Starting in January, FCC officials to hit the road to woo broadcasters to incentive auction

FCC officials are going to conduct more than a dozen field visits from January to mid-April next year with broadcasters to give them more information about the 600 MHz broadcast TV spectrum incentive auction. The outreach effort will cover around 50 television markets, and not just the largest ones.

Gary Epstein, chair of the FCC's Incentive Auction Task Force, and Howard Symons, the vice chair, formally disclosed the plans during an appearance at the Wells Fargo Technology, Media & Telecom Conference. The outreach push comes on the heels of the FCC's announcement that it will delay the start of the auction from mid-2015 to early 2016.

At the conference and in a subsequent blog post, Symons said the field visits will include town hall meetings where FCC officials will discuss the opportunities broadcasters can take advantage of by participating in the auction and address any questions they have. Symons also said the field visits will include confidential one-on-one meetings with broadcasters if the broadcasters want to hold such meetings.

"We will also provide further detail about opening bid prices and different participation options such as channel sharing, moving from a UHF channel to a VHF channel and moving from a high VHF channel to a lower one," Symons wrote in the blog post.

Getting broadcaster participation is crucial to the success of the auction, which is why the FCC is going to push hard on its outreach efforts. Participation is voluntary, and without broadcasters support, carriers will not have enough spectrum to bid on nationwide, causing the auction to collapse. Therefore, convincing broadcasters to buy into the auction is one of the FCC's key tasks in the months ahead.

Epstein said at the conference that the FCC plans to begin taking applications from broadcasters to participate in the fall of 2015. In terms of the FCC's ongoing process to get the auction rolling, Epstein said that soon the full commission will vote on a public notice that will spell out opening bid prices for the "reverse" part of the auction, benchmarks for closing the auction, and how the market-based "reserve" spectrum will be allocated when wireless carriers bid on the airwaves in the "forward" part of the auction.

Symons said that the FCC will be visiting markets throughout the country "where we think we will need stations to participate in the reverse auction in order to clear a sufficient amount of spectrum to successfully close the auction." He also noted that "the incentive auction will impact all broadcasters--those who are participating, and those that choose not to participate and therefore may be repacked. Our outreach will provide more detail on the auction and address questions from stations that may participate as well as those that won't."

Importantly, broadcasters that investigate the process but decide not to participate will have their identities remain confidential until two years after the close of the auction, Epstein said. The FCC and Congress were mindful of the business ramifications of participating, he said.

Last month the FCC released an "information package" prepared by investment bank Greenhill & Co. that explains how the auction will work and the benefits broadcasters have for participating. According to the projections in the packet--which both Epstein and Symons said are based on a model and not the exact amount broadcasters will receive in the actual auction--in total, broadcasters could receive around $38 billion if 126 MHz is cleared and around $26 billion if 84 MHz is cleared.

Symons said the FCC needed to present the auction as a "business" opportunity for broadcasters instead of some abstract legislative or policy issue. He said the information, which includes estimates for how much broadcasters in each TV market could receive, "has had, quite frankly, the intended effect."

He said that since the package was released in October the FCC has been fielding calls for information from broadcasters seeking more information. Now, broadcasters are not viewing the auction as a "black box," he said, but as "something that is more familiar or that merits their consideration."

Epstein also discussed how the reserve part of the auction will work, noting that the opening bid prices for broadcasters' spectrum will vary market to market. The opening prices will be based in part by how many nearby stations are participating, since the FCC will need to "repack," or move around broadcasters, after the auction. If the FCC can repack more stations and free up more spectrum, those stations that can be more readily repacked will have higher valuations.

"This is a risk-free opportunity for broadcasters," Symons explained, noting that broadcasters will be shown the opening bid prices before they even need to get into the auction. The reverse auction will work on a so-called "descending clock" format where the bidding prices will keep falling in each round. Broadcasters can exit with no penalty if prices fall too low.

However, if broadcasters stay in the auction through multiple rounds, in every round the FCC will look to see if there are enough channels remaining to repack all of the participating broadcasters. If the FCC can repack a broadcaster and find a space for it, then the price for that broadcaster's spectrum will be locked in during the round in which that is determined. Broadcasters never have to disclose a minimum price they are willing to accept either.

At the same time the FCC is conducting its outreach, the commission is facing a lawsuit from the National Association of Broadcasters, which has argued 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.

For more:
- see this webcast
- see this FCC blog post

Related Articles:
FCC delays start of 600 MHz incentive auction to early 2016
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