Station Values May Differ in Incentive Auction, Epstein Says

Epstein said other concerns from broadcasters and carriers on a range of issues -- from emphasizing the voluntary nature of the auction to international coordination to changing the proposed band plan -- are being considered at the agency. Some of the interference issues raised by carriers and stations to the plan in last year’s auction NPRM (http://fcc.us/10NclY5) to intersperse both spectrum users after the incentive auction will come up at May 6’s band-plan workshop, he said. The agency “will look very seriously at the interference issues -- the commission takes the interference issues very seriously,” he said in response to our question. Working out such issues is “crucial” for the auction to work for carriers and stations alike, said Epstein. “We do need a band plan that meets our technical interference requirements. We are not necessarily wed to the proposal that’s in the notice of proposed rulemaking."

Fellow panelist NAB Executive Vice President Rick Kaplan, the association’s auction point man, made “some very good points” in expressing concerns, with consideration of those issues “well underway at the commission,” said Epstein. Kaplan had said broadcasters are “still a long way” from knowing what “life [is] going to look like if you don’t participate.” Kaplan, who left the FCC as Wireless Bureau chief last year, doesn’t like it that his ex-employer seems to have a “rooting interest” in stations exiting the business, which he said “just devalues broadcasting.” A TV station’s signal isn’t “going to be lucrative, to Chase Carey’s point, if you can steal it,” Kaplan said of the News Corp. chief operating officer’s comment that Fox could become a pay-TV network if Aereo isn’t deemed an illegal service (CD April 9 p13).

When the agency emphasizes participation will be voluntary, “the commission really does mean it,” said Epstein. He, a short time later, asked a public broadcasting representative who'd asked him a question from the audience how the FCC can get such stations to participate. The broadcaster had no substantive response. The agency will have more to say soon, maybe in about a week, on its efforts to coordinate repacking with Canada and Mexico, Epstein said in response to a question from Jack Goodman, a TV station lawyer. “We have engaged with both Canada and Mexico -- discussions are ongoing,” said Epstein. “There are really good policy reasons for Canada and Mexico to go down the road with us,” which might help Canada to free up spectrum, he continued.

"We intend to faithfully follow the statute,” Epstein said of last year’s Spectrum Act, which authorized the auction. Speakers earlier Monday at NAB had sought such a focus amid worries participation won’t be fully voluntary (CD April 9 p2). “There are some interesting engineering and other challenges involved to make sure we do fulfill” the act, said Epstein. The agency “fully intend[s]” to preserve stations’ coverage area, he said. Epstein repeated previous comments that broadcaster participation should be as easy as possible (http://fcc.us/Z4upNN, CD Oct 19 p6).

"We may have to pay a reasonably high value for broadcasters to actually be involved,” said Epstein. In a market like New York, the commission will start with a high reserve price, “making it easier for stations to participate,” he said. “If a station interferes with a bunch of other stations, that station is obviously more valuable than other stations, and we should be willing to pay more for that.” The commission will preserve the area of population a station covered if it doesn’t seek to sell its channel, and “we intend to use the $1.75 billion to compensate those stations for their costs” to change channels when that’s needed in the repacking of frequencies, said Epstein. The act set aside such an amount for relocation expenses.

Also at Monday’s panel, executives from AT&T and T-Mobile debated what would make the auction a success. T-Mobile Vice President Kathleen Ham said 84 MHz was the “sweet spot” for available frequencies from stations, while her counterpart at AT&T, Joan Marsh, said any effort to limit what her company or Verizon Wireless can bid on because of their existing spectrum licenses may doom the auction. T-Mobile doesn’t want any company to be able to win more than about one-third of the spectrum, noted Ham. The “dialogue” between the two executives may “give you an idea” of views on what would make the event a success, said Epstein. “I have not, and I do not think the commission intends to prognosticate in advance” what amount of spectrum tendered by broadcasters would make it a success, he said.

T-Mobile “very much” wants from the auction low-band spectrum, of which it has none, and wants AT&T and Verizon Wireless to participate but not dominate the bidding, Ham said: “Do not just divide and conquer” between the two top carriers. AT&T wants the FCC to “design this spectrum as efficiently as possible, so we can put out spectrum,” said Marsh. “We should resolve the spectrum holdings proceeding” and “there should be no specific limits” for the auction, she said. “We're beginning a grand experiment here” with the auction, said Comcast’s David Don, executive director-regulatory and public affairs. “Really, the goal is successful spectrum policy in this country,” he said: “We're not going to know for a long time” if it’s a success, because it can take a while for spectrum licenses to bear fruit.