Even though President Obama signed the "Middle Class Tax Relief and Job Creation Act of 2012" at the end of February, it will likely be at least three or four years until the reverse auction for broadcast spectrum starts. In the meantime, the law will impact decisions on upgrading broadcast TV facilities. Broadcasters not giving up their spectrum may be impacted, especially those on higher UHF channels. This month I'll take a quick review of the Act and its impact on stations.
One common misconception is that the Act requires broadcasters return a certain amount of spectrum. The National Broadband Plan recommended reallocating 120 MHz of TV broadcast spectrum, everything above Channel 30. Fortunately, due to the efforts of NAB and state broadcaster associations, the Act limits the FCC's power to take away broadcast spectrum. Any surrendering of spectrum, sharing of spectrum, or moving from UHF to VHF has to be voluntary. In the reverse auction, broadcasters set a price for which they will give up their spectrum. The FCC will then hold a second auction that will determine how much more they will receive for the volunteered spectrum. If the amount the broadcaster wants is more than the wireless bidders offer, the spectrum isn't transferred.
Once the auction process is complete, the FCC will repack the remaining stations into as little spectrum as possible. Again, thanks to NAB and the state broadcast associations, the Act protects broadcasters. According to the legislation, "In making any reassignments or reallocations under paragraph (1)(B), the Commission shall make all reasonable efforts to preserve, as of the date of the enactment of the Act, the coverage area and population served by each broadcast television licensee, as determined using the methodology described in OET Bulletin 69 of the Office of Engineering and Technology of the Commission." The FCC may not involuntarily reassign a broadcast television licensee from UHF to VHF or from high VHF to low VHF.
The Act requires the FCC "reimburse costs reasonably incurred" by a station required to change channels. In lieu of accepting reimbursement for relocation, a station may request and the FCC may grant "as it considers appropriate," a waiver of the rules allowing a station, subject to interference protections, to make "flexible use of the spectrum assigned to the licensee to provide services other than broadcast television services." While the waiver is in effect, the licensee must provide "at least one broadcast television program stream on such spectrum at no charge to the public."
All of this sounds good, but you may have noticed there are some open issues the FCC will have to decide in its rulemaking on broadcast spectrum options. First, what will "all reasonable efforts" mean? In a repacking there will have to be some "de minimis"
level of interference. Current rules set that at 0.5 percent, although as much as 2.0 percent additional interference from one station to another was allowed during the DTV transition. In some cases, this could total 10 percent or more. Fortunately the FCC can't change the methodology, such as tweaking receiver performance factors, when repacking stations.
The FCC will need to decide what relocation costs will be reimbursed. Will this include the costs of a completely new transmitting facility or only modification of existing equipment, which would require substantial time off-air? How long will it take for the FCC to reimburse stations for costs associated with a channel change? The paragraph allowing alternative use of the spectrum is interesting, but will it apply only to stations being relocated?
Does the free broadcast TV stream have to be transmitted in ATSC 8-VSB? If so, this paragraph alone won't enable TV broadcasters to transition to a new, more efficient broadcast technology.
HOW MANY STATIONS WILL BE IMPACTED?
Commissioner McDowell said the FCC may obtain as much as 80 MHz of spectrum as a result of these auctions. The Act also allows the FCC to auction public safety spectrum in the 470-512 MHz band. It isn't clear if that is included in the 80 MHz estimate. I created a graph (Fig. 1) showing the number of full-power and Class A TV stations impacted versus the amount of spectrum volunteered in the auctions and reallocated, based on FCC CDBS files as of March 9, 2012.
The amount of spectrum actually reallocated is likely to be determined in the major markets, since that is where spectrum is in most demand. This, in turn, will affect the repacking and the total number of stations, in and out of the new core, that need to change channels. Unfortunately, stations won't know if they will have to change channels until after the forward action is completed, which could be as much as 10 years from now. Even stations that volunteer to sell their spectrum won't know if their bid has been accepted until after the forward auctions are completed.
This poses a problem for broadcasters planning to upgrade facilities and manufacturers supplying transmitters and antennas. Will station owners invest in new equipment now and risk it needing to be replaced in 10 years? Since only coverage as of the date the Act was signed is protected, is there any point in filing to increase coverage now?
The uncertainty is not good for broadcasters and it complicates the FCC's goal of finding more spectrum for wireless broadband. However, it also presents an ideal opportunity for broadcasters and the FCC to work together to craft a new, more efficient model for TV broadcasting for a world where people want video content anywhere on any device. Done right, it could provide more spectrum for wireless broadband carriers while allowing TV broadcasters to continue to serve the public with free TV on both big and small screens, perhaps in a shorter time frame, with less uncertainty. Ideally, it would provide a way for broadcasters and wireless carriers to share spectrum on a real-time, as available basis, providing the government on-going revenue from ancillary service fees. More on that in future columns!
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