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FCC dangles $45 billion in front of TV stations, hoping to jump-start next year’s wireless auction

The Federal Communications Commission is trying to convince local TV stations across the country that giving up their broadcast airwaves is in their own best interests. Today it supplied those broadcasters with what FCC Chairman Tom Wheeler hopes is a more persuasive argument: $45 billion.

That’s how much money the broadcast incentive auction would raise if all goes according to plan, though not all of it would go to TV stations. Broadcasting & Cable did the math, calculating $38 billion would wind up in TV broadcasters pockets after the FCC funded the FirstNet emergency responder network and paid the auction costs as well as the TV stations moving expenses as they relocated to new frequencies.

Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the Communications and Technology Subcommittee on Capitol Hill in Washington, DC, May 20, 2014.    (Photo by Jim Watson/AFP/Gett
Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the Communications and Technology Subcommittee on Capitol Hill in Washington, DC, May 20, 2014. (Photo by Jim Watson/AFP/Gett

Of course, the FCC readily admits these projections are rosy, assuming that the auction clears 126 MHz of UHF spectrum and carriers pay the going rate of $1.50 per megahertz per person in the U.S. the population. But that’s Wheeler’s gambit. He wants to present broadcasters with the best possible outcome in order to convince them to buck up and put their airwaves on the auction block.

Right now, broadcasters aren’t convinced the FCC has their best interests at heart, and the National Association of Broadcasters has even sued to delay the auction until its assured the interests of its members are protected. Wheeler and the FCC staff are taking their numbers – along with specific estimates about what individual stations can expect to get paid – bundling them up in a neat presentation and traveling the country to make their arguments in person.

Broadcasters aren’t the only ones Wheeler is trying to convince. At CTIA Wireless and the Competitive Carriers Association convention last month, Wheeler decried the mobile industry’s lack of enthusiasm for the auction. If the operators don’t commit big to bidding, it makes it that much harder for Wheeler to convince broadcasters to fork over their frequencies.

The carriers have their own problems with the immensely complicated auction process – which involves a reverse auction, followed by a repacking of the 600 MHz band, followed by a forward auction. Big carriers like Verizon aren’t happy that smaller operators like T-Mobile are getting an edge in the bidding, and small regional carriers like C Spire simply don’t trust the FCC after getting burned in the last 700 MHz auction.

If by some miracle everything does goes according to the FCC’s plans, about 100 MHz of airwaves would be freed up for commercial mobile broadband services like LTE. The remaining 26 MHz would become guard bands between broadcasters and uplink and downlink transmissions, but that spectrum would also be made available for white space broadband uses.