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
Incentive Auction Stage 2 to Begin September 13 – FCC Proposal to Clear 114 MHz
Given Tuesday’s declaration by the FCC that Stage 1 of the TV incentive auction did not meet its clearing target (in that enough was not bid in the forward auction to cover the amount needed to compensate television stations for surrendering their spectrum plus the costs of the auction itself), it is now on to Stage 2. The FCC yesterday issued a new Public Notice announcing that the second stage of the reverse auction will begin on September 13, 2016. In this second stage, the FCC will try to clear 114 MHz of spectrum, instead of the 126 MHz that was the clearing target in Stage 1. If the auction is successful in clearing 114 MHz, that means that channels 31 and below will remain in the TV band.
Yesterday’s public notice gives other information about the procedures to be used in Stage 2, and the band plan for the forward portion of the stage. It also announces that an online tutorial will be available for TV broadcasters who are participating in the auction beginning September 1, on the auction website. TV stations that were provisionally winning bidders in Stage 1 (meaning that their offer to go off the air or move to a VHF channel was accepted) will be able, according to the public notice, to determine the status of that provisional acceptance starting on September 7 by logging into the auction electronic system with their SecurID tokens that they used to place bids in Stage 1.
Continue Reading Incentive Auction Stage 2 to Begin September 13 – FCC Proposal to Clear 114 MHz
As the leaders of the FCC’s Incentive Auction Task Force said in opening a post on the FCC’s blog last week, “Who says nothing happens in Washington in August?” Bidding in the initial stage of the FCC Incentive Auction’s forward auction phase begins on Tuesday, August 16th, and with it, the longest…
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
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