FCC Reverse Auction Breezes Into Stage 2

By on Sep, 14 2016 with Comments 0

Editor’s Note: An earlier version of this story incorrectly reported bidding information for Stage 1 of the Broadcast Incentive Auction. The results shown reflect Stage 1 forward auction totals of $23.11 billion, rather than bidding in the new stage of the reverse auction. An addendum appears at the bottom of this story.


Welcome to Stage 2 of the Broadcast Incentive Auction or, as some have called it, “The most complex auction in history.”

The second stage of the FCC’s reverse auction opened yesterday at 10am with a single four-hour session. Starting today and moving forward until further notice, twin two-hour bidding sessions will be held, at 10am Eastern and 3pm Eastern.

For Stage 2, a clearing target at 114 megahertz was set.

Compared to the 126 megahertz clearing target seen in the first stage of the auction, the 114 megahertz clearing target generally clears nine blocks of spectrum in each partial economic area (PEA), instead of 10 blocks; it adds two additional channels to the TV band.

Adding more channels to the TV band allows more stations to be repacked in their pre-auction band, the FCC explains.

Thus, some stations that were provisionally winning after Stage 1 will become “unfrozen” in Stage 2, and will be presented decreasing price offers during the bidding rounds.

This process will result in lowering the overall costs of clearing spectrum for wireless use.

Bidders that had at least one station with the status of “Frozen – Provisionally Winning” at the end of Stage 1 could access the Reverse Auction Bidding System for Stage 2 beginning on Sept. 7.

As the FCC explained in its “Reverse Auction New Stage Tutorial,” when those bidders log in to the auction system for Stage 2 some stations that were “Frozen – Provisionally Winning” will see a new bidding status for their stations: “Frozen – Pending Catch-Up.” Bidders with stations that begin Stage 2 with the status of “Frozen – Pending Catch-Up” must be on their toes, the FCC warns, as this status can change from one round to the next and will change by the end of the new stage.

“Remember – if a station’s status changes to ‘Bidding,’ and the bidder fails to submit a bid for that station, the system interprets this as a bid to drop out and could lead to the station exiting the auction,” the FCC says.

When Stage 2 of the reverse auction concludes, the FCC will announce the new clearing costs and move to forward auction bidding, where prices will pick up where they left off at the end of Stage 1.

Although overall there are fewer blocks available in almost every PEA, more of the blocks being offered are completely unimpaired – 99.6%, to be precise, the FCC points out.

“In some PEAs the supply actually remained the same or increased,” the Commission says. “On Sept. 8th we opened up access to the Forward Auction Bidding System so that eligible bidders can begin to familiarize themselves with the Stage 2 data and prepare to bid.

As in Stage 1, the public will be able to monitor the auction on our Public Reporting System (PRS). During the reverse auction, the PRS will continue to display the final stage rule graphic with the status as of Stage 1. Once round 1 of the forward auction is complete in Stage 2 the graphic will once again begin displaying the round-by-round progress toward meeting the final stage rule.

REQUIRED SILENCE

Unlike the Forward Auction, the Reverse Auction is conducted with a high level of secrecy.

This could lead to confusion when reviewing just what’s transpiring in the bidding process.

“It’s so complicated,” notes Lawrence Miller, partner with Washington, DC law firm Schwartz, Woods and Miller. “Participants are forbidden by law to say what is happening.”

Even the FCC’s Auction Dashboard is a tad confusing, Miller notes, leading RBR + TVBR to erroneously report the Stage 1 Forward Auction bidding results as “Round 1 results for Stage 2 of the Reverse Auction” in an earlier version of this article.

The FCC is expected to release the aggregate amount of reverse auction bids at the end of Stage 2, Miller says.

About The Author: Adam R Jacobson is a veteran radio industry journalist and advertising industry analyst with general, multicultural and Hispanic market expertise. From 1996 to 2006 he served as an editor at Radio & Records.

Leave a Comment