FCC moves ahead with wireless auction plan

Broadcasters wary as commission eyes voluntary sales in 2014

The FCC voted unanimously on Friday to move forward with a plan for auctioning off broadcast spectrum for wireless use, a move that could dramatically reshape the country’s communications infrastructure.

The FCC’s vote was on a notice of proposed rulemaking, an initial step in creating a system of incentive auctions in which broadcasters can voluntarily give up spectrum and then share in the proceeds when they are sold off to the highest bidder. The FCC said the auction is planned for 2014.

Broadcasters have been skeptical of the plan, and are sensitive to inferences that it is a signal that they are losing their primacy with the growth of smart phones, tablets and other wireless devices.

One of the more controversial parts of the auction plan is for “repacking,” in which channels may be moved on the lineup to free up space so that contiguous spectrum is available for wireless use. Congress set aside some $1.75 billion for the costs of moving channels, as well as other transition expenses. Stations also have been concerned about losing some of their coverage area in the transition, even though Congress mandated that “all reasonable efforts” be made to protect their reach. The auctions were approved as part of the Middle Class Tax Relief and Job Creation Act of 2012, signed into law in February.

Gordon Smith, president of the National Assn. of Broadcasters, expressed concerns in a media conference call on Friday.

“We are certainly entering uncharted territory,” he said. “There has never been an auction of this type or magnitude in the history of this country.”

Several times during the call, he said that their focus is on “transparency” and to make sure “if in the repacking our members are protected if they have chosen to stay.”

A concern is that stations, particularly in large markets, could lose some of their coverage area.

“This is something we think they are defining from the precedent of the transition from analog to digital, in that no more than 2% of the contour be degraded,” he said.

Nevertheless, with Congress having approved the incentive auction plan, Smith said that broadcasters “are committed to working with (the FCC) to ensure their success.”

He said that they have not yet surveyed members to see how many will be willing to give up spectrum or even turn off the lights. He said that he hasn’t heard of many stations coming forward yet to do so.

“I have said before that if there is a stampede coming, we certainly aren’t hearing hooves,” Smith said.

But the move toward the incentive auctions is drawing praise from the wireless industry, which fears that a spectrum crunch will limit the ability of mobile and other broadband services to grow.

Steve Largent, CEO of CTIA-The Wireless Assn., said that the move was “an important step toward alleviating the looming spectrum crisis that we’ve been warning policymakers about for the last three years.”

The goal of the FCC in its National Broadband Plan has been to reallocate 500 MHz of spectrum for wireless use, with up to 120 MHz coming from broadcasters who give up their airspace.

The auctions are projected to raise about $15 billion, according to the Congressional Budget Office. About $7 billion is allocated to create a wireless public safety network. The proposal also calls for freeing up unlicensed spectrum, with the intent of bolstering wifi.

The auction itself is a complex, a design that includes several pieces, including a “reverse” auction in which stations submit bids for what they want to get to relinquish their spectrum; the repacking of stations; and a “forward” auction that will include initial licenses for flexible use of the newly available spectrum.

FCC chairman Julius Genachowski, who has been championing the incentive auctions, said in a statement that the auctions “are also an opportunity for broadcasters, both those that will take advantage of a once in a lifetime financial opportunity, and those that will choose to continue to be a part of an even healthier broadcast marketplace.”