What if you held an auction and nobody came? That is the path the FCC may be on if it goes out of its way to minimize payments to participating broadcasters as opposed to making participation as attractive as possible, according to Preston Padden and the Expanding Opportunities for Broadcasters Coalition.
EOBC met ex parte with key FCC personnel to present their case on 12/3/14.
The phenomenal success of the ongoing AWS-3 auction provides evidence that demand for the kind of quality spectrum broadcasters occupy is tremendous.
“Given the demonstrated demand for spectrum for mobile broadband use the greatest mistake the FCC can make is adopting pennywise and dollar foolish rules and procedures that will limit the amount of spectrum available for reallocation,” state EOBC in its summary of the meeting.
It focused on two areas of concern.
The first was POPs scoring, which is supposedly supposed to be based not on the value of the spectrum if used as an ongoing local television concern, but rather on its value in forwarding the goal of clearing spectrum to repurpose for wireless use.
Population is a factor, but not necessarily covered population – if a station poses interference issues with a station or stations in nearby larger markets, the population covered by those stations should be attributed to the smaller station as well.
A prime example is KAMU-TV in College Station, which provides service to a relatively small number of people, but due to its central location will affect channel clearing in no less than four other much larger markets: Dallas, Houston, San Antonio and Austin.
EOBC says it has found some 30,000 instances where a statin will have a greater impact on repacking than would seem to be indicated by its own POPs score. It adds that 1,400 of the instances use very conservative assumptions.
IBOC provided dozens of examples, including WVTA-TV Windsor VT, which has an interference-free POPs total of only 766,265, but via its interference profile, has a preclusion POPs total of 11,301,568. EOBC points out that the latter figure is much higher than the 7,968,637 preclusion POPs total of WFXT-TV in Boston.
The second area of concern is the Dynamic Reserved Pricing process, which EOBC says “…is a potentially destructive solution to a relatively narrow problem.”
DRP is said to invite more impairment than necessary, add unneeded complexity and broadcaster distrust to the process; and possibly tie pricing to unrelated actions of distant stations.
EOBC is arguing for a truly market-based auction, and says that DRP will only be necessary if the FCC fails to run such an auction.
RBR-TVBR observation: To all indications, the Greenhill auction estimate got everybody’s attention. Before they came out, participation in the auctions did not seem to be on the table at all for a lot of broadcasters.
Now, in certain markets at least, it’s absolutely worth consideration, particularly for stations not affiliated with a major network. And it’s amazing that they are being called lowball estimates already, in some cases at least.
2015 is going to be an interesting year, as this issue plays out and television stations deal with the question “to be or not to be” with a possibly compelling urge to choose the latter course, for reasons entirely antithetical to Hamlet’s gloomy motivation.
