By a 3-2 vote along party lines, the FCC adopted a public notice yesterday which establishes bidding, spectrum clearance, channel repacking and other procedures for the agency’s first-ever incentive auction of broadcast television channels to the wireless industry. The notice sets forth procedures for selecting 600 MHz spectrum clearing targets (i.e., the amount of repurposed broadcast spectrum to be offered to wireless carriers) and also establishes a formula for determining opening price offers for each eligible TV station. Calculations for forward auction opening bids, upfront payments and bidder eligibility will be based on the assignment of a specific number of bidding units to each spectrum block. Two spectrum block categories will be established for the forward auction: Category 1 (i.e., blocks with potential interference issues or other impairments that affect up to 15% of the population of a partial economic area or “PEA”), and Category 2 (blocks with impairments that affect at least 15% and up to 50% of the PEA population.) In addition to affirming previously- proposed average price and spectrum benchmarks that would trigger the implementation of auction final stage rules, the notice also sets a 20 MHz cap on the amount of reserve spectrum that any reserve-eligible entity may acquire in PEAs with populations of 500,000 or under.
With respect to TV stations that opt to remain on the air, the notice authorizes the auction system to relocate such stations to the 600 MHz wireless uplink or downlink bands or to the “duplex gap” that sits between these bands “in a limited number of geographic areas where necessary to accommodate market variations in broadcaster participation.” With the goal of compensating for TV stations that are relocated to the duplex gap, the notice also seeks comment on proposals to “preserve an additional vacant channel for licensed wireless microphones and unlicensed devices in such geographic areas.” Final TV channel assignments will be determined by optimization techniques that attempt to (1) maximize the number of stations that remain on their pre- auction channels, (2) minimize aggregate new interference to individual stations, and (3) avoid reassignments for stations that carry high anticipated relocation costs.
FCC Chairman Tom Wheeler characterized the procedural notice as “a good, balanced, logical solution to an incredibly complex, never-tried solution.” Broadcasters and wireless carriers, however, joined FCC Commissioners Ajit Pai and Michael O’Rielly in protesting the FCC’s decision to relocate certain TV stations in the duplex gap. As Pai warned in a dissenting statement that the duplex gap decision will result in “an extraordinary amount of impairment,” the National Association of Broadcasters lamented the ruling as “a major setback” that could impact the success of the auction.