September 2012

The Federal Communications Commission voted to officially launch the incentive auction process; here’s a look at the reaction.

FCC Chairman Julius Genachowski anticipates conducting the world’s first incentive auction in 2014. He said the new incentive auction concept poses a long-list of new challenges, but this proposal already makes clear that smart and elegant solutions are possible. The proposals on auction design and band plan demonstrate this. He said, “Innovation requires risk taking and new thinking. I challenge all stakeholders will approach the creation of these new incentive auctions with the same daring spirit that led to the creation of the original spectrum auctions two decades ago.”

FCC Commissioner Robert McDowell said: “As we know, the law mandates that the Commission accomplish a number of important goals. I have advocated that success will come more easily if we proceed with an eye toward regulatory humility, simplicity and restraint. In the past, regulatory efforts to over-engineer spectrum auctions have caused harmful, unintended consequences. I remain hopeful that our new rules will be minimal, intuitive and ‘future proof’ to pave the way for uses that we cannot imagine today as technology and consumer choices evolve.”

FCC Commissioner Mignon Clyburn underscored two points: First, voluntary incentive auction authority gives us the ability to strengthen both our mobile and broadcast industries. Second, to “maximize the opportunities of spectrum [which this new authority creates], depends on the active engagement of the public and all stakeholders.”

“Today’s Notice of Proposed Rulemaking is merely the start,” stressed Commissioner Jessica Rosenworcel. “Big choices and hard work lie ahead. Yet going forward, I believe that there are four central building blocks to a successful incentive auction: simplicity, fairness, balance, and public safety.” Her points: Simplicity is key. Fairness is essential. Balance is necessary. Public safety is fundamental.

Commissioner Ajit Pai lamented that there are important questions that the FCC is not asking for public input on including: How can the auction be designed to maximize the net revenues raised by auction? Does the law require the FCC to close the auction when the Broadcaster Relocation Fund reaches $1.75 billion? What are the appropriate size of guard bands? Do the law require the FCC to license and auction all spectrum reallocated from the television broadcasting service, including guard band spectrum? What are alternative approaches to channel sharing? How can the FCC protect translators? What is a realistic schedule for completing the auction?

Senate Commerce Committee Chairman Jay Rockefeller (D-WV) said: “Today’s action by the FCC moves us yet another step closer to creating a truly nationwide, interoperable public safety broadband network for our first responders,” said Rockefeller. “When we authorized voluntary incentive auctions to fund the public safety network earlier this year, Congress recognized the dual benefit of promoting innovative spectrum policy and providing funding for next-generation public safety communications. I know that developing the rules for the incentive auctions will be a complex process, but I am optimistic that broadcasters, wireless companies, and others will work cooperatively with the FCC to make sure these auctions are successful.”

“Today we are one step closer to advancing spectrum policies this subcommittee has been championing for more than five years,” said House Communications and Technology Subcommittee Chairman Greg Walden (R-OR). “If implemented well, the law has the potential to help meet Americans' hunger for mobile broadband services, generate hundreds of thousands of jobs, and raise billions of dollars toward buildout of the nationwide, interoperable public safety network called for by the 9/11 Commission. We will work with stakeholders and the FCC to try to make those goals come to fruition.”

Rep Henry Waxman, Ranking Member of the House Commerce Committee, applauded the FCC’s decision: “This is an important milestone towards implementing the bipartisan Public Safety and Spectrum legislation passed by Congress earlier this year. That landmark legislation gave the FCC new authority to repurpose underutilized spectrum to help meet the nation’s growing demand for mobile broadband and fund the creation of a nationwide, interoperable broadband network for first responders.”

"The FCC's adoption of a proposed rulemaking to implement a voluntary incentive spectrum auction begins the process of fulfilling Congress's vision for fast, ubiquitous broadband to all Americans," said Rep Anna Eshoo (D-CA), Ranking Member of the House Communications Subcommittee. "The proposal recognizes the need for a competitive wireless landscape and the importance of a nationwide block of spectrum dedicated to unlicensed innovation. The Commission's action today lays the foundation for a 21st century spectrum policy that will drive American innovation, create new jobs and increase consumer choice."

National Association of Broadcasters President Gordon Smith said the FCC has not taken a count of how many stations might be offering up spectrum. "If there is a stampede coming, we are certainly not hearing any hooves," he said. If the FCC chairman thinks there are a number of broadcasters in big cities interested in selling their spectrum, it may be predicated on the "misbegotten" belief that broadcasting is an industry in decline. "That is simply false," he said.

The Minority Media and Telecommunications Council is "strongly encouraging" the FCC to finish up its spectrum incentive auctions by the end of 2013 to free up more spectrum for wireless as quickly as possible.

CTIA-The Wireless Association President and CEO Steve Largent said: Today’s action by the Chairman and Commissioners was an important step toward alleviating the looming spectrum crisis that we’ve been warning policymakers about for the last three years. Since spectrum is a finite resource, we’re pleased the Commission has begun the process of establishing the rules that will fulfill the goals of the recently adopted, bipartisan spectrum legislation. We also commend the Commission for working to ensure that it not only establishes rules that result in a successful auction, but also completes its efforts in a timely manner. In order to maintain our global leadership in the mobile ecosystem, we must ensure that this spectrum is brought to market more quickly than the almost ten years it took to bring the last two spectrum blocks to market. While spectrum fuels the wireless industry’s ‘virtuous cycle’ of innovation and competition, its impact on the nation’s economy is also significant. Analysts estimate that bringing 500 MHz of spectrum to market will increase U.S. GDP by $166 billion, add at least 350,000 new U.S. jobs, generate an additional $23.4 billion in government revenues and result in a $13.1 billion increase in wireless applications and content sales.

“To meet soaring consumer demand for mobile Internet services and to maintain a robust platform for innovative mobile services, rational spectrum policies and bold action are vital. The spectrum-related items adopted by the FCC today represent significant progress towards reaching these important goals,” said AT&T’s Joan Marsh.

Broadcasters have three choices if they want to participate in the Federal Communications Commission's auction. They can give up their entire spectrum, two stations can share a channel, or a UHF station can move to the VHF band, a less desirable frequency.

But by sharing a channel, the station would be giving up a lot of its future, said National Association of Broadcasters President Gordon Smith said. "By matter of physics, stations that share a channel would be disqualified from mobile and ultra-high definition and they wouldn't be able to multicast. Channel sharing may get you short-term financial gain, but not long term opportunity," Smith said. FCC Chairman Julius Genachowski thinks the process will give broadcasters the certainty they need to make a decision and reassure those that want to stay in the business. "The desire is to have more certainty and clarity in advance of the auction," he said. Because an auction like this has never been done, what will happen is hard to predict. Once the buying and selling prices are set, the agency needs to figure out how to repack the stations into a smaller spectrum space. "Interference and signal contour protection causes us the greatest concern," Smith noted. "We're inferring what this means and how [spectrum auctions] will work, but we've not seen the inside of the black box and what decisions will be made. We're in the dark," Smith said.

The Federal Communications Commission (FCC) adopted a Notice of Proposed Rulemaking (NPRM), initiating a fresh look at its mobile spectrum holding policies given the changes in technology, spectrum availability, and the mobile marketplace since the last comprehensive review of these rules more than a decade ago. In recent years, large and small wireless providers, as well as trade associations and public interest groups, have requested that the FCC review its current policies regarding mobile spectrum holdings to keep pace with market changes. With this NPRM, the FCC seeks comment on ensuring that its policies provide the certainty and predictability needed to make informed investment decisions, including participation in upcoming incentive auctions and secondary market transactions, while also promoting the competition needed to sustain a healthy wireless marketplace.

The NPRM seeks comment on a number of issues, including:

• Continuing the current approach to evaluating mobile spectrum holdings in the context of transactions and auctions—a case-by-case analysis, or moving to a different approach such as bright-line limits;
• Including additional spectrum bands in evaluating spectrum holdings;
• Updating the Commission’s geographic market analysis, including to consider the impacts of mobile spectrum holdings at the national as well as local levels;
• Whether the Commission should make distinctions among bands in assessing spectrum holdings; and
• Updating the Commission’s attribution rules.

In a panel of fact-checking all-stars at the National Press Club, a predictable question arose: What about the studies that have shown that fact-checking operations are tougher on Republican than Democratic politicians?

Jim Drinkard, an Associated Press (AP) editor who oversees the wire service’s fact-checking work, said, “We had to have a self-imposed Michele Bachmann quota in some of [the primary] debates.” Drinkard said that there wasn’t an actual numerical quota on Bachmann at the AP. It’s just that if the AP had gone back and vetted all her claims that looked dicey, the result would “overload” the debate story. “Often she was just more prone to statements that just didn’t add up,” said Drinkard.