Policy

FCC's Epstein: Incentive Auctions Have 'Tremendous Benefits' for Broadcasters

Cites Cash for Future Programming Investments for Stations Willing to Share Channels 10/18/2012 12:00 PM Eastern
Gary Epstein, senior adviser and co-lead of the FCC's Incentive Auction Task Force, said Thursday that spectrum incentive auctions will offer "tremendous benefits to broadcasters."

In a Q&A session after a speech to the Media Institute pitching the FCC's recently issued rulemaking on an incentive auction framework, Epstein outlined those benefits by dividing broadcasters into two groups, those who would be participating in the auctions, and those who would not.

The benefits for the first, he said, were money for those who gave up their spectrum and money to invest in their stations' programming for those who agreed to share channels, both of which are proposed options in the auctions.

For those not giving up spectrum, he identified the benefits as "following the dictates of the statute with respect to interference and also minimizing disruption to the consumer."

The FCC, in the National Broadband Plan that proposed the auctions, had initially projected reclaiming 120 MHz from broadcasters, but there has been some suggestion that total could be much less and the FCC has not been talking up that number. The FCC in the NPRM recognized that how much spectrum it will get depends on the approach it takes to the auctions, which will not be finalized until a vote on final rules projected for mid-2013. Epstein confirmed that the FCC was no longer speculating on that total, saying that the auction would decide that.

As to whether a 2014 target for completing the auctions was unrealistic because it was such a complicated proceeding, Epstein called them "aggressive but achievable" deadlines, but that some of the timing will depend on the comments the FCC gets.

He said the FCC's job is to make the auction understandable and easy for broadcasters to participate after which "the economic decision-making of broadcasters will drive how much spectrum we end up getting."

In his speech, Epstein addressed the criticisms of the 2014 auction target given the admittedly complex auction process with plenty of moving pieces. He said there had been similar criticisms throughout the history of FCC auctions, dating back to the days of chairman Mark Fowler in the 1980s, pointing out he was there. (Epstein was at the FCC then as Common Carrier Bureau chief. He returned to the FCC to head DTV transition efforts in 2009 under acting chairman Michael Copps, then was tapped by current chairms Julius Genachowski to help with the DTV transition.)

Epstein said that, instead, the 80-some auctions held since Fowler got the FCC the auction authority had proved very successful, raking in $50 billion for the treasury.

But he recognized that the combination incentive reverse auction--broadcasters compete for who will take the least for their spectrum--and forward auction--the rights to use that spectrum are sold to the highest bidder, presumably wireless companies--is a first-of-its-kind effort.

Epstein did not have an estimate of how long after the auctions are completed stations not giving up spectrum or sharing spectrum would be repacked. He did point out statutorily that the FCC has three years to pay broadcasters for making that move. But the commission has proposed giving broadcasters the option of taking an upfront estimate of those costs or waiting to submit the real costs.

September