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If the Federal Communications Commission holds its much-anticipated “incentive auction” of spectrum in 2014 as planned, the effort will “almost certainly fail,” said Rick Kaplan, executive vice president of strategic planning for the National Association of Broadcasters, in a speech March 18.
The FCC is currently crafting rules for the first-ever incentive auctions of spectrum, in which the agency will try to reclaim airwaves now used for broadcast television and auction them off to wireless carriers led by Verizon Wireless and AT&T Inc., with a portion of the proceeds paid to the broadcasters.
The agency wants to finalize the auction rules this year, and actually conduct the auctions in 2014.
But Kaplan, who formerly served as chief of the FCC's Wireless Competition Bureau and was instrumental in urging congressional leaders to include legislation authorizing incentive auctions in the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96), said the agency's effort has raised many questions and requires further study and discussion.
“There is no question that a rushed auction could lead to fewer volunteers,” Kaplan said in the speech given at a Media Institute luncheon March 18. “There is a general consensus that, for the auction to be successful, the FCC must ensure it's easy for broadcasters to participate. It will require the release of the basic information broadcasters actually need to make decisions, such as 'does the FCC want a volunteer in my market?’ and, if so, 'how much might I get paid?’ and then, 'where do I go to participate and how exactly is it going to work?’ None of these questions have been answered, and the clock is ticking.”
Even at this early stage in the process, agency officials anticipate a return of between 60 and 80 megahertz from broadcasters, roughly half of the amount contemplated when the FCC released the National Broadband Plan in 2010.
Such a result undoubtedly would be disheartening to President Obama and to Democratic and Republican congressional leaders, who are counting on incentive auctions to generate as much as $15 billion in revenue, $7 billion of which would go toward building a new nationwide emergency communications network for public safety officials, the last unfulfilled recommendation of the 9/11 Commission.
Given these realities, Kaplan said the FCC must re-issue any revised spectrum band plans for additional public comment.
“The commission can't afford to get this one wrong, and thus needs to be as engaged as ever with industry and the public at large to ensure its decision-making is sound,” Kaplan said. “In practice, this means not simply digesting the comments and replies and then churning out a report and order with the final answer.”
Addressing some of the details of the FCC's proposal on auction rules, Kaplan said the agency should avoid adopting what has been termed a “split” band plan.
As part of such a proposal, the FCC would relocate high-powered broadcast TV operations in the gap between wireless carriers' uplink and downlink spectrum, which Kaplan says would cause serious interference.
He also urged the commission against proposals to create different, or “variable,” band plans in adjacent markets throughout the country. Under the so-called variable plan, in some markets one channel may be used for broadcasting and in others that very same channel may be used for wireless connectivity.
“Like its cousin, the 'split’ plan, it simply doesn't work,” Kaplan said. “If you force broadcasters and wireless carriers to share channels in adjacent markets, one will interfere with the other. It's basic engineering.”
As the National Association of Broadcasters has argued in comments to the FCC, Kaplan said the FCC should first develop a list of potential scenarios for “repacking”--the process of reassigning new frequencies to TV broadcasters who choose not to participate in incentive auctions. The agency could then determine how many TV stations would need to give up spectrum, and where those stations would be. Then, the commission could estimate how much spectrum for wireless carriers--and money--each scenario would yield, Kaplan explained. The commission could then use those nationwide estimates to entice volunteers in markets where the most amount of spectrum is needed, he added.
According to the association, this proposal, while not perfect, would give the FCC the best opportunity to create nationwide bands of paired spectrum for mobile broadband uses, a key goal of the National Broadband Plan.
“Success in this auction is getting a reasonable band plan that the wireless industry thinks is sufficient,” Kaplan said, responding to a question from a reporter following his speech. “In my view, that's a minimum of about 60 MHz of spectrum. I'm not saying that's the ideal by any means, but I think anything under that, from a wireless industry perspective, [it's] probably not necessarily worthwhile.”
As Kaplan noted several times in his remarks, one lingering question for the FCC is how many broadcasters actually will participate. Nothing in the Middle Class Tax Relief and Job Creation Act requires broadcasters to return their spectrum.
One broadcasting-industry group calling itself the Expanding Opportunities for Broadcasters Coalition, which is being led by Preston Padden, a former FOX, ABC, and Disney executive, said there are 40 such broadcasters ready to give back their spectrum if the price is right.
The National Association of Broadcasters, in contrast, is advocating for TV stations that want to stay in the broadcasting business.
“This auction is way more important to the broadcasters than it is to the wireless industry,” Kaplan said. “To the wireless industry, this is going to result in maybe a 10 percent gain in total spectrum. For the broadcasting industry, not only is it potentially reducing our spectrum by a third, but…we really have to worry about questions like 'how will repacking work?’ 'Who do we serve afterward?’ 'How much is it going to cost to stay in business?’ 'Can we still innovate on the spectrum?’ For us, the auction is huge, huge deal, despite the fact that spectrum is going to go the wireless companies.”
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