The Chicken & Egg Spectrum Auction

Replace the term chicken with “reverse auction” and egg with “forward auction” and the result would be a classic conundrum updated to 21st century FCC-speak. Throw in the term “repacking“, as in moving the broadcasters who relinquish their spectrum into common broadcast channels outside the 600 MHz band, and, suddenly, it is a next generation chicken-egg dilemma. No wonder Jill Canfield, VP of Legal and Industry for NTCA termed the 2016 FCC’s 600 MHz auction as the most complicated one the FCC has ever attempted.

Canfield and Caressa Bennet, RWA General Counsel, did an excellent job of simplifying a recent and very complex FCC Incentive Auction Comment Public Notice. This public notice explains how the FCC proposes running the 600 MHz auction; which is slated for 2016. In the above interview, Bennet provides an abbreviated explanation of this auction and points out that this spectrum could be valuable to rural operators, given the propagation characteristics of these relatively low frequencies.

How much money will the auction raise and how it is distributed are big questions. Some of the money will be set-aside for compensating broadcasters for the costs of moving channels and, presumably, others, such as this author, for the replacement of microphones (such as the one used in the above video) that become obsolete due to the auction. As Bennet points out, according to one public notice, a single broadcast station may be worth $900 Million, so the total value of the auction could be record-breaking. Still, the value of the stations won’t be set until the auctions, so the overall value won’t be known until the process is underway.

Additionally, it may be that some stations, in some markets are of great value, while other stations in other markets are of lesser value. As Bennet points out, one of the possibilities is that not all the spectrum will clear because of the inability to elicit enough interest from broadcasters. And, of course, there is the pesky lawsuit from the broadcasters that could put a halt to everything.

Fortunately, operators have attorneys and consultants like Bennet to figure out the details of this modern-day challenge. For those of you who dare jump into this spider-web of rules, check out the upcoming FCC webinars (pdf):

Forward Auction Webinar: Thursday, January 15 at 10:30 a.m.
Reverse Auction Webinar: Tuesday, January 20 at 10:30 a.m.
Integration Webinar: Friday, January 23 at 10:30 a.m.

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