FCC Delays Largest Spectrum Auction…Again

October 30, 2014

The Federal Communications Commission (FCC) announced Friday that it is again postponing its planned Incentive Auction of low-frequency airwaves until early 2016. Similar auctions for the licenses of electromagnetic spectrum have been conducted by the FCC since 1994. The FCC has found that these spectrum auctions are an effective means of assigning licenses, by awarding them to those who will use them most effectively, and reducing the average time from initial license application to license grant to less than one year.
This Incentive Auction is a sale of low-frequency airwaves currently used by broadcast television stations to cellular carriers. It is unprecedented, as it is likely to be the largest and most complicated sale of airwaves that the FCC has undertaken. It involves a multi-step process in which television broadcasters will be offered money in exchange for relinquishing their rights to airwaves. The stations will then decide whether to share a channel with existing operators or exit the industry entirely. The FCC will then auction the available spectrum to wireless carriers, who intend to use it to improve their cellular networks.
Such an auction is a logistically complex process. It requires new computer algorithms capable of awarding money to TV broadcasters interested in selling their spectrum while also auctioning that same spectrum to wireless carriers. It was this complicated technical process that caused the original delay of the auction in 2013 to 2015.
In addition to complex computer programs, this auction cannot work without broadcaster participation. As such, the FCC began a campaign this month to encourage broadcasters to sell their spectrum rights. In it, the FCC provided compensation estimates for broadcasters in various areas. Examples of these estimates include medians for New York City, Chicago, and Greensboro-High Point-Winston Salem, NC being $410 million, $340 million, and $45 million, respectively.
Some broadcasters were convinced by the FCC’s presentation. Preston Padden, a former Disney executive who now leads a coalition of broadcasters interested in participating in the sale, commented that, “[i]f the FCC does end up compensating broadcasters in line with the guidance in the book…we expect next year’s auction to be a great opportunity for many television broadcasters.”
In a blog post Friday, Gary Epstein, chair of the FCC’s Incentive Auction Task Force, partly blamed the most recent delay on a pending lawsuit filed by the National Association of Broadcasters, and the need for more time to recruit television stations to participate in the auction. As the court recently released the briefing schedule for the lawsuit, Epstein issued this statement declaring:

“We are confident we will prevail in court, but given the reality of that schedule, the complexity of designing and implementing the auction, and the need for all auction participants to have certainty well in advance of the auction, we now anticipate accepting applications for the auction in the fall of 2015 and starting the auction in early 2016. Despite this brief delay, we remain focused on the path to successfully implementing the incentive auction.”