Analyst: 'Better than expected' participation expected from TV broadcasters in 600 MHz spectrum incentive auction

The nation's wireless carriers may well have more 600 MHz spectrum to acquire during the FCC's incentive auction next year than they had expected. "From our conversations it appears that absent any legitimate reason (like interference) the auction will begin on March 29th, with better than expected participation from broadcasters," said Jefferies analysts in a recent note to investors. "Officials made it clear that it is unlikely that broadcasters will be able to sell their spectrum directly to the carriers, that a new auction will take place near-term, and that future auctions will reimburse reallocation costs. The FCC is clearly hopeful for participation from both traditional and non-traditional players."

Jefferies' positive statement on the auction coincides with news that the Expanding Opportunities for Broadcasters Coalition (EOBC) will disband, noting that most of the rules that it had sought for the auction have been established. The EOBC included 87 member TV stations and was formed to help shape auction rules that favored TV broadcasters.

According to reports, EOBC Executive Director and Co-founder Preston Padden said that the group had achieved many of its objectives, including dealing with price guidance for broadcasters, addressing channel sharing rules, handling dynamic reserve pricing for spectrum, and including stations' interference profiles in the auction's starting price formula.

Padden also said the EOBC will disband due to the FCC's anti-collusion rules, which likely will start in November and are intended to prevent TV broadcasters from sharing information that might allow them to manipulate spectrum prices. Padden said the EOBC wants to avoid putting its members at risk of potentially violating those rules.

Despite initially opposing parts of the FCC's incentive auction plan, some broadcasters appear to be easing their opposition. As TVNewsCheck pointed out, the National Association of Broadcasters (NAB) had filed a lawsuit to stop the auction, though an appeals court rejected that lawsuit.

And Sinclair Broadcast Group, the nation's largest TV broadcaster, had initially opposed the auction too, but recently has indicated it may participate. For example, in August Sinclair executives said the company could make $2 billion by putting its spectrum up for auction, though they stopped short of confirming the company would participate.

More recently, Sinclair's One Media pointed to the incentive auction as one reason it is moving forward with the Next Generation Broadcast Transmission Standard (ATSC 3.0) for TV broadcasts. "The timing is critical so that new equipment can be in place for the expected transition to new channels for many broadcasters as a result of the Spectrum Incentive Auction targeted for next Spring," said Jerald Fritz, One Media's EVP for strategic and legal affairs. "Giving broadcasters, who will be updating their facilities, the option of including Next Gen capabilities is both wise public policy and an important competitive boost with positive benefits for our industry and our viewers." One Media was established as a joint investment between Sinclair Broadcast Group and Coherent Logix to create a more efficient and flexible TV transmission standard.

Despite TV broadcasters' apparent embrace of the auction, Sprint (NYSE: S) this week announced it would not bid on 600 MHz licenses. EOBC's Padden said he thought Sprint's decision to not participate in the event would have "zero" effect on the outcome, including broadcasters participating. Analysts expect Verizon (NYSE: VZ), AT&T (NYSE: T) and T-Mobile US (NYSE:TMUS) to participate in the auction to some degree.

The FCC's incentive auction will be conducted in two parts: A "reverse" auction will encourage TV broadcasters to release their 600 MHz licenses, which wireless carriers and others will then bid on through a traditional "forward" auction.

For more:
- see this Broadcasting & Cable article
- see this TVNewsCheck article

Related articles:
T-Mobile seen as winner in Sprint's decision to bow out of 600 MHz incentive auction
T-Mobile's Legere: Give us more spectrum, and we'll amp up competition even further
FCC's Wheeler 'supremely confident' incentive auction will take place in March