FCC Lets Spectrum Auction Proceed

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An auction of occupied television spectrum will go forward on June 19, despite criticism that TV broadcaster Paxson Communications Corp. could reap hundreds of millions of dollars in the process, the Federal Communications Commission ruled last week.

The FCC considered a petition for delay by the Cellular Telecommunications & Internet Association, which claimed that, among other things, wireless company bidders have not established business plans for the spectrum and that Paxson — a major TV-station owner — would be the real beneficiary of the auction.

The FCC rejected the CTIA's request last Thursday in a ruling handed down by Thomas J. Sugrue, chief of the FCC's Wireless Telecommunications Bureau.

Paxson issued a statement applauding Sugrue's decision.

The FCC plans to auction spectrum held by about 100 analog TV stations with assignments in channels 60 to 69. The broadcasters may continue to occupy the spectrum until 85 percent of TV households in a market have DTV-capable receivers. Paxson, the owner of dozens of TV stations, said its the largest single holder of spectrum in channels 60 through 69.

The FCC has been concerned that if TV stations can indefinitely remain in 60-69, then wireless companies that want the spectrum would not bid top dollar in the auction.

To address that problem, the FCC last year said wireless companies could pay Paxson and other broadcasters to vacate promptly.

Paxson CEO Lowell (Bud) Paxson once estimated that he'd get at least $1 billion from the wireless companies for yielding his spectrum.

Association of Maximum Service Television (MSTV) president David Donovan said his group also filed a petition for delay. Sugrue did not address MSTV's request in his letter to the CTIA last week.

MSTV is a small organization with close ties to the National Association of Broadcasters. It serves as the NAB's technology adviser on the transition to digital television.

The auction plan, Donovan said, was flawed because dozens of analog TV stations that might vacate spectrum in channels 60 to 69 are planning to resume analog operations in the digital TV spectrum block (channels 2 to 52), and are therefore likely to interfere with incumbent digital TV stations in that band.

Paxson said it has filed 14 requests with the FCC to operate analog stations on its assignments in the 2-to-52 DTV band.

Before Sugrue's letter surfaced, Paxson said at the NAB's annual convention here last Tuesday that an auction delay would destroy the coalition of stations on channels 60 to 69 he had assembled to negotiate with wireless bidders.

Those stations, he said, needed to know whether they would be able to sell out to the wireless industry or make plans to broadcast on both their analog and digital channels.

"The alliance collapses if there is no auction," Paxson said.

The CTIA claimed that an auction delay was necessary because the FCC should not allow Paxson and the other 60-to-69 TV station owners to drive FCC spectrum policy.

"It is clear that to hold an auction in June would make the FCC the croupier collecting the ante for the real game: the subsequent private auction of spectrum the broadcasters received for free," CTIA president Tom Wheeler said in a statement.

Paxson and the other TV stations now appear to have the upper hand. If they are dissatisfied with the money offered by wireless carriers to vacate, they can remain in the 60-to-69 band until the 85-percent test is met — an event not expected to occur for many years.

"This thing is sort of a mess. It's been a mess for a long time and, candidly, it's going to stay a mess for a long time, in some ways," FCC chairman Michael Powell said last Tuesday.

The FCC will hold the auction under a Congressional mandate, after postponing it five times.

Andy Levin, an aide to Rep. John Dingell (D-Mich.), said the FCC could dodge the whole problem by staging what he called a reserve-price auction.

The FCC would set the minimum price it would accept for the spectrum. If that target were not reached, the FCC could cancel the auction while still meeting the law's requirements.

In his letter to the CTIA, Sugrue noted that his bureau has set a $2.6 billion reserve price for the 60-69 spectrum.

"Accordingly, if a high degree of uncertainty or other factors depress bidding for these licenses to a level below the reserve, the licenses will not be awarded and the auction will be rescheduled," Sugrue said.

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