The FCC decided to delay the start of the 600 MHz broadcast TV spectrum incentive auction from mid-2015 to early 2016. The delay marks the second time in less than a year the FCC has pushed back the start date of the auction, and is an indication of the both the complexity in designing the auction and the problems stemming from a legal challenge against the auction by the National Association of Broadcasters.
In an agency blog post, Gary Epstein, chair of the FCC's incentive auction task force, said court challenges to the auction rules by some broadcasters have introduced uncertainty into the process, forcing the delay.
"Earlier this week, the court issued a briefing schedule in which the final briefs are not due until late January 2015. Oral arguments will follow at a later date yet to be determined, with a decision not likely until mid-2015," Epstein wrote. "We are confident we will prevail in court, but given the reality of that schedule, the complexity of designing and implementing the auction, and the need for all auction participants to have certainty well in advance of the auction, we now anticipate accepting applications for the auction in the fall of 2015 and starting the auction in early 2016. Despite this brief delay, we remain focused on the path to successfully implementing the incentive auction."
The NAB sued the FCC in August, arguing that the agency's rules would diminish broadcasters' coverage areas and could result in a loss in viewership. One of the broadcasters' main arguments against the FCC is that the commission has changed how it calculates TV station coverage areas, using a methodology known as OET-69, referencing the FCC's Office of Engineering and Technology. The NAB has said it did not intend for its lawsuit to derail the auction.
"As NAB has said repeatedly, it is more important to get the auction done right than right now," Dennis Wharton, NAB's executive vice president of communications, said in a statement. "Given its complexity, there is good reason Congress gave the FCC 10 years to complete the proceeding. We reject suggestions that our narrowly focused lawsuit is cause for delay. We look forward to a speedy resolution of our legal challenge and a successful auction that preserves access to free and local TV for every American."
Under the basic auction structure, after broadcasters give up their spectrum, it will be "repacked" so that broadcasters that do not give up their spectrum can stay on the air. Then the FCC will conduct a traditional "forward" auction in which wireless carriers will bid for the freed spectrum.
"Under this new methodology, many broadcast licensees, including NAB's members, will lose coverage area and population served during the auction's repacking and reassignment process, or be forced to participated in the auction (and relinquish broadcast spectrum rights)," the NAB lawsuit states.
The FCC adopted basic rules for the auction in May and then set about writing more detailed rules for how the auction would be governed. Epstein noted that the FCC has initiated rule-makings "to address the operations of important services affected by the incentive auction," including unlicensed white spaces devices, wireless microphones and Low Power Television. Last week the FCC addressed several broadcast and wireless interference issues.
Epstein noted the FCC is going to continue to move forward to get the auction set up. By the end of the year the commission is expected to vote on a public notice that will propose and seek comment on the detailed directions for how the auction will be conducted, including the methodology to be used to establish opening bids for the reverse and forward auctions; how to define "impaired" markets subject to interference; and the components of determining when final bidding conditions have been met. In the coming weeks, he added, the FCC will also consider a proposed rule-making to preserve one vacant TV channel post-auction for use by unlicensed devices.
This is the second time the FCC has delayed the 600 MHz incentive auction. In December 2013, shortly after FCC Chairman Tom Wheeler came into office, the commission pushed back the start of the auction to mid-2015 from sometime in 2014.
Earlier this month, the FCC made its formal pitch to broadcasters to participate in the auction and give up their spectrum, arguing that the one-in-a-lifetime auction could deliver billions of dollars to broadcasters throughout the country. The first part of the pitch was a slide deck or "information package" prepared for the FCC by investment bank Greenhill & Co. that explains how the auction will work and how much money broadcasters can expect to get if they participate. FCC staff members and officials are expected to hit the road in the coming weeks and months to make personal pitches to broadcasters ahead of the auction. Epstein indicated those efforts will continue.
Getting broadcasters on board is critical since how much spectrum they give up will determine how much spectrum carriers can bid on.
Wireless carriers have been agitating for more low-band spectrum via the auction. Low-band spectrum like the 600 MHz band is highly prized because of its propagation characteristics and in-door penetration capabilities.
"While any delay in spectrum auctions is unfortunate, we appreciate the thoughtful focus the FCC has brought to this complex auction to ensure it is conducted properly to the benefit of all Americans," Scott Bergmann, CTIA's vice president of regulatory affairs, said in a statement. "Today's action underscores the need to resolve the pending litigation over the FCC's rules expeditiously. When the auction is held, mobile companies will have their checkbooks ready to participate in this critical auction that will be key to our nation's wireless future."
- see this FCC blog post
FCC pitches broadcasters to participate in incentive auction, offering billions as a reward
CCA wants FCC to revise rules for triggering 'reserved' spectrum in 600 MHz auction
FCC's Wheeler: Operators need to 'show up' for 600 MHz incentive auction
NAB sues FCC over 600 MHz incentive auction rules
T-Mobile wants FCC to reserve up to half of all 600 MHz spectrum for smaller carriers
Article updated Oct. 24 at 2:15 p.m. ET with statements from NAB and CTIA.