The Expanding Opportunities for Broadcasters Coalition says it has 40 television stations in crowded DMAs that are ready and willing to turn in licenses in order to participate in the incentive auction program, but it warns that FCC attempts to control pricing may chase broadcasters away from the auctions and doom them to failure.
In a letter to the FCC, EOB’s Preston Padden stated, “It is universally acknowledged that widespread broadcaster participation is the indispensible key to a successful auction. The Commission’s proposal to manage the prices paid to broadcasters by ‘scoring’ stations is driving broadcasters away from the auction. And, the ‘scoring’ plan is inconsistent with the Spectrum Act, which provides for the prices to be received by broadcasters to be determined by the market forces of the auction, not by FCC ‘scoring.’”
EOB said that demand from wireless carriers, participating station bids, bids from other broadcasters and preclusion effects are the only relevant matters when it comes to maximizing the benefits of the auction.
It argued that FCC scoring attempts could be extremely counterproductive. Using as an example the comparison of a station in New York City and another in the DMA but located in the New Jersey outskirts, EOB noted that population scoring would kill value for the New Jersey station. But take the New Jersey station out of the auction, and the possibility of effectively clearing spectrum to enable a the auction of a significant amount of spectrum could be damaged.
“If the Commission offers a station with less population coverage a lower value, it could cause that station to forego auction participation, notwithstanding the fact that the station will greatly hinder the agency’s repacking efforts,” stated EOB. “Already, the prospect of such scoring is causing some stations to rethink their plans to participate in the auction.”
EOB noted other proposals that would be harmful, or even ludicrous – for example, ratings mean nothing when it comes to the spectrum of a station that is to be repurposed, yet the FCC has been asked to consider Nielsen ratings when scoring stations.
Padden said Commissioner Ajit Pai had it right when he said, “[If] the Commission preemptively tells broadcasters, ‘You may bid this high, but no higher,’ many may not show up for the reverse auction.”
Padden concluded, “The absolute best way for the Commission to assure a successful auction, and to assure that there will be funds for FirstNet and deficit reduction, is to attract the maximum possible broadcaster participation. We urge the Commission to take every opportunity to disavow any intention to manage broadcaster prices by ‘scoring’ stations.”