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The Federal Communications Commission (FCC) is currently creating rules to conduct a voluntary incentive auction of broadcast spectrum as authorized by Congress.
NAB is working to ensure that the FCC implements the law as Congress intended, advocating for fair rules for broadcasters who choose to participate in the auction, as well as stations that remain on the air following the auction. Unfortunately, recent FCC action could harm TV stations that choose not to participate, as well as their viewers.
In 2012, Congress passed legislation granting the FCC authority to hold broadcast spectrum incentive auctions. The incentive auction consists of three interrelated parts: a "reverse auction," or time for TV stations to submit their spectrum for potential sale; a "repacking," or mandatory relocation of all remaining broadcasters into a smaller band of spectrum; and a "forward auction" where former TV spectrum is put out for bid.
In authorizing the auction, Congress included provisions to safeguard local televisions stations and their viewers during this process, particularly those that choose not to participate in the auction. Numerous members of Congress have weighed in on the auction procedure, asking for transparency; protections for low-power television and translator services; coordination with Mexico and Canada to guarantee viewers in border areas as not unduly harmed and assurances that broadcasters relocated during the repacking phase are reimbursed for all reasonable costs in a timely and equitable manner.
However, several rules adopted by the FCC have given broadcasters cause for concern, including those that will result in extensive interference and undercut broadcasters' ability to cover breaking news in some markets. A primary issue is ensuring TV stations forced to move to new channel assignments are not left with out-of-pocket costs or provided an unreasonable timeline for relocating.
Congress established the Television Broadcasters Relocation Fund to cover the reasonable costs that eligible broadcasters incur as a result of "repacking." Congress allocated $1.75 billion to reimburse the service and equipment costs of channel relocation, such as changes to antennas, transmitters, transmission lines and towers. It set a timeline of three years to complete the moves.
Unfortunately, the FCC has adopted repacking rules that will require far more TV stations to move than Congress envisioned. According to data the FCC made available in July 2014, the Commission is likely to relocate more than 1,000 broadcasters as part of the incentive auction. Using the FCC’s report on repacking as a basis, NAB estimates that the FCC's approach will leave broadcasters with a bill of more than $2.6 billion - that’s a shortfall of more than $600,000 on average per relocated station.
Additionally, the FCC report found that three years would be insufficient for some broadcasters to complete their relocation. Assuming no glitches, and without taking into account delays due to weather, mishaps, competing vendor demands or unforeseen delays, it could take 41 months or more for some broadcasters to move to new channels. When accounting for the number of broadcasters that will be moving at once, and the limited number of qualified vendors and manufacturers available, some suggest the process could take much longer.
The Fiscal Year 2016 House and Senate Appropriations reports express the opinion that the period of time and amount of money for reimbursement could be insufficient and "strongly encourages the FCC to continue to work with broadcasters to develop a reasonable framework for repacking to ensure a successful voluntary auction."
NAB continues to support a truly voluntary spectrum incentive auction that ensures viewers retain access to local news, emergency information and quality programming, and safeguards viewers' ability to take advantage of broadcast innovations on the horizon.
NAB believes that:
- The auction should be voluntary and market-based;
- A fully transparent process is critical to auction success;
- Broadcasters that do not volunteer spectrum should retain their service areas so they may continue to serve their viewers and local communities;
- The FCC should limit the number of stations affected by repacking to minimize viewer disruption;
- Broadcasters required to move to new channels should be fully compensated for the cost of such moves and be given a reasonable amount of time to relocate;
- A dedicated and stable broadcast band is essential to the broadcast industry's continued growth, innovation and service to viewers; and,
- Impacted industries should have ample time to evaluate the auction rules and repacking procedures.
Congress must provide strong oversight to ensure that the FCC implements the voluntary incentive auction legislation as intended and that the viewer protections provided by the law are fully preserved. Forced relocation should not result in involuntary capital expenses for broadcasters that Congress did not intend and many stations will not be able to bear.