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Incentive Auctions Hit Snag

The issues of broadcasters not looking forward to the second digital transition that would be prompted by the FCC’s planned auction of much of their spectrum have been overtaken by a political battle over what to do with that reclaimed spectrum. This could push any decision that much further down the road.

Most broadcasters, not surprisingly, continue to focus on how much spectrum they will be left to use for things such as mobile DTV, particularly after the announcement two weeks ago of their first wireless carrier deal, with MetroPCS. But the spectrum fight on the Hill has become a political power struggle over who should control the auction of that spectrum to wireless, the FCC or Congress.

Having agreed to allocate, rather than auction, spectrum for an emergency broadband communications network, a concession that appeared ready to align the bill with a Senate version, the Republican-controlled House approved amendments to its version of the spectrum bill in December. The bill would prevent the FCC from applying conditions on the auctions related to who could bid, along with how the spectrum could be used. It also would set a timetable for first responders to give up their landline spectrum, which has opposition groups chaffing at the bill.

At the Consumer Electronics Show last week, FCC chairman Julius Genachowski said that the FCC needed to be free to structure the wireless auctions as it sees fit. “The costs of tying our hands could be devastating in the fast-moving and competitive global economy,” he preached to an association that has been four-square behind taking spectrum back from broadcasters. “Allocating spectrum by statute is problematic not only because it prejudges the future in an essentially irreversible way… [but] because it preempts an expert agency process….

“Congress will make a decision on incentive auctions by March 1,” the chairman continued, referring to the deadline for action on the long-term revenue-raising/ spending cutting bill, set by the stop-gap measure that did not include incentive auctions. But political gridlock could alter the timetable on that decision as well.

Genachowski’s assertions at CES about FCC power rubbed House Republicans the wrong way. In response to his comments, House Energy and Commerce chairman Fred Upton (R-Mich.) said, “It sounds like we have a federal agency more concerned about preserving its own power than offering serious improvements as we prepare to finalize this legislation.” AT&T, in a blog post, suggested the FCC’s push for condition authority might be aimed its way.

Upton added that while the bill gives the FCC the flexibility it needs to conduct the “mechanics” of the auctions, “it’s time to stop the FCC from engaging in political mischief” that will “steal money from taxpayers’ coffers.” That was a reference to yet another issue that has thrown a wrench into the works. The Republicanpassed House bill would limit the FCC’s ability to set aside more spectrum for wireless use, a non-starter with many Democrats, as well as with the FCC, given the rise in Wi-Fi hotspots that use unlicensed spectrum.

Meanwhile, broadcasters’ fate continues to hang in the balance.