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FCC Approves Spectrum Auction Framework

In a split decision, the FCC voted 3-2 Thursday on a regulatory framework report and order for the upcoming broadcast incentive auctions.

The item establishes the band plan for broadcast and wireless companies sharing the band, as well as the plan for repacking broadcasters after the auction and how the auction will work.

Both Republicans dissented, saying the item was manipulating the market by limiting wireless bidders, was not necessarily holding broadcasters harmless in the band plan, and may not even be legal.

It was clear that the National Association of Broadcasters would have dissented had they had a vote.

"While NAB acknowledges the incredibly hard work by FCC staff, we are disappointed that today's vote fails the mandate of Congress to hold harmless those broadcasters who choose not to participate in the spectrum auction," said NAB spokesman Dennis wharton. "

"Simply put, a deeply-divided Commission chose not to fulfill required obligations under the Spectrum Act," he said. "It adopted new coverage and interference software [TVStudy software] that has not yet worked, potentially jeopardizing hundreds of TV stations and millions of over-the-air television users. It takes for granted that the yet-to-be-released auction and repacking software will work flawlessly. The FCC cavalierly concluded that broadcasters forced into a shrunken TV band won't be guaranteed full compensation for this disruptive move - as was the express intent of Congress.

"The order today threatens diverse programming sources and diminishes a vibrant free and local news, entertainment and information source for millions of Americans who can't afford $200 a month pay TV and broadband bills," he said.

"NAB will pursue every avenue to get the auction back on track and ensure that broadcasters and our viewers are protected -- as Congress mandated in the Act."

Commissioner Pai registered his opposition to the FCC's decision to use new TVStudy software instead of existing OET-69 methodology to determine TV station coverage areas in the repacking, something broadcasters have also said could land the auction item in court.

The FCC conceded many questions remain to be answered in future items, but one thing commissioner Jessica Rosenworcel said the FCC needed to do ASAP is give broadcasters some sense of what price they can expect to be offered for their spectrum.

The plan is to begin providing price and timing info starting in the summer, an FCC staffer said in outlining the item.

Rosenworcel said that in her conversations with broadcasters, the necessity of that figure was a common theme.

"Our Coalition is very grateful that this Summer the FCC will begin providing TV stations with guidance about the range of initial prices they can expect to see and with information on the timeline for the auction process," said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition (broadcasters who may be interested in volunteering spectrum for action). "This information will be critical to broadcaster participation. We look forward to reading the Report and Order to answer many questions including the FCC's planned basis for scoring stations (scoring based on interference is appropriate, scoring based on the enterprise value of the station and population covered by the station is not) and the referenced potential for the FCC to lower accepted bids in certain non competitive situations.  Our Coalition will continue to do everything possible to help the FCC conduct a successful auction."

The FCC will keep the identities of the losing TV station auction bidders confidential for two years, a period that appears to be OK with the coalition.

The auction is targeted for sometime in 2015.

The auction framework report and order consists primarily of the following, according to an edited FCC summary:

"600 MHz Band Plan: The band plan consists of specific paired uplink and downlink bands (which enables two-way communications), comprised of five megahertz 'building blocks.' Additionally, the band plan accommodates limited variation in the amount of spectrum recovered from broadcasters in different geographic areas in order to prevent the “least common denominator market” from limiting the quantity of spectrum we can offer generally across the nation.

"The band plan incorporates technically reasonable guard bands, including a uniform duplex gap (11 MHz), to prevent harmful interference between licensed services. The Commission authorizes the use of these guard bands for unlicensed use nationwide.  The Report and Order also designates one naturally occurring white space channel in the remaining TV band in each area for use by unlicensed devices as well as wireless microphones. Any other unused television channels in an area following the Incentive Auction will also be available for unlicensed devices as well as wireless microphone use. Unlicensed devices also will be able to operate on channel 37 at locations where it is not in use by channel 37 incumbents--Wireless Medical Telemetry Service or the Radio Astronomy Service.

"Other incumbent services in the television band, including low power television, and translators may be displaced. Recognizing the value these services provide, the Report and Order allows their continued operation until new license holders become operational.

"To facilitate wireless microphone use of available spectrum in the reorganized UHF band, the Report and Order adopts measures in addition to those noted above. It will allow wireless microphone devices licensed to broadcast and cable programming entities to operate in a portion of the duplex gap on a licensed basis. In addition, the Report and Order will permit other wireless microphones to operate in the guard bands on an unlicensed basis. The Commission will initiate a proceeding to adopt technical standards to govern these uses as well as a separate proceeding to address the needs of wireless microphone users over the longer term.  

"Incentive Auction Design: The Incentive Auction will consist of a reverse auction in which broadcasters may voluntarily choose to relinquish some or all of their spectrum usage rights, and a forward auction in which the relinquished spectrum is made available to wireless providers.  

"The rules integrate the reverse and forward auctions in a series of stages; each stage will consist of a reverse auction and a forward auction bidding process aimed at a specific clearing target. The Report and Order adopts an auction design that is intended to make it simple to for broadcasters and wireless providers to participate.  Broadcasters who choose to participate in the auction will have several options for relinquishing their spectrum usage rights – going off the air, moving from a UHF to a VHF channel, or sharing a channel with another broadcaster.

"The reverse auction will use a descending clock format in which the prices offered to broadcasters for their spectrum usage rights will drop with each successive round of bidding. The forward auction will use a multiple round ascending clock format in which the prices will generally rise from round to round as long as the demand for licenses exceeds the amount available. The auction will close when the auction meets the “final stage rule”; namely, when the auction proceeds meet a specific reserve that will be determined by the Commission. If the final stage rule is not satisfied,   the clearing target will be reduced and another stage of the auction will begin."