FAQ: The FCC’s upcoming broadcast-TV spectrum auction

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The Federal Communications Commission on Friday took another step toward its unprecedented auction of broadcast TV spectrum, expected to kick off on March 29, 2016.

A major goal of the auction is to make more wireless broadband spectrum available for an explosion of 4G and, soon, 5G demands, as users stream video and other data to smartphones, tablets and other devices.

What's the latest?

The FCC on Friday gave hundreds of TV stations throughout the nation maximum opening competitive bidding prices for selling their 600-MHz spectrum rights to go off-air, or for swapping from VHF to UHF, or vice versa.

The maximum nationwide opening bidding price was set at $900 million for WCBS-TV in New York, the nation's biggest TV market, to move off-air. Of course, stations don't have to participate and many are expected to stay in operation. Many others in rural markets may take the money and go off-air.

FCC officials based the bidding prices on a complex formula developed over the past two years that includes the number of viewers in a given market and other factors.

What's next?

Stations have until Dec. 18 to decide whether to sell their spectrum rights to the FCC. When the auction starts on March 29, it will include 52 rounds. With each subsequent round, prices will decline. This initial stage is called a "reverse" auction.

After each round, the FCC will repackage the TV band in each market so broadcasters will know how much space remains. The FCC will analyze whether it has a channel for each of the remaining stations after each round, but won't communicate to broadcasters which stations are in or out.

After the reverse auction, the FCC will launch the "forward" auction for wireless carriers and probably some non-traditional players to bid to purchase the rights to generic blocks of spectrum. A special round will also be held to bid on specific spectrum bands.

Senior FCC officials said Friday that the entire two-part auction process could take two to three months, finishing in the second or third quarter of 2016.

Why auction TV broadcast spectrum?

The FCC has been under pressure from the private sector to provide more spectrum for next-generation wireless uses. At the same time, some TV broadcast spectrum is underused. Congress has mandated that broadcasters be fairly compensated for the spectrum they relinquish.

The proceeds of the auction will go the U.S. Treasury, as with previous auctions. Some analysts predict $60 billion could be raised, while others predict the figure could go as high as $80 billion. AT&T has criticized the $60 billion as unrealistically high.

FCC Chairman Tom Wheeler has called the two-part auction "unprecedented...with more moving parts than a Swiss watch."

Who is expected to participate?

Sprint has said it won't participate, since it has plenty of spectrum, although not as much in the lower bands. That leaves just about everybody else, including many small rural carriers and even, possibly, some non-traditional players like Google.

T-Mobile is widely considered to make the biggest push for 600-MHz spectrum at auction.

The 600-MHz band is at a low frequency, which means it has the physical ability to carry a signal further than a high-frequency band. As such, it is especially suited for rural areas where towers need to be placed further apart to keep costs low.

Verizon and AT&T, the nation's two largest wireless carriers, are estimated to already control about three-fourths of the nation's low-band spectrum. The FCC is reserving a portion of the 600-MHz band in each market for smaller carriers to bid on.

There's disagreement about how much that reserved spectrum will help smaller carriers, which would need to bid millions for the spectrum, then have to wait until 2020 or later before it can be available for commercial use.

Broadcasters are required to move off the spectrum they relinquish within 39 months, but some rural carriers believe that will take much longer.

Of the non-traditional possible players, Google is the most interesting, partly because it has so many innovations such as wireless drones and high-altitude balloons that could benefit from the spectrum. Some reports have indicated Google might lead a consortium of other non-traditional groups.

Dish Network, a satellite provider, might also participate, as might Charter Communications, according to various reports.

More information about the auction can be found on the FCC's website.

Copyright © 2015 IDG Communications, Inc.

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