Auction Schedule Modified, Upfront Payments Due July 1

WASHINGTON—Upfront payments from parties intending to bid for relinquished 600 MHz TV spectrum are due July 1, the Federal Communications Commission announced Wednesday. The commission released its upfront payments Public Notice, along with a modification of the schedule for the reverse auction, which started May 31 with a six-hour bidding round, followed the next day by a four-hour session, and thereafter through this week, a series of two-hour rounds, twice daily. As of Monday, June 13, the schedule will comprise three, one-hour bidding rounds per business day. According to John Eggerton of Broadcasting & Cable, this schedule means the reverse auction will conclude the last week in June. (See, “FCC’s Spectrum Auction Moves to Three Rounds.”)

Beginning with Wednesday morning’s round of the currently running reverse auction, the dollar amount that reverse auction bidders can enter as a proxy floor price cannot be less than 50 percent of the price offered for a station’s currently held option. The floor was previously set at no less than 75 percent of the price offered for a station’s currently held option to prevent participants from accidentally setting their price lower then they intended.

On the forward auction side, all qualified applicants vying to buy TV spectrum sold in the reverse auction will be required to make their upfront payment by 5 p.m. ET on July 1. The payment must be made by wire transfer into the FCC account at the Federal Reserve Bank of New York.

“Upfront payments help deter frivolous or insincere bidding, and provide the commission with a source of funds in the event that the bidder incurs liability during the auction,” the PN states.

The commission urged forward auction bidders to pay close mind to the upfront payment instructions, “because they differ in several respects from instructions provided in past auctions.”This PN will be sent by overnight delivery to the contact person listed on each forward auction applicant’s FCC Form 175. The PN noted that of 104 forward auction applicants, 99 qualified. Those 99 will have to make upfront payments to participate. The upfront payments will be treated as refundable deposits.

The amount will determine how much spectrum—in terms of bidding units—each participant is eligible to bid for. A certain number of bidding units comprise each of the Partial Economic Areas that wireless providers use to define U.S. market boundaries. For example, New York, the No. 1 television market, is also the top PEA, comprising 27,000 bidding units. (Bidding units for each PEA is laid out in Appendix F of today’s Public Notice.) Upfront payments should be calculated by multiplying the number of bidding units targeted by $2,500. Applicants previously considered defaulters will have to multiply that number again by 1.5.

These upfront payments will not be assigned to any particular bidding units, but will apply to the total across all areas forward auction applicants selected on Form 175. Applicants previously considered defaulters will have to multiply that number again by 1.5. The commission said it would release an upfront bidding calculator shortly after the release of the Public Notice.