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FCC Proposes Volume Discounts for TV Moving Fund

WASHINGTON— Bulk purchases and volume discounts are just a couple of suggestions being floated to qualify for a piece of the $1.75 billion broadcaster moving fund. The Federal Communications Commission is seeking comments on some of the items related to the Broadcaster Relocation Fund in its Incentive Auction proposed rulemaking issued last December. The fund is also supposed to cover cable and satellite operators who have to retool to continue receiving relocated TV station signals.

Vendor discounts are emphasized. In its Public Notice seeking feedback, the commission asked:

“Are there ways to encourage manufacturers and service providers to establish prices with built-in discounts that reflect the volume of business that channel reassignments will generate?”

“Do broadcasters typically pay list price for equipment or are discounts common, particularly for bulk orders or for station group owners? If so, what kinds of discounts generally apply?”

Companies that make broadcast facility equipment rarely publish prices because contracts vary significantly. The commission acknowledged this by asking “if the services and equipment necessary to accomplish a channel reassignment [are] too customized to be eligible for discounts or bulk purchasing?”

Some of the equipment necessary to move a TV station to a different channel is among the most customized, especially the half-ton antennas used to transmit signals, which are slotted according to frequency. Antennas, as well as transmitters, tubes, transmission line, mask filters, tower gear and rigging, HVAC and labor are the primary items listed in the commission’s “Catalog of Eligible Expenses,” an addendum to its Public Notice crowdsourcing a reimbursement strategy. Widelity of Fairfax, Va., was brought into help compile the catalog.

The commission also suggested holding vendors to federal contractor prices for expenses that are already included in a General Services Administration Schedule, and competitive bidding for expenses exceeding “a certain dollar threshold,” or new tower construction.

On the TV station side, the commission proposed facility sharing…:

“Should the commission encourage broadcasters seeking reimbursement from the fund to pursue tower- and antenna-sharing arrangements and, if so, how?”

and organized buying:

“We received minimal comments on bulk purchasing and, thus, seek specific comment on the viability of having broadcasters organize bulk purchasing or services arrangements to generate costs-savings.”

It also asked if interim facilities should be covered and how that equipment could be repurposed to final facilities.

The Broadcaster Relocation Fund was established by a Congressional directive to set aside $1.75 billion of the presumed proceeds raised in next year’s auction of TV spectrum. There is no way to know if the fund will be sufficient to cover all broadcasters because there’s no way to know before the auction how many and which ones are participating.

Consequently, there’s no way to know how many TV stations will have to be moved and where, which in turn could put vendors in the predicament of having to turn out huge amount of specialized equipment very quickly.

Because the fund may have to be stretched, the commission asked if it could “incentivize” cost-sharing by splitting any left-over monies with TV stations and multichannel video service providers.

The commission’s Media Bureau will hold a workshop Sept. 30, 2013 “to discuss cost and cost mitigation issues,” the Notice stated.

Comments on the Public Notice go in GN Docket No. 12-268 and are due Oct. 31. Replies are due Nov. 14, 2013.