FCC's Wheeler lays out plan to draw broadcasters into 600 MHz incentive auction

FCC Chairman Tom Wheeler laid out the agency's plans to entice TV broadcasters to participate in next year's incentive auction of 600 MHz spectrum. Specifically, he said the commission starting this summer will meet with broadcasters individually across the country and will provide an estimate of the amount of money broadcasters could receive for voluntarily relinquishing some or all of their spectrum rights in the auction.

"Robust participation by broadcasters will be critical to the success of the auction. The auction is a risk-free, once-in-a-lifetime opportunity for broadcasters, but the decision of whether or not to participate is completely voluntary and confidential. We recognize that spectrum auctions are new for most broadcasters, and that we owe them additional information before the Incentive Auction," Wheeler wrote on the FCC's website. "As anyone who's made a major sale or purchase knows, having more information leads to better decisions."

As part of the education and inducement program, the FCC released a timeline of what will happen up to and after the auction. According to the timeline, the commission said it expects to issue final auction rules in the first quarter of next year and then will begin the "reverse" part of the auction--in which broadcasters would give up their spectrum--in the middle of 2015. After the "reverse" auction, the "forward" auction would start, in which wireless carriers will bid on the spectrum freed by broadcasters. After the auction is over, the FCC would give broadcasters the cash their spectrum generated in the forward part of the auction "as soon as practicable after [the] conclusion of [the] auction."

This summer, the commission said it will meet with broadcasters to answer questions about the auction as well as conduct webinars to explain how the auction will work and why broadcasters should participate. According to the FCC's presentation, there are five key reasons broadcasters should participate in the event:

  • It's easy and risk free. "Cost of participation and barriers to entry are negligible and bidders need only know their bottom line price and may exit at any time," the agency said.
  • It's confidential. The FCC said the identity of broadcasters who initially choose to participate and are not auction winners will be kept secret for two years after the auction.
  • It could result in a "high reward."
  • It's a once-in-lifetime event. "FCC has no plans to hold another incentive auction for broadcast spectrum," the agency said.
  • There will be multiple bid options. "Range of bid options, tailored for different broadcaster needs, enables substantial payment while allowing for continued broadcast operations," the FCC said.

So far no broadcaster has specifically stepped forward and agreed to participate in the auction. The National Association of Broadcasters has said it will continue to review the FCC's auction rules to see if the event will be worthwhile. Those broadcasters that do not participate will be able to continue broadcasting, though their systems might be modified to account for the wireless networks that could be built on the spectrum.

On the wireless side of things, wireless carriers are chomping at the bit to acquire 600 MHz radio waves, which can transmit cellular signals much farther than higher-band spectrum. Indeed, AT&T Mobility (NYSE: T) has said it plans to purchase between 20 MHz and 40 MHz of spectrum in the FCC's 600 MHz incentive auction of broadcast TV spectrum.

Overall, the 600 MHz auction is expected to raise roughly $20 billion or more. The event is the FCC's first auction of low-band spectrum since the 700 MHz auction, which was largely dominated by AT&T and Verizon Wireless (NYSE: VZ). Those carriers have since used their 700 MHz holdings to build out their respective LTE networks.

For more:
- see this release from Wheeler
- see this FCC timeline and this presentation (PDF)

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