Spectrum Auctions: No Reason Broadcasters Can’t Bid

LAS VEGAS: There’s no reason broadcasters can’t bid for spectrum in the incentive auctions designed to redesignate it for wireless broadband, a federal official said today at the NAB Show.

“The rules haven’t been written, but I don’t see why not,” said Bill Lake, chief of the Federal Communications Commission Media Bureau.

Lake was on hand for a panel discussion about broadcast issues underway at the FCC. He noted that spectrum likely would be offered in 6 MHz increments, and since that’s the allocation of a single TV channel, it would be suitable for another TV channel. Or they might bid on larger blocks depending on their intention. The FCC’s Notice of Proposed Rulemaking on opening the broadcast spectrum for broadband simply calls for adding new allocations for fixed and land mobile services that would be co-primary with broadcasting. The NPRM itself does not preclude broadcasting. The service rules and public service obligations likely to have implications for bidders on potentially freed spectrum remain undefined, however.

Lake was asked about the commission’s predictive model for repacking the spectrum after the auctions. FCC Chairman Julius Genachowski said this Allotment Optimization Model would be released when Congress granted the commission authority to hold incentive auctions, which it did in February.

“There is no one model,” Lake said, but rather an algorithm, already released to the public, which the FCC was testing. He said it was unlikely for broadcasters to obtain access to the tests. “We will be trying to refine our approach to that as we move into the rulemaking. As the chairman mentioned, we have a lot of rulemaking to do. We hope to have a large NRPM or a series of them by fall.”

Lake also reiterated something the chairman mentioned in his remarks on Monday at the NAB Show regarding calls from broadcasters interested in selling spectrum.

“We have been contacted by some station owners,” Lake said. “I was approached yesterday by someone who said, ‘I just wanted to remind you that yes, we are selling.’ The questions range from, ‘what will be my share of the proceeds, to questions about channel sharing.”

Lake said the inquiries were evidence of interest, if only anecdotal. Mark Fratrik, a market analyst with BIA/Kelsey Group, said he’d also seen anecdotal evidence of another type.

“There are purchases of TV stations in recent years in anticipation of the auctions,” Fratrik said. “We saw TV station prices go up 100 percent in large markets. Clearly it’s the independent stations or public broadcast stations where there are multiple ones in a particular market. We think it’s having an impact already.”

Lake noted that this would be the commission’s first ever endeavor to hold “two-sided auction” in which reverse auctions are first held to determine if a minimum bid price can be met. He said the agency was vested in making it work for broadcasters because “we won’t have spectrum to sell unless broadcasters offer it.”

The legislation authorizing the incentive auctions outlines three scenarios for broadcasters to participate—giving up a 6 MHz license, giving up a portion of spectrum and sharing a channel with another station, or moving to a VHF channel. The FCC’s first workshop on participation will focus on channel sharing, which is also on the commission’s April 27 open meeting agenda.

Lake said some people had asked how the commission could issue a ruling on channel sharing without having auction rules in place. He said even if a channel-sharing order was adopted at the April meeting, it would most likely set forth things related to licensee rights such as must-carry, but not how channel-sharing would work in relationship to the auctions process. He said the channel-sharing workshop would probably take place in Washington.
~ Deborah D. McAdams