During his highly anticipated address to the NAB convention, FCC chairman Julius Genachowski didn’t mention NAB president Gordon Smith by name, but he strongly refuted charges that the commission is trying to pull off a “great spectrum grab” from television broadcasters.
“A lot has been said and written about this auction proposal, including at this conference, that just isn’t accurate,” Genachowski told the NAB less than 24 hours after Smith’s speech.
Then Genachowski tackled the issues head on. “One, these auctions are voluntary. Period. Participation is up to the licensee and no one else,” he said. “Two, for the plan to work, we don’t need all, most, or even very many licensees to participate.”
The FCC chairman said if a relatively small number of broadcasters in a relatively small number of markets share spectrum, the commission’s staff believes it can free up a significant amount of bandwidth. And, he said, rural markets would be largely unaffected by the recommendation in the National Broadband Plan because the spectrum crunch will be most acute in our largest population centers.
He said the FCC anticipates mechanisms to reduce or even eliminate risk, and maximize the upside for broadcasters that elect to participate in the auction. For example, the plan could allow broadcasters to set a reserve auction price below, which their licenses wouldn’t transfer. The mechanism could lock in a payment for broadcasters, while allowing for participation in upside above that level.
Finally, Genachowski said, auction rules and mechanisms will be developed through an open and transparent process, with ongoing dialogue about the best design mechanisms for incentive auctions, focusing on what will actually work and meet the country’s needs.
The intention of the proposal, he said, is “to provide broadcasters with more choice and flexibility, not less. More business model options, not fewer. While at the same time helping address a vital national challenge.”
Genachowski attacked some of the myths broadcasters have about incentive auctions:
Myth #1: The plan is to confiscate broadcasters’ spectrum and drive broadcasters out of business.
“The incentive auction plan is voluntary,” he said. “No one will be forced to participate. In fact, this is the opposite of a confiscation; it would be an economic boost to broadcasters that elect to participate.
Myth #2: The plan will diminish voices and harm the values of broadcast diversity and localism.
“To the contrary,” he said, “giving broadcasters new options and an additional source of financing should strengthen the industry and bolster the public interest.”
The incentive auction plan, he added, would give local broadcasters serving minority or other underrepresented audiences a new choice: share spectrum, continue programming and carriage, reduce operating costs, and gain a capital infusion. For some broadcasters, he said, it could make the difference in having a business and staying on the air.
Myth #3: The plan will prevent broadcasters from deploying mobile DTV.
“Under the incentive auction plan,” he said, “broadcasters will be able to provide mobile DTV, both licensees that choose to retain all 6MHz, and those that choose to share.”
Myth #4: Consumers will need to purchase new equipment.
“The plan would have no effect at all on viewers who receive their broadcast signals from cable, telephone or satellite providers,” he said. “Viewers who receive their broadcast signals over-the-air would simply need to rescan their current TVs or converter boxes. And to the extent a transition would impose any new costs on broadcasters themselves, those costs could be covered by the auction proceeds.”
Finally, he said, “some people have asked, what happens if the incentive auction doesn’t work? I truly believe it won’t come to that. Our country can’t afford for it to come to that.
“I believe that a voluntary auction plan based on unlocking billions of dollars of value and sharing it, a plan that needs the participation and spectrum-sharing of a limited number of broadcasters, who will get to lower their operating costs, and receive a cash infusion, while continuing on the air,” the FCC chairman said.