NAB, Sinclair Challenge Auction Order in Initial Briefs

If NAB and Sinclair win, retooling the auction to address their complaints should not lead to it being further pushed back, said NAB Executive Vice President-Strategic Planning Rick Kaplan in an interview Monday. “If the FCC believes we have a non-frivolous case, they should already be thinking about how to incorporate these changes,” Kaplan said. CTIA wants the D.C. Circuit to “move quickly to address these matters so that the Broadcast Incentive Auction may proceed as soon as possible,” General Counsel Mike Altschul emailed us. CTIA is an intervenor in support of the FCC in the auction appeal case.

The commission’s plan to use TVStudy in the auction contradicts specific wording in the Spectrum Act that specified the use of the original OET-69 software and violated the Administrative Procedure Act since the software and its settings weren’t part of a public notice, NAB said. Though FCC staff has argued that the older OET-69 software is not up to conducting the auction, that argument is belied by the fact that the original software is still being used to process applications by the FCC, NAB and Sinclair said. Although NAB conceded that there is “sense” in arguments against using “archaic software,” it said "there is sense, too, in Congress’s judgment that the certainty that comes with a familiar standard is critical to achieving a successful, voluntary incentive auction". By not providing proper notice of the software change and not considering alternative options, the commission violated the APA, NAB and Sinclair said. The FCC did not comment.

The broadcasters also attacked FCC decisions on what aspect of broadcast coverage would be protected in the auction. By not preserving the existing terrain covered by repacked station contours, the commission’s procedures “will fail to preserve ‘either coverage area’ or ‘population served’ for each broadcast television licensee,” Sinclair and NAB said. The petitioners' brief also points to a declaratory ruling “clarifying” that the auction order won’t protect unpopulated areas within station contours (see 1410010050). That ruling was the FCC’s “post hoc rationalization” to supply an explanation for not protecting broadcaster coverage areas in the wake of the NAB’s challenge of the auction order, the joint brief said.

The FCC also violated the Spectrum Act’s provisions protecting coverage areas with its 39-month post-auction deadline for broadcasters to cease broadcasting on their old frequencies, Sinclair said. “The hard deadline will force some broadcasters to cease broadcasting, and thus fails to preserve either ‘coverage area’ or ‘population served.’” A study by the commission had previously determined that “even in the best-case scenario, a single complex transition site would require at least 41 months to complete the transition,” Sinclair said.

The declaratory ruling was “an admission of weakness” on the FCC’s part, Holland & Knight broadcast attorney Charles Naftalin told us Monday. Naftalin is not involved in the auction appeal, but represents broadcast clients. The NAB has a “strong case” in its argument that the FCC did not follow the wording of the Spectrum Act in protecting station coverage areas, he said. The issuance of the declaratory ruling may be a sign that the commission isn’t likely to reach an out-of-court settlement with broadcasters about the auction framework, said another broadcast attorney unconnected with the case. The commission likely issued the ruling to make its case stronger, making it less likely to give ground, the lawyer said. The broadcaster arguments against TVStudy could also make their case before the D.C. Circuit difficult, the broadcast attorney said. The software and the work it performs are highly technical, which could make the court more likely to defer to the FCC on issues concerning them, said the lawyer.

The auction order also violates the Spectrum Act by being too broad in defining “competing licensees,” Sinclair said. The act prevents the FCC from holding a reverse spectrum auction unless two competing licensees participate, but the FCC is treating all broadcasters in the country as being in competition with each other for the purposes of the auction, Sinclair said. “This interpretation unreasonably strains the definition of 'competing' because licensees situated on opposite sides of the country obviously do not compete.” Since the incentive auction order would have the FCC paying stations in markets where there is only one auction participant, it violates the APA, Sinclair said. That’s an argument against the auction order that has not been much discussed, several industry attorneys pointed out. The markets where the FCC is most interested in collecting spectrum would likely have multiple bidders anyway, said a broadcast attorney, so it’s not clear how much an FCC concession to Sinclair on this issue would affect the auction. This is one of two Sinclair arguments that NAB did not join in on, and the two petitioners had asked the D.C. Circuit for permission to file their briefs separately, a request the court refused. NAB’s absence of support for this argument suggests the association didn’t think it was easily addressed, said a broadcast attorney. An attorney representing Sinclair declined to comment on the brief.