Historic Incentive Auction Begins
WASHINGTON—Broadcasters approved to participate in the TV spectrum incentive auction will not be able to pull out of the starting round after today. March 29, 2016, is the official start date of the two-part auction—a reverse auction with descending prices for broadcasters; a forward, more traditionally structured auction for the 100 or so wireless providers lined up to buy spectrum, including Verizon, AT&T and T-Mobile.
To participate in the auction, accepted applicants will have to commit to a relinquishment option at the opening price for that option by 6 p.m. ET March 29. The three relinquishment options include going off the air, voluntarily moving from a UHF to a VHF channel assignment, or moving from a high VHF to a low VHF. Each option incorporates a percentage of the opening price: full price for going off the air; 40 percent for going high VHF and 75 percent for going low VHF.
Reverse auction opening prices are based on a maximum value of $900 million divided into 1 million units of interference-population volume. For example, the opening bid price for WCBS-TV in New York to fully relinquish its spectrum is $888,687,700. Moving from a U to a V opens WCBS at $666,515,250, and from a high V to a low V, $355,747,800.
There is no guarantee of receiving those top bids, and broadcasters can drop out of the auction if their price expectation is not met. The Federal Communications Commission’s auction system will determine a spectrum-clearing target between 42 and 144 MHz based on how many and which stations participate. This also will determine which participating stations are most needed for a given clearing target, and therefore most likely to receive a higher opening bid.
Only full-power TV and Class A licensees may participate. Non Class A low-power TV licensees are not authorized to participate, but may enter into a channel-sharing arrangement with another broadcaster in the post-auction repack.
Broadcaster participation in the auction is anonymous by statute. Applicants are under a quiet period until the auction closes, so there is no public data available on how many TV stations may be sold or moved in the post-auction repack. This information will become available only after the auction closes, tentatively sometime in the third quarter of this year.
The clearing target is expected to be announced within three to four weeks, along with the starting time of the reverse auction clock phase, when actual bidding begins in the live auction system.
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