Incentive Auction: What’s Next?

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WASHINGTON—Just what to expect when you’re expecting a TV spectrum incentive auction is taking shape. The Federal Communications Commission has laid out a “roadmap” of its intentions over the next few months leading to the March 29, 2016, auction.

“This fall, staff will release detailed information on the application process and announce the reverse auction opening bid prices. We will then start taking applications,” wrote Gary Epstein, chair, and Howard Symons, vice chair of the FCC’s Incentive Auction Task Force on the “Official FCC Blog.”

The next step, now that the commission has released its Bidding Procedures Public Notice outlining the basic logistics of bidding, will be the release of an Application Procedures Public Notice in the fall.

“It will describe the nuts and bolts of the auction application process and post-auction procedures, including the opening dates for the application filing windows, the filing deadline, the schedule for mock auctions, and the information required on the auction application forms,” Epstein and Symons said.

The commission also will release the forward auction bidding prices this fall. The forward auction bidding prices pertain to the reclaimed TV spectrum that wireless providers will bid for in paired 5 MHz blocks.

The reverse auction opening bid prices—those broadcasters will be offered at the start of the auction—will be announced 60 days before the deadline for reverse auction applications. This application window itself also will be defined in the upcoming Application Procedures PN. It is expected to close before the end of the year, meaning opening prices (as well as contour coverage data), must be issued by at least Nov. 2, 2016. The application deadline is notable in that this is when the FCC’s quiet period goes into effect, prohibiting broadcasters from discussing bids or bidding strategies. (See, “Shh! Public TV Questions Auction Quiet Period.”)

The reverse auction opening bids will be based on a formula applied to a maximum value of $900 million divided into 1 million units of interference-population volume (How many people are covered by the spectrum, at what level of interference). They will be further refined according to which of three options broadcasters elect for participating in the auction: going off the air; going from a UHF to a high VHF, or going to a low VHF channel.

After the application deadline, the commission will review the applications for “completeness and accuracy.” Broadcasters will be able to make minor modifications or corrections until the March 29, 2016 commencement date, when they will have to commit to their preferred initial bid option.

“Broadcasters will have the opportunity to make minor modifications or corrections necessary to complete their applications, and then, by March 29, 2016, each participating broadcaster that has completed an application must commit to its preferred initial bid option—going dark, low- or high-VHF.

“That commitment will bind the broadcaster to relinquishing its spectrum usage rights at the opening price applicable to its preferred option,” Epstein and Symons wrote. “If, in the auction itself, the price offered to the broadcaster drops, the broadcaster is no longer bound to relinquish its spectrum unless it elects to remain in the auction at the lower price.”

When applications are filed and finalized, the FCC will determine its initial clearing target and broadcasters will then be able to participate in a mock auction before actual bidding begins.

Qualified forward auction applicants will have to make upfront payments after the clearing target and band plan are announced. Once upfront payments are made, wireless providers also will be able to take part in a mock forward auction. The forward auction will begin no sooner than 15 days after qualified bidders (wireless providers) are announced.

“We recognize that this is a great deal of information, especially for entities that have not participated in an FCC auction before,” Epstein and Symons said. “Staff will therefore be offering three types of training this fall, even before applications are due: workshops, webinars and an interactive on-line tutorial.”

The first webinar, on channel-sharing, was held recently. (See “Channel-Sharing: Multiple Stations on One Channel.”) The next will be held “shortly after Labor day,” and cover the Bidding Procedures Public Notice released Aug. 11. The Applications Procedures PN will be covered in two workshops in the fall.

There also will be a technical hotline available during the application and bidding processes.