There are three items on the Federal Communications Commission agenda for July 16, but only one big topic: the broadcast incentive auction.
What will happen this coming Thursday is less predictable when, late Friday, the FCC said it would waive the sunshine period for the auction procedures item to give lobbyists more time – until 7 p.m. Wednesday – to make further presentations.
Along with the extension, the FCC released new auction simulation data that showed how the FCC might move some TV stations into the so-called duplex gap, the band of unlicensed spectrum between the upload and download frequencies used by wireless carriers. Before Friday’s letter, the duplex gap was being considered for wireless microphones and unlicensed wireless services, but it was not a serious option to repack a TV station into the gap, according to an industry insider.
Putting some TV stations in the duplex gap is option just about no one likes, but broadcasters were particularly alarmed.
“The duplex gap is an explosive issue for us. It opens up a huge can of worms and jeopardizes the news gathering that local TV stations provide to the public in lifeline situations,” said Rick Kaplan, general counsel and executive vice president for the National Association of Broadcasters.
The duplex dilemma is all about giving the FCC a way to solve a problem if there are too few broadcasters willing to sell in any one market and the FCC is left with too many broadcasters to fit into the new, reduced broadcast band.
In the simulations released Friday, the FCC shows only a handful of markets that could be affected including Los Angeles in one simulation. Other markets include a handful of northeast and north central markets such as Madison Wisc. and Buffalo, N.Y.
But in those markets, losing the duplex gap would deprive wireless mics and other unlicensed wireless uses of a dedicated home. In those markets, TV stations would be unable to use wireless mics for covering breaking news or emergencies. Inteference is also a big concern for both broadcasters and for the wireless companies that buy spectrum next to the duplex band.
“It’s astonishing that just a week before the vote, the FCC has released only six simulations related to the duplex gap. This compares to 100 simulations the Commission released a year ago related to repacking. All of this is unorthodox, to say the least,” said Kaplan.
An FCC official admitted that using the duplex gap isn’t a perfect solution, but that it’s a matter of balancing all interests in the auction and “moving forward with various goals.” The official also noted that mics and unlicensed spectrum will be taken up in a separate procedure.
But there may be a much simpler solution, said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, representing more than 80 prospective TV station sellers.
“Part of the problem, because [the FCC] didn’t adopt our price formula, they may not have enough broadcaster participation,” said Padden, who also filed an ex parte with the FCC on Monday. “They will have to jam some stations in and now, they’re talking about the duplex gap. If they would just raise the prices a little bit, they’d get more participation and they wouldn’t have any of these problems.”
There’s little chance that the duplex dust-up will delay any action on Thursday, the FCC official predicted.
“We want to keep on schedule; there is significant enough movement,” the official said.
FCC chairman Tom Wheeler is determined to keep the auction on track for early in 2016 and this week, he’s put some critical milestones on the agenda.
What happens Thursday could make or break the auction and with it, Wheeler’s legacy as chairman. It’s his biggest chance yet to change spectrum policy to pave the way for a bigger wireless market.
A two-sided auction has never been tried before—a reverse auction in which broadcasters who want to can sell their spectrum, and a forward auction where wireless companies bid for low-band spectrum given up by broadcasters.
The Thursday meeting comes just as the second quarter earnings season gets underway, meaning publicly-held broadcast companies could give some indication of what they are going to do during calls. Some of the big companies have said they would look at it (CBS, Fox, Univision, ION Media, and Tribune) but smaller groups like Sinclair and Entravision may be more likely to sell.
Here’s what else is on the FCC’s Thursday agenda:
–A recommendation to keep the spectrum reserve for small carriers at 30 MHz, an issue that’s gotten attracted lots of press coverage, largely on the over the top advocacy for an even larger spectrum reserve by T-Mobile ceo John Legere. The Competitive Carrier Association and other small carriers are holding out hope for a bigger reserve.
—Reforms to how auction discounts would be given to small and minority-owned companies, an item precipitated by Dish’s relationship to two small wireless bidders in the AWS-3 auction.