The Federal Communications Commission ceded no ground to anyone with its vote on incentive auction procedures, the agency’s detailed blueprint for how it will run the auction.
Despite mounting opposition by broadcasters, the wireless industry and advocates for users of unlicensed spectrum over the way the commission will reorganize the TV broadcast and wireless spectrum, the FCC voted along party lines to accept a plan that almost no one likes. The vote also officially set the date of the auction for March 29.
The procedures notice sets the rules for the amount of spectrum to be cleared, the level of interference to be tolerated, bid prices for TV station spectrum voluntarily relinquished, and what will happen to stations that choose to stay in business when the auction is done.
If the FCC doesn’t get enough broadcasters to relinquish spectrum, it will have to deal with where to place TV stations. The plan calls for broadcasters to be placed first in the duplex gap, the space between uploads and downloads in the mobile wireless spectrum. Broadcasters could also be placed in the downlink portion of the wireless spectrum, or the uplink. All three situations impair spectrum for the auction that will be auctioned off to wireless companies, but the duplex gap and the downlink were the biggest sticking points for all the stakeholders.
In markets where stations are placed in the duplex gap, prohibiting the use of wireless mics, the FCC said it will set aside a second channel.
The result of the plan, said GOP commissioners Ajit Pai and Mike O’Rielly, will cause interference, jeopardizing revenue made in the auction.
“The notice “permits too many broadcasters to be placed in the wireless band. It will impair spectrum in the forward auction and cause future interference between broadcasters and wireless services,” said commissioner Ajit Pai. “Our prioritiy should be to auction clean spectrum.”
Broadcasters called the vote a “major setback” for stakeholders eager for a successful auction because it undermines certainty for both broadcasters and wireless bidders.
“The FCC undercuts the notion of a voluntary auction; low-balls payments to TV stations interested in exiting the business; establishes a haphazard variable band plan destined for decades of interference disputes; guarantees maximum loss of LPTV and translator service for millions of Americans in exchange for a handout of free spectrum with no public interest obligations to multibillion dollar companies; and jeopardizes lifeline news coverage of local TV stations in some of America’s largest cities,” said Dennis Wharton, the National Association of Broadcasters executive vice president of communications.
The fate of low power TV stations hangs in the balance. “Big whoop, don’t do nothing for the 1200 small businesses which have licenses and permits for 8000 LPTV and translators; nor, the over 200 government agencies across the country which have more than 2000 LPTV and translator stations; and, more than 50 educational institutions which have more than 350 hyper-local stations with LPTV and translators. No, what we saw today at the FCC was big business interests rule the day, and their pseudo public-interest groups leading the charge for more corporate welfare masked as unlicensed spectrum. Today we saw internet-age industrial policy at its worse,” said Mike Gravino who heads up the LPTV Spectrum Coalition.
The wireless industry, which would prefer clean spectrum, was also “disappointed” with Thursday’s outcome. “The FCC appears to have ignored the Spectrum Act’s mandate to protect licensed services from harmful interference. … today’s decision potentially exacerbates the uncertainty that forward auction bidders will experience. Congress recognized that certainty and protection from harmful interference are vital to a successful Incentive Auction, which in turn is essential to meeting our nation’s spectrum needs and encouraging the next generation of mobile innovation and investment that will benefit consumers,” said Scott Bermann, vice president of regulatory affairs for CTIA-The Wireless Association.
Not everyone was unhappy. Stations that are looking to sell spectrum, had few complaints.
“Based on a remarkably open and fair process, the FCC has adopted compromise auction rules that make no stakeholder, including our Coalition, 100% happy. As a concession to the shortness of life, it is time to end the debate and get on with the auction,” said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition.
FCC chairman Tom Wheeler, defended the process and lashed out at the dissenting commissioners, accusing them of ignoring the bigger picture.
“I’ve been around spectrum policy since 1944. Let me tell you about the worst case scenario. What this team has done is to listen to everything, be extremely forthcoming, be extremely transparent, and to produce a result, that doesn’t satisfy the ask of any one of the stakeholders, or any one of the commissioners or the chairman. But it is a good, balanced logical solution to an incredibly complex never-tried situation. To assault that activity by bringing up a constant litany of worst-case scenarios is to assault having to deal with reality,” Wheeler said.
The item vote was accompanied by a lot of angst. Both GOP commissioners blasted the process that led to the auction procedures blueprint, fretting that the decision made Thursday could create big problems for the future.
“This proceeding has been partisan and conducted in an insular manner. The majority made a deal among itself. There was no willingness to negotiate, no willingness to compromise, no willingness to consider our ideas. It’s left us with a mess and Congress, wireless carriers, broadcasters, dissatisfied to various degrees. The FCC is making is more difficult to have a successful auction. I believe that we are poised to dump serious post-auction difficulties into the laps of future Commissions,” Pai said.