Broadcaster Petition Urges Changes to Incentive Auction Order Channel-Sharing Rules

Channel-sharing boundaries could drive broadcasters away from the auction when the FCC needs to be enlarging the pool of interested broadcasters, said the petition. It urged the FCC to clarify that parties to broadcast channel-sharing agreements are free to negotiate for common contractual rights, let broadcasters enter into CSAs either before or after the incentive auction, and ensure that parties to CSAs have the flexibility to choose whether those agreements are permanent or for a fixed term, it said. EOBC urged the FCC to clarify that it “will never force a broadcaster to accept a channel sharing partner.” The commission declined to comment.

There are practical problems under the rules outlined in the order, said EOBC Executive Director Preston Padden. Some coalition members began discussing possible sharing arrangements after the order was released, but then realized that there were issues, he said. A broadcaster may want to share a channel, but under the order, “you'd have to give up a chunk of your spectrum forever,” he said. “The table of television allotments would be formally changed to reflect that part of your spectrum belonged to me.” Members found that some potential hosts weren’t prepared to make that permanent commitment forever, he said. “There may have been interest in hosting for a few years, but not forever.” EOBC represents mostly big-market TV stations potentially interested in participating in the auction, and doesn’t identify members.

The changes suggested in the petition “would certainly increase the attractiveness of channel sharing to broadcasters,” said Jason Rademacher, a Cooley broadcast attorney. Channel sharing is something the FCC thought should be an attractive option to broadcasters because it lets them monetize their spectrum and remain on-air, he said. The rules already adopted in the order make broadcasters less likely to sign those agreements, he said. The petition addresses nuts and bolts questions from a business standpoint that might keep people from the agreements in the first place, he said. While some companies may be comfortable with CSAs under the current rules, “the FCC should make the rules more expansive and inviting, so that more people will want to do this,” he added.

CTIA said it welcomes the coalition’s efforts to reduce barriers to broadcaster participation. Channel sharing is another example of how the incentive auction is a “win-win-win” for U.S. consumers, broadcasters and the mobile wireless ecosystem, said Scott Bergmann, vice president-regulatory affairs. CTIA encourages the FCC “to carefully consider proposals that might make channel sharing more desirable and free up much-needed spectrum,” he said in a statement. The filing has a lot of important points, said an NAB spokesman. “They are making meaningful contributions to the goal of making channel sharing viable."

While there are other agreements for broadcasters, like retransmission consent agreements, they don’t really provide for what happens when a broadcaster no longer has a dedicated channel, said Peter Tannenwald, a broadcast attorney at Fletcher Heald. “If you're interested in remaining a pay-delivery station, you might very well want to channel share because you'd get a lot of money out of the auction."

Tannenwald backed the petition’s arguments and bemoaned the commission’s approach to the channel-sharing framework. The FCC is taking a new way of operating and trying to apply old concepts to it, he said. “If you want to have channel sharing, don’t put barriers in the way of it.” Broadcasters don’t want to channel share with a partner they didn’t choose, he said: If the broadcaster can’t have the channel back if their partner leaves the business, “it’s a big negative.”

The attorneys said the changes in the petition have a good chance of being addressed in the later proceedings. Padden said he expects the issue to be clarified in the upcoming FCC order responding to various reconsideration petitions. Some FCC staff members suggested to EOBC that it file the petition, so there would be a basis on the record for them to consider changes, he said. There will likely be a lot of interest in sharing “and it will take a while to figure out how to negotiate these agreements,” he said. The coalition petition isn’t “obstructionist,” Rademacher said, referring to FCC Chairman Tom Wheeler’s statements against broadcaster efforts to delay the auction (CD Sept 10 p1). If the FCC already made decisions on an issue, petitioners should file now because they might lose the ability to contest it later, said Rademacher.

The FCC ought to make channel sharing more widely available through the later proceedings, Tannenwald said. For those who want to, they shouldn’t be limited, he said. If the FCC will allow two separate licenses on the same channel, “there’s no reason to limit where it’s used,” he said: “It doesn’t make sense for it to be a one-time opportunity.”