Divided FCC Seeks Comment on Auction Framework

A politically divided FCC voted 3-2 to release the details of the FCC's proposed incentive auction framework for public comment.

While the item, which comes from the Wireless Bureau with an assist from other offices, made no final decisions, it had enough specificity for the Republican members to object to many of those specifics, as well as the fact most of their edits were rejected.

The framework includes establishing opening bid prices for broadcasters in the reverse auction and (presumably) wireless companies in the forward auction.

The Republicans don't like the proposal to use dynamic reserve pricing (DRP) in the reverse auction, arguing that it artificially lowers prices for broadcasters. They also took issue with making population served a major factor in determining pricing. Both of those criticisms have been leveled by the Expanding Opportunities for Broadcasters Coalition, which may represent some of the smaller stations in markets adjacent to major markets whose prices could be artificially depressed, something the coalition said could doom the auction.

They also don't like the proposal to divide reclaimed spectrum into two categories, one with spectrum "impaired" by some degree by their proximity to broadcasters, and category of spectrum unthreatened by that interference, and reserving spectrum for competitive carriers out of the interference-free parcels.

The Republicans argued that the FCC was introducing complexity and the expense of simplicity, or at least more simplicity for an auction that will by its nature be complex, and introducing that complexity to favor some players--competitive carriers in particular--at the expense of others--like broadcasters and the two largest wireless carriers.

Commissioner Mignon Clyburn pointed out that the item was simply seeking comment, as did Wheeler, and commissioner Jessica Rosenworcel pointed to the challenge of getting the auction right. She conceded that the plan introduced complexity, but also pointed out the FCC was trying something that had never been done before, that the "art and science" of getting it right was not for the timid or faint-hearted and that it was a "novel, thorny, and flat out hard" process. She also said she hoped the FCC would keep an open mind to ways of reducing that  
complexity, perhaps by reducing the number of "impaired" spectrum blocks or draw some differences between short-term border issues and longer-term encumbrances.

Clyburn pointed to the AWS-3 auction and its success as a positive sign for the incentive auction, suggesting wireless companies would be willing to have their checkbooks out for that auction as well. The AWS-3 auction has raised over $43 billion and more than doubled pre-auction estimates of that take.

Wheeler said that at least they could all agree on the complexity of the auction, and he recognized that both sides of the auction were out to maximize it for themselves, but that should not "fog" the discussion.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.