Broadcasters, Carriers Ask FCC to Change Incentive Auction Rules

The Competitive Carriers Association and T-Mobile asked the FCC to reconsider the reserve trigger for the auction, a price point that must be met before some of the spectrum offered in the auction will be reserved specifically for competitive carriers. Petitions filed by the two were among eight petitions for reconsideration on the rules posted by the FCC Tuesday in docket 12-268. The FCC approved initial rules for the much-anticipated auction at its May 15 open meeting (CD May 16 p5).

Industry lawyers we asked said the recon petitions likely pose little additional risk that the auction will be delayed, especially relative to the threat of delays as a result of NAB’s legal challenge. FCC Chairman Tom Wheeler warned last week that NAB’s challenge poses a danger to holding the auction as planned in mid-2015 (CD Sept 10 p1).

"Resolving the recon petitions is clearly important on auction timing, but the biggest risk is probably NAB’s lawsuit on repacking just because it’s so interconnected with other issues,” said Paul Gallant, analyst at Guggenheim Partners. “Although at this point, it still seems like there’s a decent chance that lawsuit gets settled.” Though several broadcast attorneys have told us it’s not uncommon for court challenges to FCC orders to be delayed until after the agency has resolved related recon petitions, that’s unlikely to happen in this case, they said. The FCC has already told the court it wants the matter resolved quickly. In the interests of time, the commission is likely to quickly address the recon petitions with an order on reconsideration, said Drinker Biddle broadcast attorney Howard Liberman. “That would make the case very ripe."

Reserve Trigger

Some wireless interests focused on the order’s reserve trigger. The reserve trigger is “arbitrary and capricious and risks auction failure,” CCA said (http://bit.ly/1tYIzkh). No one argues that the FCC shouldn’t set an overall reserve price in the auction to guarantee the auction recoups enough money to pay broadcasters, fund FirstNet and pay other costs, said CCA President Steve Berry in a news release. “Because of the unique nature of this ‘once-in-a-lifetime’ opportunity, CCA wants to ensure the FCC has fully considered the risks associated with the additional reserve trigger,” Berry said. “CCA merely seeks to ensure the FCC promotes the most competitive auction and because it has failed to articulate any good reason for this ‘double trigger,’ CCA has asked the Commission to reconsider this portion of the Report and Order."

The reserve trigger is “unnecessary and contrary to the Commission’s goal of encouraging competition, maximizing the efficient use of the spectrum resource, and recovering a portion of license value for taxpayers,” T-Mobile said (http://bit.ly/1qJojBU). The trigger “increases the risk of foreclosure, heightens the risk of auction failure, and introduces unneeded complexity in an already complex auction process,” T-Mobile said.

GE Healthcare asked the FCC to reconsider its “arbitrary and capricious decision” to allow the unlicensed use of TV Channel 37, spectrum also dedicated to the wireless medical telemetry service (WTMS). “As an important safety-of-life service, WTMS cannot tolerate even small or episodic incidents of interference,” GE said (http://bit.ly/1ARjJ4s). It noted that six years ago, the FCC opted not to allow Wi-Fi or other unlicensed use of the spectrum. The company also asked the FCC to mandate “increased 600 MHz base station transmitter to WTMS separation distance and/or more stringent emission limits to avoid WTMS desensitization” and to rethink a decision to repack more TV stations into channels 36 and 38, adjacent to the WTMS band. “GEHC appreciates the Commission’s efforts thus far to protect WMTS operations, but more protections are needed to ensure that WTMS systems will not suffer harmful interference as a result of changes in the 600 MHz band,” the company said.

Commercial, NCE Station Concerns

The FCC post-incentive auction repacking plan doesn’t follow legislators’ instruction to take all reasonable measures to protect existing broadcasters, said petitions from all big four network affiliate groups, Block Communications, the Association of Public Television Stations and many others. The FCC “has adopted an auction and repack scheme that protects wireless telephone companies and punishes TV viewers,” said Block (http://bit.ly/1ARrpUs). Instead, it said the commission should adopt a repack plan that prioritizes maintaining current broadcast coverage. A new repack plan should ensure that relocated stations are compensated, said the big four network affiliate groups (http://bit.ly/1m8LFQd). The FCC should either treat the $1.75 billion relocation fund as a budget or require “winning forward auction bidders to reimburse the expenses of relocated incumbents,” the affiliates said.

Broadcast engineers Cohen Dippell (http://bit.ly/1m8LHYi), the Advanced Television Broadcasting Alliance (http://bit.ly/1BJZAzH) and other petitioners also criticized the use of the TVStudy software in the repacking, one of the issues at the heart of the NAB court challenge of the action order. “The FCC has not achieved the correct balance achieving what it perceives in compliance with the enabling legislation,” said the engineering firm.

The auction order “overturns more than six decades of Commission precedent protecting reserved spectrum for noncommercial educational service,” said APTS, the Corporation for Public Broadcasting and PBS in a joint filing (http://bit.ly/1uFSYiB). The FCC should reconsider its incentive auction rules “so that a noncommercial educational station operating on a reserved channel may relinquish all of its spectrum usage rights only if at least one such station remains on-air in the community or at least one reserved channel is preserved during the repacking process,” they said. By not doing so, the FCC is “making the continued existence of noncommercial educational reserved spectrum subject entirely to market forces,” the public TV filers said. The FCC hasn’t given enough notice of such a radical shift, they said. “The Administrative Procedure Act requires the Commission to provide adequate notice of and a reasoned analysis for such a radical departure from longstanding Commission policy."

The FCC shouldn’t proceed with the auction without completing its international coordination process with Canada and Mexico, several broadcasters said. “More than one-third of the UHF stations that are potentially subject to repacking are in these border areas,” said Gannett and other broadcasters (http://bit.ly/YPOJGK). Because the timing of the repacking doesn’t take international coordination into account, stations near the border might not be fully reimbursed for being relocated, Gannett said. This issue and others are caused by the FCC’s rush to complete the auction, Block said. “The Spectrum Act gives the FCC 10 years to conduct the auction -- more than enough to complete the necessary border coordination -- but the FCC is choosing to ignore a direct Congressional command in order to maintain its arbitrary decision to hold the auction in 2015."

Several petitions challenging the auction order and repacking were filed by LPTV groups and station owners. The FCC needs to prove, though an economic study, that including LPTV in the auction wouldn’t make it more financially successful, said the LPTV Spectrum Rights Coalition (http://bit.ly/1DgaLSv). Free Access and Broadcast Telemedia made similar requests for a cost-benefit study (http://bit.ly/1qZwhEy) of including LPTV in the auction, and ATBA also asked for a study. -- Monty Tayloe (mtayloe@warren-news.com), Howard Buskirk