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FCC Covers Plenty of Ground in Auction Workshop

FCC senior adviser and co-lead of the FCC's Incentive
Auction Task Force Gary Epstein said Friday that the FCC is committed to
voluntary incentive auctions that will 1) honor Congress' statutory language,
2) work with include the industry in a transparent repacking process, and 3)
provide viable reimbursement and transition mechanism.

That came at the FCC's first workshop for broadcasters on
its spectrum incentive auctions on Friday at FCC headquarters in Washington.

FCC bureau chiefs and other staffers outlined various
options for the auctions as outlined in the FCC's framework released last

While the workshop was targeted at broadcasters, according
to one self-identified broadcaster at the workshop who said he was considering
participating, a show of hands at the event revealed only three others in the
room, though it was also webcast, so remote broadcaster participation could
have been larger.

FCC commissioner Mignon Clyburn kicked off the workshop by
hammering home that the auctions were voluntary, though Bill Lake pointed out
that repacking of TV stations after the auctions was not. Julie Knapp, head of the
FCC's Office of Engineering and Technology, who headed that repacking portion
of the workshop, pointed out that the majority of stations would probably not
have to move.

Media Bureau chief Bill Lake made the point that the auction
part of the equation would only involve (roughly) the top 25-35 markets, and
maybe a few others, though repacking would affect those others. He also echoed Clyburn
in saying there had been great interest from broadcasters in the auctions.

Clyburn tried to set a broadcaster-friendly tone from the
outset by saying that TV stations remained the most important vehicle for
serving the informational needs of local communities.

Much of what the FCC staffers talked about were proposals
that were put out for comment, with the final look of both auctions and
repacking far from set. Lake made the point that this was very much the
beginning of the process.

Among the proposals/questions covered in the workshop:

Anti-collusion measures: The auction will have
anti-collusion rules to make sure bidders can't get together to inflate prices,
but the FCC recognizes that if stations are being given the opportunity to
share channels as an incentive to give up theirs, and those are expected to be
private negotiations, those broadcasters will have to be talking and sharing

Eligibility: The FCC is proposing to allow stations with
pending enforcement actions -- indecency fines, for example -- to participate, but
not ones whose license has expired or who have had their license cancelled or
revoked, even if it is subject to appeal. Only full-power and class A
full-power stations, which excludes other low powers and translators. Stations
won't be allowed to share outside of their community of license unless they can
continue to cover that community as well. Noncoms and commercial stations can
share, and all must-carry rights would carry over to each of the channel

New channels under repacking: Unlike the DTV transition,
stations that are moved to new channels to free up blocks of spectrum for
wireless will not get to choose those channel numbers. But Lake pointed out the
FCC is considering allowing stations unhappy with their new channels to apply
to the FCC to change them.

Timing: Lake said the repacking transition process presents
challenging timing issues. The FCC is asking whether there should be a hard
date or a phased transition. The FCC is planning for an 18-month transition,
pointing out that some TV stations in the DTV transition were about to do it in
12 months.

Money: The FCC has $1.75 billion to cover any broadcaster
and MVPD moving expenses. The statute creating the auctions also allows
broadcasters to pass on cash for the chance to use their broadcast spectrum for
more than broadcasting, so long as they continue delivering their primary
broadcast channel. The FCC has proposed various compensation plans, including
upfront payments based on market size, or a partial payment and "true
up" after the real costs are incurred, or waiting until the expenses are
filed and reviewing them.

In all these, the FCC is looking to make the auctions as
easy for and attractive to broadcasters as possible. Epstein has said that most
of the complexity will be "under the hood" and the province of FCC
staffers rather than broadcasters.

After often densely-packed presentations on auction
framework proposals -- combinatorial and simultaneous multiple round ascending
clock auctions, and the like -- the staffers opened the floor for questions.

One broadcaster -- the one who said he was only one of four --
asked why, if the FCC wanted to encourage broadcasters to participate, he
didn't let them go dark before the auction, so they would save money, including
the expense of complying with FCC rules like the new CALM Act and the
commercial loudness mitigation equipment it requires.

Lake pointed out that the FCC has rules and responsibilities
for holding a license, but that he should flesh out that suggestion and the FCC
would consider it along with other comments.

Asked by a public interest representative whether the FCC
would publicize the private sharing agreements between broadcasters since they
could involve a large transfer of value of public spectrum to a private
company, Lake did not rule it out, pointing out there are other types of
private contracts the FCC requires stations to file.