The incentive auction to repurpose part of the TV band for wireless broadband marches on, and activity takes place on an almost daily basis. Last week, in providing the February Regulatory Dates for Broadcasters, we mentioned the dates for comments on the auction procedures, asking questions about the mechanics of the auction and how
repurposing of TV spectrum for broadband
February Regulatory Dates for Broadcasters – TV Renewals, EEO Reports, Lots of TV Incentive Auction Activity, OTT MVPD and Contest Comments, and Last-Minute January Deadlines for Webcasting
As in any month, February has many impending deadlines for broadcasters and media companies – many routine regulatory obligations as well as some that are specific to certain proceedings. First, let’s look at some of the routine filing deadlines. On February 2, license renewal applications in the second-to-last filing window of this renewal cycle are due to be submitted to the FCC by TV stations in New York and New Jersey. The last TV stations to have to file in a regular renewal cycle will be due on April 1, for those TV stations in Pennsylvania and Delaware. After these stations complete their renewal filings, it will be another 5 years before another set of routine license renewals are to be filed. Stations in Pennsylvania and Delaware should be broadcasting their pre-filing announcements on February 1 and February 16 (and there are also post-filing announcements that need to be run by the New York and New Jersey stations, as well as those in New England that filed their applications by December 1).
Radio and TV stations in New York and New Jersey, as well as in Arkansas, Kansas, Louisiana, Mississippi, Nebraska and Oklahoma, should be placing EEO Annual Public File Reports in their public files (online for TV and paper for radio, with links to the reports on their websites) by February 1 if they are part of an employment unit with 5 or more full-time employees. By February 2, noncommercial TV stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York should file with the FCC their Biennial Ownership Reports, and noncommercial radio stations in Kansas, Nebraska, and Oklahoma should be filing those same reports on February 2. Commercial radio and TV stations in the entire country will be filing their Biennial Reports in December of this year. A guide to many of the regular FCC filing deadlines can be found in our Broadcasters Calendar available here.
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What Washington Has in Store for Broadcasters in 2015 – Part 1, What’s Up at the FCC
Each year, at about this time, we pull out the crystal ball and make predictions of the issues affecting broadcasters that will likely bubble up to the top of the FCC’s agenda in the coming year. While we try each year to throw in a mention of the issues that come to our mind, there are always surprises, and new issues that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her. But here is our try at listing at least some of the issues that broadcasters should expect from Washington in the coming year. With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues. In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.
So here are some issues that are on the table at the FCC – starting first with issues affecting all stations, then on to TV and radio issues in separate sections below.
General Broadcast Issues
There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:
Multiple Ownership Rules Review: In April, the FCC finally addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules – essentially by punting most of them into the next Quadrennial Review, which probably won’t be resolved until 2016. Issues deferred include any revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).
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Putting Details to the Incentive Auction – FCC Asks for Comments on Fact Sheet on Auction Structure, and Prepares for Meetings with Broadcasters
The FCC adopted proposed auction procedures for its incentive auction at its meeting on Friday, and thus far has released a Fact Sheet on these procedures by which it plans to buy back spectrum from broadcasters and resell it to wireless companies for wireless broadband uses. The tentative procedures, along with the recent “Greenhill Report” setting possible prices to be paid to television stations who are willing to surrender their channels for the FCC to resell to wireless companies (see our summary here), are setting the stage for a series of meetings with broadcasters to attempt to convince enough to participate in the auction to satisfy the FCC’s goals for the auction – goals that also became a bit clearer from Friday’s releases. Further information on the auction procedures is expected soon in a more detailed Public Notice fleshing out the proposals outlined in the Fact Sheet so that comments can be filed by the end of January.
The fact sheet is not the detailed notice of auction procedures that some broadcasters may be familiar with from participating in past broadcast auctions – that will apparently come soon in the Public Notice that it summarizes. But it does provide an outline of proposed general principles that will be applied to the incentive auction. Initially, it proposes that the FCC would set opening prices for each station – prices at which the FCC would offer to pay the licensee to give up its spectrum. The prices would be set based on an analysis of two factors: (1) the impact that the station would have on the repacking of the broadcast spectrum after the auction because of the interference that it causes and (2) the population covered by the station. If a station agrees to move to the VHF band instead of surrendering its licenses altogether, it would receive somewhere between a third and a half of the opening price if it accepts a high VHF channel, and between 67 and 80% of the opening price for a low VHF channel. According to the fact sheet, the prices that will initially be offered to the broadcaster will be initially set high, and will be lowered as the auction progresses until the prices reach a point where there are just enough broadcasters willing to take the lowered offer to clear the amount of spectrum that the FCC needs to fill the demands of the wireless users. There has also been introduced the concept of a “dynamic reserve price,” setting a limit on how much the FCC is willing to pay some stations for giving up their spectrum, which could conceivably result in the amount that they are offered being lowered even when it is known that they cannot be repacked into the amount of the spectrum that remains available in the smaller post-auction TV band. How much spectrum must be cleared for the auction to go forward?
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FCC Extends the Deadline for Comments on the Draft Form for TV Stations to Seek Reimbursement of Their Repacking Expenses After the Incentive Auction
The FCC has extended the comment deadline for ideas about the draft form that the FCC plans to use to determine the amount of reimbursement to be paid to individual TV broadcasters for changes in channels caused by the television spectrum repacking after the incentive auction (by which portions of the TV spectrum will be…
TV Incentive Auction Moves Forward – FCC Estimates the Value of TV Stations and Clarifies the Interference Standard for Stations Who Remain After the Auction
There are more and more signs that the FCC is moving forward aggressively with its “incentive auction” to purchase TV stations so that their licenses can be cancelled and their spectrum sold to and reused by wireless companies for wireless broadband purposes. In two significant actions this week, the FCC gave broadcasters a first peek at the anticipated value of their stations in an incentive auction, and also clarified the interference standard that will be used by the FCC when they “repack” the stations that do not sell their licenses into a smaller post-auction TV band. This Declaratory Ruling clarification seems to be addressed to answering some of the questions raised by the NAB in its appeal of the incentive auction order, about which we wrote here (an appeal which has been combined with a separate appeal of the incentive auction order by Sinclair Broadcasting). But, to most television operators, the more interesting of the two actions is the report issued by the FCC suggesting the values that licensees in the various TV markets might get if they surrender their TV licenses in the incentive auction.
The Report was prepared by an investment banking firm retained by the Commission. It sets out the procedures for the auction, and how the bidding will work. The report also contains an IRS letter suggesting the tax treatment that would be accorded licensees for incentive auction payments in various scenarios (e.g. a pure surrender of the license, or a surrender of a license as part of a channel sharing agreement, or a decision to move a station from UHF to VHF in exchange for FCC compensation). But what most broadcasters were most interested in was the chart of projected maximum and median payments to full-power and Class A stations in each of the television markets across the country. Those projected payments ranged from Los Angeles, where the FCC projected that the maximum that could be paid to a broadcaster for surrendering their license could be as much as $570,000,000, with the median value of a surrendered license being $340,000,000, to much smaller markets where the value, in the smallest television market of Glendive, Montana and in several smaller Alaska markets, where the FCC did not foresee any payments to TV broadcasters for surrendering their licenses.
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FCC Seeks Comments on Form for Reimbursement of Expenses for Technical Changes Caused By Repacking the Television Specrum After the Broadcast Incentive Auction
We wrote last week about some of the upcoming issues on the FCC’s agenda for the very short term related to the TV incentive auction to clear part of the TV spectrum for use by wireless companies, and the subsequent “repacking” of the TV stations who do not sell their licenses in the auction into the new smaller TV band. On Thursday, the FCC took a step to make that repacking somewhat more concrete – releasing a Public Notice where the FCC’s Media Bureau seeks comment on a draft TV Broadcaster Relocation Fund Reimbursement Form (the draft form is here, and draft instructions to the form can be found here). This will be the form that broadcasters will use to claim payment from the government for the costs of the repacking. The Bureau asks for comments on the draft Reimbursement Form. The comments are due on October 27, 2014.
The form provides a checklist of likely expenses, asking for details of the equipment to be bought and other expenses to be incurred in making the transition, including both hardware costs and soft costs including the reimbursement of tower crews, consulting engineers and even broadcast attorneys for filing the necessary FCC forms. Broadcasters should carefully review the draft form to make sure that it anticipates all categories of expected expenses that stations may incur in the repacking process.
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NAB Brings Court Challenge to Incentive Auction Rules – As Broadcasters Wait For More Details on the Auction Process
The FCC’s planned incentive auction, by which the Commission hopes to pay broadcasters to surrender some of their TV licenses so that these stations’ spectrum can be repurposed for wireless broadband uses, is almost impossible to define in a simple blog post. The FCC issued its Order on the Incentive Auction process several months ago and, despite that order being over 300 pages long, many issues remain unresolved. Last month came the announcement that the National Association of Broadcasters had filed a court challenge to that order (on the first business day after the order was published in the Federal Register, meaning that there is still two weeks in which additional challenges may be filed in Court). While the NAB is seemingly limiting its current challenge to a few issues (according to a Blog post on the NAB website), there still are many other issues to which broadcasters have no final answers as there are further proceedings yet to come that will help to decide exactly how the process will play out for TV stations in the coming years. What did the NAB challenge, and what other issues for broadcasters are left to be resolved?
So far, the NAB has only needed to file a notice with the court stating that it is challenging the order. That is a very limited pleading that gives only the most cursory outline of the NAB’s grounds for its objections to the rules. Details of all of the grounds for the objections to the ruling do not need to be included in the appeal notice. Instead, the details will be set out in the NAB’s brief in the case, which will likely not be due for several months. In the interim, there have been some pleadings asking for expedited processing of the appeal, supported by both the NAB and the FCC, so as to not delay the auction (or to avoid having the auction take place before the appeal is resolved). From these pleadings, and from an NAB press release and the Blog post referenced above, the principal reasons for the NAB’s challenge can be discerned. Essentially, there appear to be two issues that are raised.
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FCC Extends Comment Deadlines on Proceedings on Multilingual Emergency Information and Network Nonduplication/Syndicated Exclusivity Repeal, and Announces Incentive Auction Rules are on the Agenda for May 15 Meeting
Some quick items to update some of our recent articles. The FCC has granted extensions of time to comment in two rulemaking proceedings, and released its tentative agenda for its next open meeting where it will adopt an initial order in the incentive auction proceeding. That’s the proceeding that we most recently wrote about…
FCC Gives a Peek at Some Details for the Incentive Auction – What’s Up for TV Stations?
The incentive auction by which the FCC will try to get some television stations to surrender their spectrum so that it can be sold to wireless broadband users is moving forward. A vote on the general rules to implement the auction and to repack the television band are expected to be held at the Commission’s May 15 meeting. We are now beginning to get a look at what the FCC is thinking, based on a post on the FCC’s blog on Friday by Chairman Wheeler, and a fact sheet released later that day (which does not appear to be available on the FCC website). While not terribly detailed, the documents at least show that the Commission is planning a quick transition – looking for the repacking to be complete within 39 months from the end of the incentive auction – and perhaps sooner for some stations.
The blog post again reiterates the Chairman’s belief that the Incentive Auction process poses:
a once-in-a-lifetime opportunity to expand the benefits of mobile wireless coverage and competition to consumers across the Nation – particularly consumers in rural areas – offering more choices of wireless providers, lower prices, and higher quality mobile services
The post also suggests that TV stations, by agreeing to share television spectrum with another station in their market so that they can give up a channel to the auction have another “once in a lifetime” opportunity to get money from the government to pursue new business opportunities in new technologies, while still providing some broadcast service. This is much the same message that the Chairman conveyed at the NAB Convention in Las Vegas a few weeks ago. But for stations that do not take him up on his invitation to sell their spectrum, what is likely to happen?
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