Is FCC’s Incentive Action Smart Business?

So now that the Federal Communications Commission has begun writing the rules for the reverse auction of the television spectrum, what does it mean for local television stations? Will this reverse auction lead to enough revenues to make it worthwhile to cede all or some of the spectrum that is presently being used? Will those revenues be enough to compensate moving to the VHF spectrum? The answer for some television stations is clearly yes.

The value of the spectrum for alternative uses seems substantial enough to allow the FCC to offer prices that should be high enough to cause a good number of television stations to participate. But how will the FCC determine the final price paid to television stations? In the declining reverse auction that will recover some of the broadcast spectrum, the FCC will set initial prices in many television markets for two options: one to give back the entire 6 MHz and one to keep the 6 MHz but relocate to the VHF band.