On Wednesday, FCC Chairman Julius Genachowski announced the formation of an "Incentive Auction Task Force." Last month President Obama signed legislation allowing the FCC to conduct an incentive auction of UHF TV broadcast spectrum as well as some spectrum currently allocated for Federal government use by NTIA. Ruth Milkman has already started managing the Task Force and implementation of incentive auctions on an interim basis.
Members of the Task Force include Rick Kaplan, leader of the Wireless Telecommunications Bureau, Bill Lake, leader of the Media Bureau and Julie Knapp, head of the FCC Office of Engineering and Technology. Also participating are FCC Chief Economist Marius Schwartz, Chief Technologist Henning Schulzrinne, General Counsel Austin Schlick, and others.
Genachowski commented, "Incentive auctions are a big idea. The concept, of course, which we developed in our National Broadband Plan, is to deploy market forces and a market-based mechanism to re-purpose spectrum for flexible use, including mobile broadband. But there's no doubt that the task ahead will be complex and challenging. Incentive auctions are unprecedented. The legislation, at over 100 pages, raises many difficult issues. I'm confident our staff is up to the challenge. What we'll see is an implementation process that will be inclusive and participatory; that will be guided by the economics and the engineering; and that will seek to maximize the opportunity to unleash investment and innovation, benefit consumers, drive economic growth, and enhance our global competitiveness. When the incentive auction of the TV bands is complete, we expect to have a healthy broadcast sector, and a strong, robust, competitive, and world-leading mobile industry."
Some of the "difficult issues" in the legislation include the prohibition on involuntarily moving UHF TV stations to VHF and the requirement to make "all reasonable effort" to protect broadcast stations' coverage in a repacking. As I've pointed out in previous articles, if the demand for UHF TV spectrum by wireless carriers turns out to be insufficient to cover the compensation set by broadcasters giving up their spectrum (or moving to VHF) in the reverse auction, the spectrum will not be transferred. The legislation also allows the FCC only one shot at the auction process, so there will not be an opportunity to try it again. Nielsen ratings are showing in increase in the use of over-the-air TV and it is obvious from the many articles on "cord-cutting" that this trend is likely to increase. These factors, and the delay in getting compensation for any returned spectrum until the forward auction is completed, could limit broadcaster participation.
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