the auction will have one round per day, with subsequent days speeding up to have at least two rounds per day until further notice from the FCC’s Wireless Bureau which administers the auction.
Continue Reading 126 MHz Incentive Auction Clearing Target Set – Reverse Auction for TV Stations to Bid to Surrender their Spectrum to Wireless Users to Begin May 31

May is one of those off months in which there are not the kind of routine filings that pop up in most other months – no EEO Public File Reports, no quarterly issues programs lists or children’s television reports, no Biennial Ownership Reports for noncommercial stations (which will soon disappear anyway when noncommercial stations transition to the same biennial report deadline as commercial broadcasters – see our articles here and here). Clearly, the big event for TV will be the likely start of the bidding in the “reverse auction” part of the TV incentive auction. For radio, the big activity will be around the continuing window for AM stations to buy FM translators to move to their communities (see our article here). And, as we wrote in our Broadcasters Calendar here, there are also a number of lowest unit rate windows in the states in which the final Presidential primaries are being held.

There are not even that many comment dates in proceedings of importance to broadcasters. Perhaps the most important is the preliminary comments on the proposed ATSC 3.0 transmission standard for the next generation of television (see our articles here and here). These initial comments are due on May 26.
Continue Reading May Regulatory Dates for Broadcasters – Incentive Auction, Comments on EAS, ATSC 3.0 and Set Top Boxes

The FCC has released a Public Notice, as promised by FCC Chairman Wheeler at last week’s NAB convention, asking for public comment on the proposal filed by the National Association of Broadcasters, the Consumer Technology Association and others requesting that the Commission approve ATSC 3.0, the next transmission system for over-the-air television broadcasting.…

At the NAB Convention last week, FCC Chairman Tom Wheeler discussed the timing of the incentive auction and how some of the remaining issues may soon be resolved. One subject of talk in a number of NAB sessions, as well as in the trade publications, has been how the repacking of broadcast television spectrum will proceed after the auction. Even FM broadcasters noted the potential for disruption of their operations as the repacking may affect shared users of broadcast towers, and given that hundreds of TV stations potentially face changing out antennas to operate on new channels in the smaller post-auction television band.

The Chairman made clear that the FCC will be announcing soon, perhaps as early as this week, the “spectrum clearing target” for the auction. In other words, the FCC will be announcing how much of the TV band it intends to try to clear for wireless broadband uses, based on how many TV stations expressed interest in potentially taking a buyout of their spectrum in their commitments filed at the end of last month. After the targets are announced, the FCC will quickly begin the reverse auction, a process where, round by round, the FCC will lower the prices offered to TV stations to abandon their spectrum until the FCC has committed to buy just the right amount of spectrum to meet its clearing targets. Then, it will turn around and repackage and resell that spectrum to wireless companies in the “forward auction.” The Chairman indicated that the clearing target may also signal the answers to many other issues.
Continue Reading As Incentive Auction Draws Near, Focus Begins to Shift to TV Spectrum Repacking – and Even FM Broadcasters Take Note of Potential Issues

Can expenses incurred by a TV station now in making moves to prepare for the post-incentive auction repacking of the TV spectrum be reimbursed if that station in fact is forced to move after the auction?  In a clarification “Declaratory Ruling” released on Monday, the FCC said that they can – in an aim…