FCC Inadvertently Releases March 29 as Proposed Start Date for Incentive Auction
March 29 is the FCC's semi-official starting date for the TV incentive auction, according to an agency list of items on circulation. Former FCC officials told us the date is correct but was apparently posted by accident and should have been removed before the list was put up on the commission’s website. The date is consistent with past statements from Chairman Tom Wheeler on an early 2016 auction.
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The auction date was part of the formal title of orders now teed up for the Aug. 6 meeting by Wheeler, after being taken off the agenda for last week’s meeting (see 1507150058). The title was entered in full, unlike an earlier announcement when the agenda was released for a vote at the July 16 meeting, officials said. “While there’s never a guarantee that a date will stick, this is Wheeler’s date; or at least it was as of June 25, the day on which he announced the agenda for the July meeting,” a former FCC spectrum official said Monday.
"In this case it's more than a stake in the ground,” said Paul Gallant, analyst at Guggenheim Partners. “I think the chairman has everyone working toward that date and really expects the auction to be launched by that date."
“This notice certainly gives us a look at where the FCC is heading in their incentive auction planning,” broadcast lawyer David Oxenford of Wilkinson Barker wrote in a blog post. “A deadline focuses the mind -- and this date, even if preliminary, should focus all TV broadcasters on their plans for the incentive auction.”
Meanwhile, the Phoenix Center said in a paper released Monday that the FCC would be wrong not to give Dish Network the spectrum it bought in the AWS-3 auction, bidding through two designated entities (DEs). The total in bidding credits used in the auction, $3.6 billion, is “a large number” but not that “surprising for a $45 billion auction,” the center said. The agency is expected to refer the DE applications to the Enforcement Bureau (see 1507160054).
“The FCC rules at the time of the AWS-3 Auction did not prohibit the financial relationship between DISH and the two DEs," the Phoenix Center said. "In fact, the rules in place at the time of the AWS-3 Auction were expressly designed to encourage large firm investment in DEs via arms-length financial roles. It appears that DISH did not abuse the rules, but embraced them.”
The DE program has had problems since its start 20 years ago, said Phoenix Center President Lawrence Spiwak. Whenever there are set-asides for certain constituencies, such as small businesses, “People are going to try to take advantage of it,” Spiwak told us. “It’s the nature of the systems. Here, nobody did anything wrong, they just followed the rules. The fact the FCC changed the rules after the auction is a tacit acknowledgement what Dish did was legal at the time.”
The next FCC spectrum auction could run into problems, Spiwak said. “When you do not have regulatory certainty” about being able to recover fixed costs and investments, “investment is going to be fleeting,” he said. “That’s why this credibility point is so important. That sends a chilling effect on investment.”
Also Monday, CTIA released a paper arguing that policymakers need to speed up the process for bringing more spectrum to market beyond the incentive auction. The licensed spectrum “pipeline” stops with that auction, CTIA said. The time between the first step of bring a new band to auction and deployment has been an average of 13 years, CTIA said. For example, work started on the AWS-3 auction in 2002, but deployment of the spectrum isn’t expected until 2017, a time lag of 15 years, the association said. It said that SMR spectrum took even longer -- 18 years between conception and deployment.
“The timelines can be accelerated both pre- and post-auction, as the experience with certain bands -- PCS, AWS-1, and the upcoming incentive auction -- illustrates,” CTIA said. “But it is incumbent upon policymakers to take that first step, to begin the process as soon as possible.” Spectrum sharing by itself isn't the answer, CTIA said. “Licensed spectrum made the U.S. the global leader in wireless, and lessons learned from recent spectrum reallocation efforts can provide the path for future efforts.”