The Expanding Opportunities for Broadcasters Coalition met ex parte with members of the FCC and made several points about the incentive auction. It asked once again to get rid of the dynamic reserve pricing plan.
EOBC called it a “crude tool to hold down prices paid” and noted that it is opposed by almost all stakeholders in both the broadcast and carrier communities.
EOBC stated, “By continuing to lower prices after a station should be frozen, DRP undermines broadcaster confidence in the integrity of the auction. Necessary impairment of the flexible use spectrum will be unavoidable in a limited number of border markets. DRP adds value destroying unnecessary impairment in a penny-wise/pound foolish attempt to save a few Dollars. EOBC has suggested the alternative of a more traditional Round Zero Reserve Price (“RZR”) in a limited number of markets. If reserve pricing is more predictable and transparent, broadcasters (especially those with the highest reservation prices) will be more likely to participate in the auction.”
The Coalition praised the FCC for improving the channel sharing model.
It noted that its own modeling shows it will be possible to clear 126 MHz and more of New York and Los Angeles spectrum – providing the FCC improves the pricing formula.
EOBC said the FCC formula departs from the most important criterion: The station’s impact on spectrum clearing. It noted that stations with identical clearing potential are priced hundreds of millions of dollars differently under the FCC’s formula.
For example, there is a station in Rockford IL with a greater impact on spectrum clearing than on in Chicago, yet its priced $334M less than the Chicago station.
Finally, EOBC said there is a critical need for transparency so broadcasters know what they are being asked to participate in and can make informed business decisions. “Under the FCC’s proposal, broadcasters would not have even basic information, such as the clearing target for the current stage, whether DRP is on or off, and whether any stations have been frozen.”
It noted that it understands the FCC’s concern about making it possible for broadcasters to “game” the system, and explained, “But we are not asking for anything that the Commission does not routinely provide during wireless auctions. Our premise is simple: the FCC should favor openness and only withhold information if there is a credible reason to do so.”
