TV Broadcast Incentive Auction: Results and Repacking

TV Broadcast Incentive Auction: Results and Repacking

October 11, 2017
TV Broadcast Incentive Auction: Results and Repacking
On April 13, 2017, the Federal Communications
MHz of licensed spectrum for wireless companies and 14
Commission (FCC) formally announced the close of the
MHz for wireless microphones and unlicensed use.
television (TV) broadcast incentive auction. Under this
Licensed spectrum is sold to the highest bidder and used
auction, some TV broadcast stations voluntarily
exclusively for services provided by the license-holder.
relinquished their spectrum usage rights in the 600MHz
Unlicensed spectrum is accessible to anyone using wireless
band for financial payment. The radio frequency spectrum
equipment certified by the FCC for those frequencies.
released by the TV broadcasters is to be repurposed for
commercial broadband communications to meet the
Post-Auction Transition—Repacking
growing demand for new and expanded wireless services.
TV stations will have to vacate the spectrum that was paid
for by the winning bidders to enable its new use. This
The major framework and requirements for this auction
transition to post-auction channels involves not only those
were established by Congress in Title VI (Spectrum Act) of
stations that voluntarily participated in the auction, but
the Middle Class Tax Relief and Job Creation Act of 2012
other non-participating broadcast stations that continue to
(P.L. 112-96). As required in the Spectrum Act, this auction
operate their stations, which may incur costs or need to
(designated by the FCC as Auction 1000) consisted of two
relocate as a result of the auction.
parts: Auction 1001 (reverse) followed by Auction 1002
(forward). TV broadcasters (restricted to full power and
The post-auction transition requires the FCC to clear the
Class A licensees) voluntarily participated in Auction 1001,
airwaves won in the auction by relocating the TV broadcast
establishing the prices they were willing to accept for
signals in a process known as “repacking.” The FCC
releasing the spectrum. In Auction 1002 wireless carriers
established both a repacking plan to clear the channels that
and other commercial interests bid for licenses created from
wireless carriers acquired in the auction and a TV
the release of the spectrum.
Broadcast Relocation Fund (Fund) to cover associated costs
incurred by non-participating TV stations (restricted to full
The proceeds of the auction are to be used for the following
power and Class A licensees) that are involuntarily
purposes: to pay TV broadcasters that relinquished their
repacked during this transition. Reverse auction winning
spectrum holdings; to cover the costs incurred by the FCC
TV stations that choose to remain on the air must pay for
for conducting the auction; plus up to $1.75 billion to cover
their own relocation costs.
costs associated with the relocation of other TV broadcast
stations that did not participate in the auction but will be
The repacking will occur over a 39-month period, and
displaced by spectrum relocation. Any remaining funds will
involves the relocation to new channels of nearly 1,000
be deposited in the U.S. Treasury for deficit reduction.
broadcast TV stations that remain on the air and the
coordination of hundreds of stations nationwide. This
Auction Results
transition will occur using a phased approach with each
Bidding in the auction closed on March 30, 2017. The
station assigned to one of ten transition phases which will
reverse auction cleared payments of $10.05 billion to
determine the order in which stations will move to their
winning broadcast TV stations with 142 winning bidders
new channels. The repacking process, which commenced in
and 175 winning TV stations. The gross proceeds from the
April 2017, is scheduled to conclude in July 2020. Initial
forward auction totaled $19.8 billion, with 50 bidders
relocation moves will take place in November 2018.
placing winning bids for a total of 2,776 of 2,912 licenses
offered. T-Mobile was the largest winner in the forward
This process includes modifying towers, moving radio
auction, spending $8 billion for 1,525 licenses, followed by
transmitters, moving and manufacturing antennas, as well
Dish at $6.2 billion for 486 licenses, Comcast at $1.7
as hiring tower crews and engineering consultants. External
billion for 73 licenses, AT&T at $910 million for 23
factors, including weather conditions and local zoning and
licenses, and U.S. Cellular at $328.6 million for 188
permitting processes, will also factor in to the repacking
licenses. (Verizon did not bid and Sprint did not
process.
participate.) Nearly 30 rural and regional carriers were also
successful bidders. After all obligations are met more than
After the transition these stations, in most cases, will not go
$7.3 billion of forward auction proceeds are to go to the
off the air, but will share frequency with other stations
U.S. Treasury for deficit reduction.
(channel sharing) or relocate to a new channel. As a result
multiple stations may relocate or new stations may enter a
The spectrum that was auctioned is located in the 600 MHz
market. Viewers who rely on over-the-air antennas to
band and is considered highly desirable due to its excellent
receive their broadcast signals will need to direct their
propagation characteristics (i.e., the ability to both travel
receivers to “scan” the area, in some cases multiple times,
long distances and penetrate buildings).The auction has
to find and view relocated local broadcast channels.
repurposed 84 MHz of low-band spectrum, including 70
https://crsreports.congress.gov

TV Broadcast Incentive Auction: Results and Repacking
Viewers who receive their programming via a paid provider
timeframe at this point. They cite the growing need for new
(e.g., cable TV or satellite) will not have to take any action.
wireless spectrum to meet current and future consumer
demand, the substantial resources bidders have spent to
Once the repacking is completed all stations reassigned to
obtain this spectrum to meet those needs, and the possible
new channels are expected to be off their pre-auction
detrimental impact that significant delays could have on the
channel and commence operation on their new channel. The
value of spectrum for future auctions, as reasons to uphold
auctioned spectrum is then to become available to the
the present timeframe. Furthermore, they state that a
winning bidders to offer new wireless services. Winning
potential increase to repacking cost estimates is no reason
TV stations that elected not to relocate but to go off the air
to slow down the repacking process, as there is sufficient
have 90 days from the date they receive their reverse
time and support to readjust funding levels, if needed.
auction winnings to vacate their channel.
Impact on Other Broadcast Stations. LPTV stations,
Selected Issues for Consideration
translator stations, and some public TV stations, while not
As the repacking process proceeds some stakeholders have
participating in the auction, may be required to transition to
expressed concerns regarding certain aspects of the FCC-
new channels as part of the repacking plan. LPTV stations
established repacking plan. Some of these concerns include
typically serve rural communities with limited access to full
the reimbursement funding level; the scheduled timeframe;
power stations or provide specialized original programming
and the impact on other broadcast entities such as Low-
to niche communities in urban areas. TV translator stations
power TV (LPTV) stations, translator stations, public TV
do not originate programming, but retransmit the
stations, and FM radio stations that did not participate in the
programming of other TV broadcast stations (e.g., ABC and
auction, but that are involuntarily affected by repacking.
FOX affiliates), mostly to viewers in rural areas who cannot
otherwise receive full power station broadcast TV signals.
Funding Level. Concerns have been expressed that the
Both of these types of stations are categorized by the FCC
$1.75 billion funding level allocated by Congress to cover
as secondary and as such, are not entitled to protection from
the reimbursement expenses for stations that are
primary stations (i.e., full power and Class A). These
involuntarily repacked is inadequate. While still subject to
stations may be displaced or incur costs in the repacking of
review, some feel that action should be taken to ensure that
primary stations. However, due to their secondary status
any necessary additional funds will be available. Additional
they were not eligible to participate in the auction or receive
funding should be allocated, some assert, for broadcast
reimbursement from the Fund. Similarly, some public TV
stations that are currently not eligible for funding but,
stations do not qualify for reimbursement from the Fund,
through no fault of their own, will incur costs due to station
and even those that do are concerned that allocated funds
repacking, and for consumer education and outreach,
are insufficient to cover repacking costs. Supporters stress
related to scanning in particular.
that given these stations’ tight budgets and limited
resources, and their vital programming and emergency alert
Some stakeholders, while not objecting to the allocation of
offerings, sufficient funding should be allocated to protect
additional repacking funds if verified as necessary, caution
them from financial harm and possible bankruptcy.
the FCC to guard against potential misuse. For example,
concern has been expressed that the FCC must ensure
FM radio station licensees that share space on TV broadcast
against funding broadcast station technology equipment
towers are concerned that the repacking of TV broadcast
upgrades that are not related to repacking needs and
stations could result in new costs and temporary disruptions
therefore not eligible for reimbursement.
if they are required to power down or shut down, to protect
tower crews. Broadcast groups are seeking federal funding
Repacking Timeframe. Some have expressed concern that
to cover radio station expenses and financial losses incurred
the 39-month repacking timeframe is inadequate or
due to their proximity to repacked TV stations.
unrealistic, given the enormity of the repacking task.
Concerns over the potential shortage of experienced
Congressional Role
broadcast tower crews needed to install necessary
By enacting the Spectrum Act, Congress authorized the
equipment, potential equipment shortages, and probable
FCC to conduct the TV broadcast incentive auction and has
delays due to weather conditions have been cited as reasons
a continued interest to ensure that the post-auction
to extend the schedule.
repacking process fulfills the objectives and goals contained
in the act. Hearings have been held to examine issues
Other objections have been raised over the FCC’s decision
related to the repacking process and legislation has been
to require stations that do not meet repack deadlines to go
introduced to address, among other issues, the allocation of
dark (i.e., go off the air). The National Association of
additional funding to cover repacking related expenses. As
Broadcasters (NAB), while not currently proposing a
the repacking proceeds, it is anticipated that Congress will
modification to the 39-month timeframe, has urged the FCC
continue its oversight of the process.
to provide for a liberal waiver process to ensure that
individual stations that do not meet repacking deadlines due
Angele A. Gilroy, Specialist in Telecommunications Policy
to circumstances beyond their control are not forced off the
air or subject to a significant reduction in service.
IF10751
Some stakeholders, including those representing the
wireless industry, see no need to expand the 39-month
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TV Broadcast Incentive Auction: Results and Repacking

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