FCC Nearing End of Long, Complicated Process as Incentive Auction Soon Gets Underway, Says Task Force Chief
Only 57 days remain until broadcasters must make “binding” commitments on whether they will offer their licenses for sale in the TV incentive auction, said Gary Epstein, chairman of the FCC Incentive Auction Task Force, at the Spectrum Management Conference Tuesday. Epstein indicated the FCC will likely stick with the current post-auction time frame, which requires stations to move in 39 months. The time frame was adopted by the commission, he said: “We believe it to be sufficient but we recognize that there are going to be challenges.”
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The application window to bid in the forward auction closes in eight days, Epstein noted. He compared the FCC's current stage on the auction to standing at base camp before scaling a mountain peak. “Climbing it is pretty damn impressive until you look and see there’s the summit,” Epstein said. “Then you’ve got to remember even after you reach the summit, you’ve got to climb safely back down.”
Epstein said the FCC is likely to unveil the revised 600 MHz band plan in April and the clock rounds of the reverse auction will begin in May, about a week after the mock reverse auction. The entire auction is likely to be over in Q3, he said.
The FCC will have a public website with a dashboard for the reverse auction that will indicate the current stage and whether bidding is open, Epstein said. “During the forward auction, the public will see detailed price information that will indicate the progress of the auction both toward satisfying the final stage rule and towards completion of bidding.” The FCC will release a public notice in the next few weeks indicating what kind of information will be publicly available, he said.
The incentive auction is a “bold” proposal and “totally unprecedented," said Commissioner Jessica Rosenworcel. “If we get it right, and I believe we will, we will have a template that can be used worldwide for the repurposing of spectrum for mobile broadband use.”
Joan Marsh, AT&T vice president-federal regulatory, said she liked Epstein’s mountain climbing analogy. “As a company that’s climbing the mountain and sitting at the base camp, the question that we’re asking ourselves is, is there going to be a blizzard before we reach the top?” Marsh said. “Will there be enough oxygen so we won’t get altitude sickness and will we face an ice dam on the way down?”
Marsh said AT&T sees the spectrum reserve, setting aside spectrum for competitive carriers, as a big question mark. “I think there’s going to be some important lessons learned as we'll discover the ultimate impact on the auction and how it plays out," she said. AT&T is also very interested in getting more information from the FCC on the mock auction and seeing the software, she said.
“This is the world’s first incentive auction. The software package will not look like the packages in prior auctions,” Marsh said. “We are very well prepared, but to date we’ve not been able to touch or test drive the actual software.” Repacking also remains a big issue, and hasn't gotten enough attention, she said. “I don’t think most people understand what an enormous lift this is going to be.” Marsh said that nothing in the record shows the 39-month repacking time frame is reasonable.
AT&T estimates some 1,200 stations will opt to remain in the TV band and 800-850 of them will have to move, Marsh said. “That is not a trivial problem by any stretch of the imagination,” she said. There are known unknowns and unknown unknowns, Marsh said: “Auctions always introduce unknown unknowns.”
The more stations that have to move, the bigger the repacking challenge, said Patrick McFadden, NAB vice president-spectrum policy. McFadden said it's not clear what the numbers will be: “It will take longer to move 1,300 stations than it will to move 300,” and the FCC imposed a 39-month deadline without knowing how many stations will have to move. The auction will be the most complicated transition the FCC has ever overseen, McFadden said. “In some congested markets, all stations won’t be able to move until everybody is ready to move,” he said. “That introduces a level of logistical challenges that is just extraordinary.”
Repacking is like a game of musical chairs, McFadden said. Everyone will get up and move around and some will be left without a channel when the music stops, he said. “Unfortunately, that game of musical chairs is going to result in some service being lost; it’s inevitable.”
Every market is unique, and the incentive auction will be very complicated, said Brett Tarnutzer, head of spectrum at GSMA. “The whole world is watching.”
Rosenworcel said industry predictions are often wrong about spectrum needs. In the 1980s, AT&T asked McKinsey to forecast how many cellular phones would be in the use in the world by 2000, Rosenworcel said. It predicted 900,000, she said: “That was a little shy of the more than 100 million cellular phones in use worldwide at the turn of the millennium. And for the record, that number now exceeds 7 billion.”