FCC Wants Carriers to Work with Broadcasters on a Successful Incentive Auction, Industry Officials Say
The FCC is leaning on wireless carriers to work with broadcasters to convince them to come to the table in the TV incentive auction, industry officials said in recent interviews. The FCC asked for AT&T’s cooperation in particular as part of a deal on the spectrum aggregation rules approved at the May 15 commissioner meeting, giving AT&T and Verizon a clear shot at buying substantial spectrum in what’s expected to be a 2015 auction, said broadcast and wireless industry officials. Other carriers have been looking to hire former broadcasters to help build support for the auction. Meanwhile, almost three weeks after commission approval (CD May 16 p5), the FCC Monday released service rules for the auction. Commissioners gave their signoff to the final version Friday (http://bit.ly/1tC9nSm), agency officials said.
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As part of a deal with AT&T on spectrum aggregation rules, FCC officials said AT&T “has to spend real dollars and put real effort behind convincing broadcasters to participate in the auction,” said a broadcast industry official. Industry officials said AT&T agreed to work with broadcasters the night before the auction orders were slated for votes (CD March 16 p5).
In its official comment on the spectrum aggregation and auction rules, AT&T said they were a “significant step forward,” which will “demonstrate to broadcasters that the incentive auction can and will attract significant carrier interest and demand.” AT&T had no additional comment, a spokesman said Monday.
Broadcast industry lawyers said they question the extent to which carriers are well positioned to get broadcasters to come to the table. But Paul Gallant, analyst at Guggenheim Partners, said direct discussion between broadcasters and carriers could “sidestep any friction” between station owners and the FCC. “Having wireless carriers engage directly with the broadcasters would be a positive development for the auction,” he said. “Broadcasters already have a pretty good working relationship with carriers, so there’s a comfort level there.”
The incentive auction order runs 329 pages without appendixes. “Our central objective in designing this incentive auction is to harness the economics of demand for spectrum in order to allow market forces to determine its highest and best use,” the order said. Participation by broadcasters is “wholly voluntary” but the agency is “committed to removing barriers to this voluntary participation,” the agency said. The FCC wants to move quickly, the order said. “We must proceed deliberately, however, as the auction will be the first of its kind. We also are committed to an open, transparent process with meaningful public input."
NAB is still analyzing the order, said a spokesman. “Our twin aims are to help ensure the best chance for auction success while holding harmless those local TV stations committed to staying in business who wish to continue serving their tens of millions of viewers” (http://bit.ly/U7zkyV).
Meanwhile, CEA, the Competitive Carriers Association, CTIA and NTCA jointly asked the FCC to revise rules that require companies to make larger upfront payments for licenses if they ever defaulted on a license or were delinquent on a debt owed to a federal agency. Under current rules, these companies must make an upfront payment that is 150 percent of what would otherwise be required. The “former defaulter” rule has in past auctions required bidders “to make millions of additional dollars in upfront payments,” the associations said Friday in docket 12-268 (http://bit.ly/1tBLeLM). The rule discourages bidding and should not apply “as long as the bidder has no current defaults or delinquencies,” they said. Consistent with a 2007 petition by DirecTV-EchoStar, the associations asked the FCC to offer a break for debt three years prior to the application deadline and debt below “the lesser of $100,000 or 0.1 percent of the average annual revenues of the applicant.”(hbuskirk@warren-news.com)