The idea is to get the incentive auction done right, not ASAP. FCC Commissioner Michael O’Rielly sees a number of reasons to slow down it down. Further, he called for “eliminating the verbal assaults on the broadcasting industry.”
Both wireless companies and broadcasters are needed to make the auction a success, and both may need more time, he said in remarks delivered at the American Enterprise Institute.
He found it completely counterproductive to float “pie in the sky estimates” to try to entice broadcasters to participate, all while adding layers of complexity most see as attempts to suppress the potential income for that very same group.
The biggest reason for delay, however, is the fact that the AWS-3 auction has been wildly successful. And as a result, the wireless companies who will be infusing cash into the incentive auction may need time to restock their warchests and otherwise revise their financial structure.
In short, if wireless companies are going to need a few years to have money to bid with, they should be given those years or everybody loses.
Here are O’Rielly’s full remarks on the topic.
“The last item I would like to discuss is the Commission’s obligation to structure and conduct a broadcast incentive auction, the first of its kind to be attempted. Recently, a number of my fellow Commissioners have explored taking “a pause” and possibly delaying the incentive auction, now scheduled for early 2016. My position regarding the timing of the incentive auction has not changed one bit since my initial confirmation hearing. I firmly believe that we should endeavor to hold the auction as soon as possible since there is a great need and demand for more licensed spectrum in the marketplace. But getting the auction structured correctly is more important than when it is held. “Congress provided the Commission broad authority on the timing of the auction, as long as the receipts were submitted within the ten-year budget window. And, a failed auction does not help anyone: Congress, the Commission, the wireless industry, broadcasters, or, most importantly, consumers.
“To be clear, any delay must be grounded in sound policy. Given how the process has gone so far and a number of major market developments, there are legitimate reasons why the auction date may rightfully slip by a year or more.
“Notably, the ability to close the auction requires significant participation by wireless providers. It is highly likely that winning bidders in the Commission’s AWS-3 auction will need time to address internal financial issues. They may need to raise capital, refinance debt structures, revise build-out plans, rededicate resources and personnel, etc. At almost $45 billion in total gross proceeds for the AWS-3 auction, it would not be unreasonable to see the wireless industry, along with the broadcast industry, seek a delay.
“Additionally, the Commission has a number of outstanding incentive auction related issues still to be addressed. There are open questions from the Comment Public Notice, especially regarding reserve spectrum, dynamic pricing, impaired markets, and reverse auction opening bid prices. There are also parallel proceedings on unlicensed spectrum, inter-service interference, low power television, and wireless microphones that need to be considered, and a few remaining issues that may still need public comment. Of course, all of these various components will need to meld together in a way that ensures success. What we have set forth already is highly complex and getting all of the pieces to work will be a daunting task. We must attempt to make this process simpler to encourage and ensure participation.
“In the end, the incentive auction will only work if it is fair to all parties and is consistent with the statute. That means working with interested broadcasters by providing realistic information, not pie in the sky estimates, and eliminating the verbal assaults on the broadcasting industry.”
RBR-TVBR observation: We have yet to see a target date that was an actual date. In our experience, the less precise the target, the less chance it will be hit.
A target like early 2106 can be changed to mid-2016 or early 2017 with ease.
It won’t be so easy when the target is March 1, 2016 or some other pinpoint in time. The first time we see such a target, the odds are it will be missed, but it will likely be placed with another hard deadline and we will be on the path to actually holding the auction.
Until then, in our humble opinion, all bets are off.
