Spectrum Auctions Could Begin Within Year or Two, Genachowski Says

Genachowski sidestepped questions about whether broadcasters deserve to be reimbursed for spectrum. He indicated that the FCC was trying for a process that could be implemented quickly. “We tried to do a plan that could move quickly and get us to where we wanted to be,” he said in response to a question from CEA President Gary Shapiro. “This was something that made a tremendous amount of sense and that people could rally around."

Getting more mobile spectrum for devices involves more than avoiding download delays for consumers, Genachowski said. “The bigger risk is that if we don’t have a world-class infrastructure, we run the risk that the next generation of innovation will start in another country.” He said that “so much of our economy rests on” the communications infrastructure that getting the spectrum is critical to the entire economy and creating jobs.

The auction rules being developed by the FCC are aimed at letting the market work, Genachowski said. They would allow broadcasters to begin sharing some spectrum in order to free up other frequencies and would set specific rules for the auction, including allowing licensees to set “reserve prices” for the spectrum they offer for sale, he said.

There is reason to be hopeful that Congress will move quickly to authorize the spectrum auctions, Rick Boucher, a former chairman of the House Communications Subcommittee, said earlier at CES. He said the need to free up spectrum “obviously remains,” and legislation in the last session had bipartisan support, so “I think this is a candidate for early action."

Genachowski and Boucher repeatedly emphasized that the auctions would be totally voluntary for spectrum holders. Despite doubts expressed by NAB officials about whether auctions would be truly voluntary, they repeatedly said no TV station owner would ever be forced to release its channel. In response, NAB officials said broadcasters could support auctions that are “truly voluntary."

"I'm still surprised that people believe these will not be truly voluntary,” said Rebecca Hanson, a senior FCC adviser on broadcast spectrum. “We are not going to require any broadcaster to give up any spectrum.” She said the agency rules also will allow broadcasters to give up only a portion of channels, allowing them to continue to broadcast full digital signals while getting a capital infusion in return for giving up, for example, half their 6 MHz.

"That all sounds good, but the tech people are asking, ‘How you do that?” responded Lynn Claudy, NAB senior vice president for science and technology. One issue, he said, is the possibility that the FCC will want to “repack” the broadcast spectrum after the auctions, creating contiguous blocks of spectrum for wireless broadband. For example, the commission might want to move broadcasters into the lower VHF channels, which were the prime TV channels in the analog world but have proven to have serious reception problems for DTV and are unattractive for mobile broadband. “If the broadcast channels are the beach front spectrum, channels two to six are the toxic beachfront,” Claudy said.

The FCC is looking at ways to improve VHF reception, Hanson said, so some broadcasters might be willing to move there and free up channels for mobile broadband. She said some might also be interested since they get the vast bulk of their viewership via carriage on multichannel services and still would get their viewership there.

Clearing 120 MHz of broadcast spectrum via auctions will be “really hard,” Claudy said. “There are a lot of assumptions in the auctions, including that a lot of broadcasters will participate,” he said. “We don’t see any long list yet."

Broadcasters face their own “looming spectrum crisis,” Claudy added. He said Japan’s NHK will exhibit an “ultra” HDTV system at the NAB convention this spring that provides 16 times the detail of HDTV but requires additional spectrum. The NAB made a similar argument about needing additional spectrum for HDTV in the 1980s, though DTV eventually turned out to require less spectrum for an HDTV signal than an analog standard definition signal. “In the zeal to get mobile broadband,” broadcasters could be left without the ability to offer ultra HD, Claudy said.

Broadcasters could bid in auctions for additional spectrum for ultra HD, said Tom Wheeler, managing director of Core Capital Partners and former president of both CTIA and NCTA. But Claudy said broadcasters probably won’t be able to afford to bid for new spectrum.

"This is ultimately about letting the market work,” Wheeler said. “This is voluntary, and it gives the broadcasters the maximum flexibility to be what they want to be.” He said there’s “a bright future” for broadcasters who want to be entrepreneurs, as well as those who want to continue delivering linear programming. “There is an economic decision to make,” Wheeler said. “The question is what they will do with the rest of their digital signal, and the auction is a way that broadcasters can make that economic decision."

The FCC is “running various scenarios” about how to run the auctions, Hanson said. She said the agency will “work hard to make it attractive for broadcasters” because the auction can’t succeed unless broadcasters give up spectrum. “When we get the first round of volunteers, we will be able to assess if the auction is feasible,” Hanson said.

The commission isn’t just targeting broadcast spectrum, Genachowski said. He said the agency is looking at ways to free up other spectrum, such as mobile satellite, by liberalizing rules. Its white spaces rules also will make a lot of spectrum usable, he said.

The FCC also sees Universal Service Fund overhaul as important, Genachowski said. He said USF’s focus on voice service is “very 20th century,” and it’s “holding us back in the 21st century.” The goal, he said, is to make USF funding of broadband “efficient and targeted.”