Spectrum Auction Transition

The FCC just completed its long-awaited incentive auction of television spectrum.  While the full results of the auction will not be immediately available, the auction reportedly yielded 84 MHz that was acquired by wireless companies in the "forward auction."  The FCC now will be relocating or "repacking" many stations to new channels over the next 3-plus years. 

The repacking of stations who did not participate in the auction has long been a concern in the broadcast industry because of the uncertainty of which stations would be repacked, whether there will be sufficient funds to reimburse broadcasters for their repacking expenses, the time allotted for the transition, and whether stations would lose parts of their coverage areas.

In 2012, Congress recognized the problems that repacked stations could face, and they took important steps to assure stations would be fully reimbursed for their repacking expenses, would be able to reach their same service area on their newly-assigned channels, and would not suffer any increased interference.  Among other things, Congress established a $1.75 Broadcaster Relocation Fund to reimburse repacked stations.

The FCC is in the process of notifying stations whether they will be relocated to another channel and, if so, what channel they will be reassigned.  The FCC has also notified stations that will be repacked which "transition phase" they are assigned to and the deadline for each transition phase.

Last Congress, Congressman Frank Pallone (D-NJ) and Senators Jerry Moran (R-KS), Brian Schatz (D-HI) received draft legislation - the "Viewer Protection Act" - that authorized additional funds to cure any shortfall in the $1.75 Broadcaster Relocation Fund and also required the FCC to modify the 39-month repacking deadline as appropriate to assure viewers do not lose access to stations.

 

QUICK FACTS - TV SPECTRUM INCENTIVE AUCTION

What is the Status of the Incentive Auction? 

The television spectrum incentive auction will be successfully completed by the end of March 2017. That means the auction generated enough revenue to fund payments awarded to winning TV stations and the $1.75 billion Broadcaster Relocation Fund mandated by Congress to reimburse stations that are forced to be relocated (or "repacked") to different channels. 

 

What Happens Next?

The FCC sent confidential letters to non-relinquishing stations in early February to advise them about post-auction procedures and deadlines.  The letters advised each station (a) whether it will be repacked, (b) its new channel number, if applicable, (c) its new operating parameters, if applicable, and (d) the deadline for implementing the transition to its new channel.  (There are various deadlines within the transition period, including deadlines for opportunities for stations to seek certain modifications of new channel assignments.)  Stations that are terminating operations on their pre-auction channel - either because they are relocating to another channel or going off the air altogether - will be required to notify viewers, MVPDs, and the FCC prior to their off-air date. 

 

How Did Congress Intend to Protect Stations in the Repacking Process? 

To ensure that non-relinquishing stations are not penalized financially during the repacking process, Congress authorized the $1.75 billion Broadcaster Relocation Fund from the proceeds of the incentive auction.  The Broadcaster Relocation Fund was intended to cover the reasonable costs necessary to repack non-relinquishing television broadcasters to new channels.  Congress also set a 3-year timeline for stations to be reimbursed for their repacking expenses and sought to ensure that stations will be repacked to a channel within the same band (UHF/VHF) and with the same coverage area.

 

Will the FCC Be Able to Fully Reimburse Stations and Avoid Service Disruptions?

Probably not.  If the FCC's repacking plan impacts more stations or relocation costs are higher than originally estimated, neither the size of the Fund nor the repacking deadline will be sufficient for stations to successfully be repacked and reimbursed for their relocation costs.  Some analysts predicted that repacking costs could exceed the Broadcaster Relocation Fund by up to $1 billion.  There also will be a strain on the limited manpower and equipment available to successfully repack stations-especially qualified tower crews to engage in highly specialized (and dangerous) activities to modify broadcast towers and install antennas and transmission lines.  Any failure to fully reimburse a station for its relocation costs or to provide sufficient flexibility to a station to relocate by its deadline could threaten the ability of the station's viewers to continue to receive uninterrupted service during this period of transition.

 

What Can Congress Do to Protect Viewers and Stations?

As it appears that the FCC will be repacking more stations than can be reimbursed by the current $1.75 billion Broadcaster Relocation Fund, Congress should (a) provide additional funds to ensure that all non-relinquishing stations are fully reimbursed for the costs incurred for their transition to new channels, and (b) should require the FCC to determine a new, feasible repacking plan to reduce the risk that Virginia viewers will lose access to local TV stations.  Last Congress, Rep. Frank Pallone (D-NJ) and Senators Jerry Moran (R-KS) and Brian Schatz (D-HI) released draft legislation - the "Viewer Protection Act" - that would authorize additional funds to cure any shortfall in the Broadcaster Relocation Fund and require the FCC to modify the 39-month repacking deadline as appropriate to assure viewers do not lose access to stations during the transition period. 

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