The National Association of Broadcasters sued the FCC over its rules for next year's planned auction of 600 MHz broadcast TV spectrum, 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 incentive auction is going to be an incredibly complex process and the lawsuit adds another obstacle FCC officials must maneuver around ahead of the auctions, scheduled to begin in the middle of 2015. 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's rules could result in "significant loss of viewership of broadcast TV stations" after the FCC repacks TV stations, the NAB said.
"We are confident that the Report and Order fulfills the mandates established by Congress on this complex matter," an FCC spokesperson said.
Rick Kaplan, NAB's executive vice president of strategic planning and a former FCC wireless bureau chief, wrote in a blog post "NAB has never advocated for--in words or deeds--any undue delay in the auction." Kaplan noted the organization filed its lawsuit as soon as possible after the rules were published in the Federal Register and is seeking an expedited review before the U.S. Court of Appeals for the D.C. Circuit. "Our aim is to resolve our core challenges as quickly as possible, so the FCC can immediately return to its auction preparations," he wrote. "We believe the court can help us swiftly address our discrete issues."
Kaplan said the NAB's main concern was with the OET-69 changes, noting that Congress took "the unusual step" of telling the FCC exactly how to calculate the broadcasters' coverage areas and populations served, saying the FCC "must use the same approach it uses today to evaluate any new station application, called OET-69."
"The FCC, however, sees Congress' direction as inconvenient, and thus has made changes to this time-honored methodology (and for purposes of this auction only)," Kaplan wrote. "The result is that, what Congress assumed to be a constant in the auction process--the methodology for calculating broadcaster coverage areas and population served--now is reducing the coverage areas and populations served for the majority of broadcasters. That methodological change was not part of the deal, and the FCC has improperly and imprudently moved the goalposts from the goal line on which we all agreed. In fact, the OET-69 provision was inserted into the Spectrum Act precisely to avoid this kind of mid-stream resizing."
Kaplan also wrote that the NAB is concerned the FCC is not making "all reasonable efforts" to preserve broadcasters' coverage areas, as Congress directed, and that the FCC's rules do "little to ensure that the Commission won't repack beyond its financial means and that broadcasters won't get stuck with the bill."
However, Kaplan struck a conciliatory tone and said the lawsuit "is not designed to derail the auction, or even slow it down. We are looking for a mid-course correction that better reflects Congress' intent and that protects broadcasters and the millions of vulnerable over-the-air TV viewers. We believe strongly that the FCC itself can achieve a better balance. If not, with this litigation we can right the ship that puts more spectrum out in the marketplace while ensuring a vibrant and robust broadcasting service for the American people."
Scott Bergmann, CTIA's vice president of regulatory affairs, said the wireless trade group "would prefer to work together collaboratively to address NAB's concerns rather than resort to litigation. We are hopeful the court addresses these issues quickly and that the NAB adheres to its commitment for an expedited process without unnecessary delays."
FCC Chairman Tom Wheeler and other agency officials have been leading the charge to entice TV broadcasters to participate in the incentive auction, which is critical for its success. FCC officials have been meeting with broadcasters individually across the country this summer to give them estimates of the amount of money broadcasters could receive for voluntarily relinquishing some or all of their spectrum rights in the auction.
The FCC expects to issue final auction rules in the first quarter of next year and then begin the reverse part of the auction in the middle of 2015.
Sprint, T-Mobile could be barred from joint bidding in 600 MHz under FCC proposal
FCC's Wheeler lays out plan to draw broadcasters into 600 MHz incentive auction
CTIA's Baker calls for spectrum 'report card' to assess how government agencies use airwaves
Analysts: AT&T comfortable with spectrum position for 2-3 years
FCC bars package bidding in 600 MHz auction, dealing another blow to Verizon and AT&T
Mosaik: Verizon could face bidding restrictions across much of country in 600 MHz auction