FCC Releases Proposals for Broadcast Spectrum Incentive Auctions

The Federal Communications Commission voted unanimously in favor of a Notice of Proposed Rulemaking that launches the incentive auction process with the hope of clearing a portion of the television band to allow for its use by mobile broadband licensees. The NPRM is very lengthy, covering many issues directly related to the auctions themselves, as well as numerous other issues that will be created by implementation of the spectrum auctions. The FCC has announced that it will be conducting a workshop on October 26 to provide further information about issues raised in the NPRM that are particularly relevant to broadcasters considering participating in the auction, including proposed auction designs, the mechanics of participation, and station eligibility.

The variety of issues in the NPRM is far too great to summarize in this Advisory without making it as long as the NPRM. However, among the broad and critical issues raised by the NPRM for broadcasters are:

• How the FCC should interpret station “coverage areas” for the purpose of preserving existing signal coverage as directed by Congress, as well as how to measure whether service has actually been preserved;
• How the FCC should collect bids, and how it should determine which bids are accepted; and
• The methodology the FCC will to use to “repack” the spectrum, which, according to the FCC, will be “part of the process for determining which broadcaster bids will be accepted” in the reverse auction.

The FCC’s NPRM is a result of the Middle Class Tax Relief and Job Creation Act of 2012 (“Spectrum Act”), in which Congress authorized the FCC to implement a complicated three part spectrum auction process. Specifically, Congress required the FCC to conduct (1) a “reverse auction” in which existing commercial and non-commercial full power and Class A TV stations submit bids to voluntarily relinquish spectrum in return for payment; (2) a “repacking” of the broadcast TV broadcast bands to make a portion of the UHF band available for other uses; and (3) a traditional “forward auction” for parties to bid on licenses for flexible use of the newly freed-up broadcast spectrum. The FCC’s primary auction proposals are summarized below.

Reverse Auction

According to the NPRM, the FCC plans to limit participation in reverse auctions to full power television stations and Class A television stations, including television stations operating on noncommercial educational reserved channels and stations operating on a noncommercial basis on non-reserved channels. Low power television stations would not be permitted to participate in the auctions. For full power and Class A TV stations interested in participating in the reverse auctions, the FCC proposes to provide such stations with three options to relinquish their spectrum and has initially concluded that these options will include:

1. A station going off the air completely;

2. A station moving to a lower broadcast television band (i.e., UHF to VHF); or

3. A station sharing a channel with another television station.

The FCC is also seeking comment on whether to allow stations to participate in the reverse auction by bidding to accept additional interference from other broadcast stations or by agreeing to reduce their service areas. According to the NPRM, the FCC proposes to allow existing full power and Class A stations, including those with pending license renewal applications or pending FCC enforcement actions, to participate in the auctions.

The Commission proposes to clarify its channel sharing requirements to prohibit any bids that would require a change in a station’s community of license. Therefore, a winning reverse auction bidder that relinquishes its rights with regard to a particular television channel would relinquish all usage rights for that channel and retain no further rights with regard to that channel. The FCC would dismiss any pending modification applications associated with the channel in question and cancel any outstanding construction permits if it decides to accept the bid.

The FCC also asks what information and certifications it should request from applicants in order to allow them to participate in the reverse auction bidding process. Specifically, the FCC is proposing to ask that parties provide the following information as part of their pre-auction submissions:

• The applicant’s name and contact information;
• The license(s) (including station and channel information, full power or Class A status, and NCE status) and the associated spectrum usage rights that may be offered in the reverse auction (including whether the applicant intends to bid to relinquish all of its spectrum usage rights, to channel share, to move from UHF to VHF frequencies, and/or to offer any other permissible relinquishments);
• Any additional information required to assess the spectrum usage rights available for the reverse auction;
• The identity of the individuals authorized to bid on the applicant’s behalf;
• The applicant’s ownership information and, for NCE stations, information regarding the licensee’s governing board and any educational institution or governmental entity with a controlling interest in the station, if applicable;
• For a channel sharing applicant, the channel the parties intend to share and any necessary information regarding the channel sharing agreement;
• An exhibit identifying any bidding agreements, bidding consortia, or other such arrangements to which the applicant is a party, if permitted;
• Any current delinquencies on any non-tax debt owed to any federal agency, but only if the FCC determines in this proceeding that such information is necessary in order to assess the licensee’s eligibility to participate in the reverse auction; and
• Any additional information that the FCC may require.

Download: FCC Releases Proposals for Broadcast Spectrum Incentive Auctions