Bipartisan bill provides most detailed glimpse to date into possible spectrum re-purposing and incentive auction mechanism – but leaves many questions unanswered
The Senate Commerce Committee has approved S.911, a bill – co-sponsored by the Committee’s Republican and Democratic leaders – which provides perhaps the most detailed legislative effort advanced thus far to move incentive spectrum auctions closer to reality. (Check out our posts on previous incentive auction bills here.) The bill now goes to the full Senate for its consideration, which is far from guaranteed at this point. Additionally, action on some corresponding bill (which has not yet surfaced) in the House will be necessary before S.911 becomes law. So we still have a ways to go before incentive auctions become reality.
But given its bipartisan origins and the fact that it’s already made it to the full Senate, S.911 is probably the horse to watch in the race among incentive auction bills.
The bill’s primary focus is the creation of a public safety wireless network which would be controlled by a new governmentally-created corporation (the “Public Safety Broadband Corporation” (PSBC)). TV spectrum re-purposing enters into the picture as a potential source of funding, mainly through the sale of "reclaimed" spectrum to wireless companies. (The bill spreads out over more than 100 pages; the spectrum re-purposing/incentive auction portion takes up only about 20 pages or so.) For purposes of this post, let’s focus on the TV spectrum re-purposing/incentive auction aspects of the bill.
Among other things, the bill as originally advanced by Senators Rockefeller and Hutchison provides that:
- No full-power TV licensee would be forced – “directly or indirectly” – to give up spectrum in order to make spectrum available for an incentive auction. But if any licensees were to opt to cough up some or all of their spectrum for such an auction, the Commission would be authorized to cut each such licensee in for a piece of the auction proceeds attributable (in the FCC’s judgment) to the spectrum rights that that licensee gives up.
- Licensees choosing to hold onto their spectrum could still run into re-purposing-related hassles. S.911 would authorize the FCC to “reclaim” TV spectrum for re-purposing, opening the door for some involuntary jiggering that could force some TV licensees to move to different channels.
- In imposing such an involuntary move, though, the Commission would only have to make “reasonable efforts” to assure that the re-purposed licensee gets “an identical amount of contiguous spectrum”: (a) in the same band (i.e., UHF or VHF) that the licensee is forced to give up; (b) in the same geographic market; and (c) with the same areas/populations coverage and interference protection. But those efforts would be required only to the extent that meeting those conditions is “technically feasible” and “in the public interest”. With the same “feasibility” and “public interest” conditions the Commission would also be permitted to make reasonable efforts to allow low band VHF stations (i.e., on Channels 2-6) to move to UHF channels.
- Licensees subjected to involuntary re-packing could also be in line for a portion of the auction proceeds to cover at least some of the costs incurred as a result of any involuntary relocation.
- The FCC would not be permitted to force stations to share a channel, although licensees who voluntarily elect to channel share would be guaranteed the same MVPD carriage rights they currently enjoy.
- All proceeds of the incentive auctions would be deposited in a newly-created Public Safety Trust Fund (PSTF). Payments to TV licensees voluntarily giving up their spectrum would come from the PSTF. While the bill does not specify exactly how the FCC should determine how much each licensee is entitled to, the bill specifies that, at least three months before any incentive auction is conducted, the FCC Chairman must notify Congress of the methodology the FCC plans to use. The bill also indicates that the FCC’s methodology must “consider[ ] the value of the spectrum voluntarily relinquished in its current use and the timeliness with which the licensee cleared its use of such spectrum.”
- No less than five percent of the PSTF – but no more than $1 billion – would be set aside in a new Incentive Auction Relocation Fund (IARF). The IARF would be available to the National Telecommunications and Information Administration (NTIA) which would, in consultation with the Commission, dole out funds to licensees (and MVPDs) to reimburse them for the “reasonable costs” of equipment, installation and construction necessary to accommodate any re-packing that is ordered.
So like most (if not all) of the other incentive auction bills that have been tossed into the mix thus far, S.911 would give the FCC broad discretion with respect to how much any licensee is likely to get for voluntarily giving up its spectrum. The bill does appear to mandate that payments to such volunteers would be pegged to the spectrum’s value as it is currently being used – which would in many instances likely result in a lower number than if it were pegged to the anticipated value of the spectrum in the hands of a wireless operator. And by assigning a priority to folks who clear out quickly, the bill obviously encourages those who are willing to act fast.
As far as reimbursement for costs arising from re-packing go, we are similarly in the dark: we know that those costs would get paid out of the IARF, and we know that the IARF would be no less than five percent of all incentive auction proceeds, but no more than $1 billion. Beyond those very wide parameters, though, we can only speculate.
In other words, the size of the pot of gold at the end of the incentive auction rainbow is still anybody’s guess.
While S.911 includes considerably more detail than other spectrum re-purposing bills we’ve seen, it’s still way too early to draw reliable conclusions about what the re-purposing process will eventually look like. How come?
First, the version of the bill that’s been available for review is the initial version offered by Rockefeller and Hutchison. It was subject to multiple proposed amendments in Committee before being voted on. While we believe that none of the Committee amendments directly affected the provisions described above, we won’t know for sure until the “approved” version of the amended bill is available for review.
Second, even if the amended bill doesn’t change the provisions we have described, it’s always possible that the full Senate might change them as the bill works its way through the legislative process. And let’s not forget the House, which could also insist on changes.
Third, even if the bill were to be enacted exactly as originally drafted, it still provides few if any reliable details about just how the re-purposing process would affect TV licensees. From the currently available draft it’s impossible to say:
- how much a licensee would get for voluntarily turning in its spectrum;
- what kind of involuntary spectrum location might be in store for those who don’t turn in their channels. (Remember, the bill would require only that the FCC make “reasonable efforts” to achieve particular results – like identical amounts of spectrum, etc. – and then only if such results are “technically feasible” and “in the public interest”. That’s a heap of wiggle room.)
- how much a licensee would get reimbursed for such involuntary relocation.
Of course, there’s also the practical reality that the bill might not be enacted at all. Again, the focus of the bill is not on TV spectrum but rather on establishment of a public safety wireless network. TV re-purposing would just be one of several preliminary steps on the way to that goal. Importantly, a core proposal in the bill – i.e., creation of a new corporation that would hold the nationwide license for that network – could prove to be controversial. Ditto for the way(s) in which the bill proposes to allocate the funds that would be realized from incentive auctions.
All of which is to say that S.911 is far from the last word on any of this. But it does give us all something to focus on, and it reminds us that the juggernaut of spectrum re-purposing is still a force that we are likely to have to reckon with, sooner or later.