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FCC Chairman Proposes Incentive Auction Rules with Eye Toward 2014 Auction

Friday, September 21, 2012

By Paul Barbagallo

The Federal Communications Commission is moving forward with its plan to conduct the first-ever voluntary “incentive auction” of spectrum, in which TV broadcasters will have the opportunity to give back some or all of their licensed frequencies to the FCC so they could then be auctioned off to mobile network operators.

FCC Chairman Julius Genachowski Sept. 7 sent the other commissioners his proposed rules for the auction with the aim of securing their votes at the agency's Sept. 28 open meeting. At that point, a formal notice of proposed rulemaking would be released, triggering a 60-day comment period for initial comments and a 45-day comment period for replies. The chairman's goal is finalize the rules by 2013, and hold an auction in 2014, an agency official confirmed to BNA.

In an emailed statement Sept. 7, Genachowski urged broadcasters not to pass up the opportunity to relinquish under-utilized spectrum and receive a share of the auction proceeds.

“Even as the commission draws on the expertise of the world's leading economists, auction design experts, and engineers, our ability to maximize the opportunities of spectrum will depend on the active engagement of the public and all stakeholders,” Genachowski said. “I urge broad participation by all. As I've stated before, we fully expect this process to strengthen both our mobile and broadcast industries, creating new opportunities and new benefits. In particular, many broadcasters will have a new and unique financial opportunity as a result of incentive auctions.”

Goal: Reclaim Up to 120 MHz
The FCC, in its National Broadband Plan in March 2010, set a goal of reclaiming as much as 120 MHz of broadcast TV spectrum, which would then be auctioned to mobile internet providers led by Verizon Wireless and AT&T Inc. to meet the rising consumer demand for bandwidth-hungry smartphones and tablet computers. But although the Temporary Payroll Tax Cut Continuation Act of 2012 (Pub. L. No. 112-78) stipulates that about $15 billion of the $30 billion extension in unemployment benefits will be paid for with the proceeds of incentive auctions, nothing in the measure will force TV broadcasters to relinquish their airwaves.

Responding to the FCC's announcement, the National Association of Broadcasters pledged to work with the FCC and Congress to implement the act.

“[The association] has no quarrel with television stations choosing to voluntarily participate in the auction process,” Dennis Wharton, NAB's executive vice president of communications, said in a statement Sept. 7. “Our overriding objective remains the preservation of a vibrant future for free and local TV stations that serve tens of millions of Americans every day with quality entertainment, local news, the most popular sports, and life-saving weather warnings.”

In a speech at the National Association of Broadcasters' convention in Las Vegas April 16, Genachowski made it clear to broadcasters that any return of their spectrum will be purely voluntary. He further pointed out that $1.75 billion will be made available to compensate stations that choose not to participate in the auction and are then relocated to other channels. And, lastly, he noted that the law provides three options for TV station owners: contribute all 6 MHz of spectrum; agree to channel share; or move from UHF to VHF.

According to industry estimates, between 300 and 400 TV stations would need to be moved off of the broadcast-TV band to reclaim 120 MHz of spectrum.

To date, not one major TV broadcaster has publicly said it would give any of it back.

'Repacking' Proposals Likely Included
Though the FCC did not divulge many details about its NPRM, the document is expected to contain proposals for repacking--or squeezing remaining stations into a smaller band.

The FCC intends to shuffle some stations around in the band to create contiguous blocks of spectrum, which are more desirable to wireless carriers.

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