Broadcaster Lawsuit Could Delay FCC Wireless Spectrum Auction

By Wayne Rash  |  Posted 2014-08-20
FCC Spectrum Auction B

Broadcaster Lawsuit Could Delay FCC Wireless Spectrum Auction

The National Association of Broadcasters has filed suit in federal court in an effort to force the Federal Communications Commission to revise the rules for the 2015 spectrum auction.

That auction would transfer access to some portions of the radio spectrum currently used for television broadcasts to wireless service providers. The spectrum auction includes two parts, a reverse auction for existing spectrum held by broadcasters and another for the spectrum that's freed up that would go to the wireless companies.

The reverse auction would allow broadcasters to give up the spectrum they use in exchange for a cash buyout. Those broadcasters would then go off the air on the relinquished spectrum, making their frequencies available for sale to wireless companies.

Broadcasters that do not accept a buyout would then be "repackaged," which means the FCC would change the frequencies over which they broadcast. The portions of the spectrum thus freed up could then be auctioned off to wireless companies.

When Congress passed the law that authorized the spectrum auctions and frequency repackaging, it specifically required the FCC to ensure that broadcasters are not hurt by the changes. Congress also established a fund to pay for the costs of spectrum relocations. This is necessary because changing the broadcast frequency of a television station is expensive and could require a station to buy new transmitters and antennas.

The NAB, while saying that it does not intend to delay the spectrum auction, also requests the federal courts to order the FCC to change the methodology the agency plans to use in determining whether broadcasters would lose coverage area or population when things change.

"Unfortunately, the FCC order oversteps congressional mandate and is likely to cause significant harm to broadcast television," said NAB executive vice president Rick Kaplan in a prepared statement.

As you might expect, not everyone agrees with the NAB. "We continue to believe that the incentive auction will be a win for broadcasters, wireless companies and consumers, and that the FCC’s order strikes the right balance to ensure that consumers emerge as winners," said CTIA vice president Scott Bergmann in a statement.

"While we would prefer to work together collaboratively to address NAB’s concerns rather than resort to litigation, we are hopeful the court addresses these issues quickly and that the NAB adheres to its commitment for an expedited process without unnecessary delays."

The Consumer Electronics Association also came out in support of the FCC action. "It is discouraging to see the broadcast television industry reject the FCC’s carefully crafted compromises. Litigating against the incentive auction undermines and delays innovation," said CEA President and CEO Gary Shapiro in a prepared statement.

Broadcaster Lawsuit Could Delay FCC Wireless Spectrum Auction

"The FCC has worked tirelessly with stakeholders and broadcasters to set up a successful incentive auction that preserves the coverage area of broadcasters, while meeting Congress’ goal of opening up more wireless broadband spectrum that will lead to exciting new innovations, services and jobs," Shapiro's statement said.

The FCC, meanwhile, contends that its procedures for determining how to handle spectrum repackaging is being done in a way that's fair to broadcasters. "We are confident that the Report and Order fulfills the mandates established by Congress on this complex matter," an FCC spokesperson told eWEEK.

The problem here is revealed when you look at the calendar. The timeframe usually given for the beginning of the FCC spectrum auction process is mid-2015, which is about nine months away. But now that NAB has sued, any substantive action will have to be put on hold until arguments are heard in court and that could easily take at least several months.

But just opening of arguments won't solve the problem for the FCC. Once the lawyers for all sides have their say, and that could easily take a month or so, then the FCC has to implement any changes. By now it's already 2015.

If the court takes any action besides dismissing the NAB's suit, the FCC staff will be involved one way or the other. This is the same staff that would otherwise be getting ready for the auctions and in planning the repackaging of spectrum.

If the NAB loses, then you can expect an appeal, which will have the same effect of distracting the FCC staff away from planning for the auction. A delay in the spectrum auction is looking more likely with each passing day.

While this may look on the surface that it's about a bunch of big broadcasting companies complaining about how the FCC is treating them, the fact is that the broadcasters have legitimate concerns. As the NAB says in its statements, there's a real chance that some television broadcasters might find themselves being forced into the reverse auction or be "packaged" into spectrum oblivion.

In addition, it looks as if the broadcasters are raising valid concern when they say that the FCC has changed the methodology for determining whether a broadcaster is being hurt has to a methodology that was not what they agreed to when the idea of the spectrum auction was first floated.

In addition, the worry that the resulting losses to the broadcasting companies may exceed the size of the fund designed to cover their costs is also real—if only because the costs estimates developed by Congress are rarely accurate.

While there's no question that the wireless industry needs additional spectrum, the fact is that spectrum is a scarce resource. Putting the broadcasting industry out of business, or even putting them at a disadvantage, really isn't the way to manage and allocate the spectrum.

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