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Getting FCC to See ThingsHis Way on Auction

An issue as big as spectrum auctions needs someone looking out for the little guy for it to succeed properly. That’s where Preston Padden and his Expanding Opportunities for Broadcasters Coalition (EOBC) comes in. The coalition, representing more than 40 broadcasters eyeing a government payout for their spectrum, has been pressing the FCC not to shortchange smaller stations at the auction pay window, given they have the same 6 MHz as anyone else.

Preston spoke with B&C Washington bureau chief John Eggerton about why he thinks the FCC may be coming around to his way of thinking and the good works of the National Association of Broadcasters and its president, Gordon Smith, who are fighting for the broadcasters who want to stay in the business. An edited transcript follows.

You have a big issue with the way the FCC proposed valuing TV stations in the reverse portion of the incentive spectrum auctions.
If you read the statute that enabled this process, it says about five different times that the price broadcasters receive is to be determined by the market forces of an auction. Instead, the FCC staff appears to be talking about some kind of administered pricing, where the FCC staff decides what prices stations receive in the auction based on the FCC staff’s opinion of the value of that station. Their most recent proposal was to base those prices on the population covered by a TV station signal.

And your response?
On March 26 we made an informal filing which gave the [FCC] multiple examples that proved beyond a doubt that the population covered by a TV station is not a good measure of how buying that station would contribute to clearing that spectrum.

Obviously, the FCC thought it was or they wouldn’t have proposed it.
\The reason the FCC was attracted to a population-based scoring is because it would be easy to implement, which is certainly true; it’s just not a good measure of a station’s contribution to clearing spectrum. Compare a station right in the heart of New York City, which covers 8 million people, to a station near the border of the Philadelphia and New York markets that might only cover 1 million; the effect of buying either of those stations in terms of clearing the spectrum would be almost identical. We met with the FCC staff and they thought our examples were very helpful.

So where does it stand?
On his panel at the NAB convention, based on our coalition filing, Gary Epstein, the auction chair, said they had been planning on scoring stations based on population covered, but that they were now looking for another metric.

And what should that be?
Our first choice would be for the FCC to do what the statute says, and that is to conduct a straight-up, unbiased, unweighted auction, which would attract the most stations to the auction. Second choice would be some kind of scoring whose only basis is: How does buying this station contribute to clearing the spectrum. We concede the FCC may have a legitimate interest in paying more for a station whose removal helps their clearing effort more than another.

For example?
If buying station A makes room for repacking more stations than does buying station B, then buying A advances the repacking and spectrum clearing objective more than B.

The National Association of Broadcasters has cautioned the FCC not to rush the process. Where is your coalition on the timing issue?
Our preference is to get it right in a timely fashion. We are only in the beginning of 2013. People who say this can’t be done by the end of 2014, I can’t imagine what they are thinking.

So you differ from the NAB on that point. More broadly, what is your relationship with NAB and president Gordon Smith—are you in opposite corners of a squared circle?
We differ slightly with NAB on timing, but on the vast majority of issues we are closely aligned. I attended the NAB convention and marveled at what a great job Gordon Smith and his staff are doing.

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