FCC Moves Forward with Incentive Auction Items (10/1/14)
Wednesday, October 01, 2014 | Comments

FCC Chairman Tom Wheeler sent an information package titled “Incentive Auction Opportunities For Broadcasters” to the owners of all full-power and Class A broadcast stations that Congress determined to be eligible to participate in the incentive auction. The information package was prepared for the FCC by the investment firm Greenhill and Co. and is designed to assist broadcasters in their analysis of the opportunities afforded by the incentive auction.

The incentive auction revenues will be used to fund the First Responder Network Authority (FirstNet) among other items.

The package describes how the incentive auction will work and reviews the flexible multiple bidding options for broadcasters. It also includes FCC staff estimates of high-end compensation that could be paid for with broadcast spectrum rights in each market, and a letter from the IRS providing guidance on the tax implications of the incentive auction.

Because of the voluntary nature of the incentive auction, each broadcaster will make the decision about whether to participate based on its own assessment of its financial and business interests. Given the complexity and financial scope of the auction, the decision whether to participate is analogous to the decision faced by potential investors in large, complex transactions.

The commission therefore contracted with Greenhill and Co., an investment firm with expertise in transactions of this sort, to prepare an information package to assist broadcasters in their analysis of the auction and the options it presents. In a letter to station owners that accompanies the information package, Chairman Wheeler wrote, “I believe the incentive auction is an unparalleled business opportunity for broadcasters. I hope you give careful consideration to the economic potential that it offers you.”

The FCC also updated its Learn Everything About Reverse Auctions Now webpage (www.FCC.gov/LEARN) to include information for broadcasters potentially interested in participating in the incentive auction. A complete version of the information package prepared for the FCC by Greenhill, the IRS guidance and Wheeler’s letter to broadcasters are available there as well.

The letter comes a day after the commission adopted a declaratory ruling clarifying how the repacking approach it adopted in the incentive auction report and order meets Congress’ mandate to make all reasonable efforts to independently preserve TV station coverage areas and population served. The FCC took action to ensure that its approach is fully understood by the public and by broadcasters that could be affected by the repacking that follows the incentive auction.

In addition, the FCC initiated a proceeding to address the long-term needs of wireless microphone users. The repurposing of broadcast TV band spectrum for wireless services following the incentive auction will significantly alter the spectrum environment in which many wireless microphones operate. Adoption of the notice of proposed rulemaking (NPRM) fulfills the commission’s commitment to initiate a proceeding to explore how best to accommodate the different wireless microphone users’ needs in the future.

Wireless microphones are used by consumers and businesses for a variety of applications. Most wireless microphones operate on unused spectrum in the UHF television band frequencies allocated for TV broadcasting. Wireless microphones also operate in other bands, both on a licensed and unlicensed basis, depending on the particular band. Following the incentive auction — with the repacking of the television band and the repurposing of current television spectrum for wireless services — there will be fewer frequencies in the UHF band available for use by wireless microphone operations.

The NPRM seeks to address the needs of wireless microphone users, both licensed and unlicensed. The notice examines wireless microphone users’ needs and different technologies that can address them, including digital technologies. The FCC proposed to modify its Part 15 rules to accommodate growing demand and encourage innovation in the provision of wireless broadband data services. The commission’s Part 15 rules permit devices to operate on unused “white space” spectrum between TV stations.

Since the commission finalized initial rules in 2010, unlicensed white space devices in the TV bands have been used primarily to provide broadband data and other services to schools and libraries. Unlicensed spectrum technologies have the potential to encourage competition in the broadband market, promote efficient delivery of broadband services in residences and businesses, and improve user experience with consumer devices needing short range but high data rate communications.

Following the incentive auction, with the repacking of the television band and the repurposing of current television spectrum for wireless services, there will be fewer frequencies in the UHF band available for use by unlicensed fixed and personal/portable white space devices and wireless microphones. The proposed changes to Part 15 rules are designed to allow for more robust service and efficient spectral use in the frequency bands that are now and will continue to be allocated and assigned to broadcast television services, while continuing to protect authorized users from harmful interference.

The 600 MHz band plan adopted in the incentive auction report and order also provided new opportunities for unlicensed white space devices in the repurposed 600 MHz guard bands and channel 37. The notice also proposes and seeks comment on rules to permit those operations, while protecting authorized licensed services from harmful interference.

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