FCC, Seeking Flexible Rules, Won’t Hold a Disappointing TV Incentive Auction, Epstein Says

Without identifying any critic, Epstein said at a Media Institute lunch Thursday that such people “have been making these same claims since before we released the NPRM.” His prepared remarks summarized the NPRM and sought comment from a wide array of stakeholders, including those broadcast executives present. The first Broadcaster LEARN (Learn Everything About Reverse Auctions Now) workshop will be Oct. 26 at the commission, Epstein said in Q-and-A: Such education is part of the agency’s efforts to educate industry and the public on the auction, as consumers will need to rescan stations their TVs can receive after broadcasters vacate spectrum that’s auctioned. “Our goal at the end of the day” after getting “your comments” is to devise a “plan to make it simple” for those volunteering spectrum in return for sharing proceeds with the government, Epstein said.

Skeptics have been complaining for years that the FCC would muddle auctions, since before the agency in 1993 first got authority from Congress to put licenses out for bids, Epstein said in prepared remarks: “I was there” working for Chairman Mark Fowler when the commission sought such authority. Auctions now are “widely heralded as an unqualified success,” with the FCC having raised over $50 billion over the years, said Epstein. The current co-head of the Incentive Auction Task Force led the Common Carrier Bureau under Fowler and the agency’s DTV transition efforts in 2009 (http://xrl.us/bnuwcb). He noted there have been more than 80 FCC auctions. Agency figures show Auction 1 for PCS spectrum got $617 million in net winning bids (http://xrl.us/bnuwb7), and the most recent auction, No. 93, got $3.8 million for FM construction permits (http://xrl.us/bm2xcd) this year (CD April 9 p14).

"We at the commission do not doubt the challenges, but we are determined to succeed” in the world’s first such incentive auction, Epstein said. The agency is having a “dialog” with outside experts on economics as it designs rules, he noted. “Collaboration between government, industry, leading academics” and others can make for a success, he said. “Each part of the auction must be designed to be straightforward from a bidder perspective.” The reverse and forward auctions and shuffling of TV stations’ frequencies to free up some UHF spectrum to be auctioned for wireless broadband will tax commission staff, Epstein said. Staff will deal with the “complexities under the hood which arise,” he said.

"Aggressive but achievable deadlines” include completing an order setting auction rules next year and holding the auction the following year, Epstein said. With the auction “a couple years off,” Media Bureau Chief Bill Lake is aware that consumers will need to rescan for channels, Epstein said in Q-and-A: That’s “just like in the analog-to-digital transition” when all full-power TV stations went to DTV. “We are well aware that consumer outreach” and education “will be part of the overall program” when the time comes, Epstein said.

Some flexibility must be built into auction rules, because different amounts of spectrum may be volunteered by broadcasters in various “geographic areas,” rather than a single swath of frequencies nationwide, Epstein said in the speech. Instead of a single band plan, “the auction design must provide a framework” with varying amounts of spectrum in regions, he continued. “Our primary goal is to make sure we follow the dictates of the statute” that became law earlier this year, by protecting the coverage areas of TV stations that don’t participate in the auction, he said of that “valuable service” such outlets will continue providing. “We're not in the business right now of estimating the spectrum we'll get,” in terms of how many megahertz broadcasters will seek to sell, Epstein said in Q-and-A. “That is a market-based” outcome based on how many broadcasters “decide to participate,” he said: The FCC wants to make that an “easy” decision.