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Editorial: FCC ReworkingIts Best-Laid Plans

Another mile marker was passed last week in the FCC’s march toward broadcast spectrum incentive auctions. That was the deadline for reply comments on the FCC’s proposed auction framework.

The FCC will now vet those comments and, likely sometime late this summer, vote on that plan. It remains to be seen whether FCC chairman Julius Genachowski still will be around to take ownership of the auction; if the Washington tea leaves are being read correctly, he will likely leave the implementation of the auction to his successor.

Broadcasters, however, whether they sell out or stay put, will still be around to deal with whatever the FCC decision dictates.

If there’s one remarkable achievement the FCC’s plan can already boast, it is that it made allies of the formerly feuding broadcast and wireless industries, joining them in opposition to the commission’s repacking proposal that would intersperse broadcast and wireless companies rather than giving them their own space.

That strange alliance was one of the first signs that there could be trouble in paradise.

OK…it was never paradise. If last week’s reply comments are any indication, and they clearly are, the signs are plenty, and some are of the flashing neon variety.

Broadcasters in both camps have their issues.

The 40-plus stations in the coalition of the spectrum-willing—or, to be technical, the Expanding Opportunities for Broadcasters Coalition— are worried that the FCC is looking to lowball the payments to broadcasters so the government can make more revenue on the resale to wireless companies. The EOBC argues that a megahertz is a megahertz, whether it is in the keeping of a struggling independent or a powerhouse market leader.

“The wireless carriers will be buying spectrum— not broadcasting businesses. It would be arbitrary, capricious and a clear violation of the Spectrum Act for the FCC to attempt to ‘manage’ the prices paid to broadcasters based on any metric other than the station’s impact on spectrum clearing,” the EOBC said in its comments.

The National Association of Broadcasters is worried that the FCC auction economists are creating more blue-sky theories than a blueprint for success. “The result so far has been an economist’s academic ideal of a reverse auction untethered from engineering realities,” the NAB said. The FCC had said it wanted to keep the complexity of the auction under the hood, but by the NAB’s and others’ reckoning, the FCC has made it unnecessarily complicated.

One non-engineering reality is that if the FCC does not make the auction attractive to broadcasters, it won’t get enough spectrum. And if it doesn’t make sure that broadcasters that remain in the business are held harmless in repacking—to the extent that is possible, given that many will have to move channels again—the agency will have violated the prime directive of the statute.

The NAB also says the FCC needs to publicize its repacking methodologies, complete border spectrum coordination with Mexico and Canada, seek separate comment on its band plan and hold some workshops or form a working group to deal with administering the broadcaster relocation fund in what FCC commissioner Robert McDowell last week called the “the most complicated auction in world history.”

The FCC has said it is open to suggestions, that it expects to tweak the plan in response to the input, that it’s a work in progress, etc. We hope that was more than diplomatic boilerplate to grease the skids, particularly given last week’s comments, which indicate there is still much work to do and not that much time if the FCC is going to try to meet its self-imposed deadline of the end of 2014 to complete both the reverse and forward auctions, which the FCC says may happen simultaneously.

At a Senate Commerce Committee oversight hearing last week, all the commissioners said they would work toward that 2014 goal, though McDowell advised legislators not to be surprised if there was a slip between that cup and lip. Our advice to the FCC parallels that of commissioner Ajit Pai, who repeated last week that it is better to get the auction right than to do it right away.

We wonder if there is a metaphor in an auction that is trying to go in two directions at the same time. We hope not.