Second Confidential Status Letters are on the way!

If you’re a TV licensee who submitted a “complete” application to participate in the upcoming reverse auction component of the Incentive Auction, be on the lookout for a package coming to you from the FCC. It’s your Second Confidential Status Letter (SCSL) – a/k/a your Golden Ticket into the auction. The package will be addressed to the “contact representative” identified in the application, and it will have to be signed for (but not necessarily by the contact rep him/herself). According to an FCC public notice, the SCSL’s were to be shipped out on March 17. If you think you should be getting an SCSL but haven’t received it by 12 Noon on Tuesday, March 22, 2016, the FCC instructs you to get on the horn pronto to the Commission’s Auctions Hotline at 717-338-2868.

If your application and your selection with respect to at least one station have been deemed “complete”, the letter will advise you that you will be permitted to participate in the auction. Congratulations. But be forewarned. Waiting for the letter may be a bit like waiting for college acceptance letters: if you get a thin envelope, that’s probably bad news.

All reverse auction applicants should be receiving a letter advising of the status of their applications. Ideally, the letter will show that the application and all selected stations are “complete” – but the public notice indicates that it’s at least possible that some applications (or the specs for some selected stations) may not be “complete”. If that misfortune befalls you, your package will be thin, consisting only of the bad news – and you will be out of luck with respect to the whole shebang (if your application is incomplete) or with respect to the particular stations deemed incomplete.

If, on the other hand, you’ve been deemed eligible to wield a bidder’s paddle in the auction, your package should include not only the letter, but also (1) instructions on how to make an initial commitment and (2) a SecurID® token for each of the individuals identified in your application as authorized bidders. These will be essential to getting to the Next Level in the process: making an Initial Commitment. Participants will have to make an Initial Commitment with respect to all of eligible stations sometime between 10:00 a.m. (ET) on Monday, March 28, and 6:00 p.m. (ET) on Tuesday, March 29. The FCC couldn’t be clearer: “Late initial commitments will not be accepted.”

What exactly is an “Initial Commitment”? It’s how an applicant, with respect to each selected station, commits to a preferred relinquishment option (turning in the spectrum, moving to a high VHF channel, moving to a low VHF channel) during the Initial Commitment window at the opening price offered by the Commission. (The options available to any particular applicant are limited to those the applicant chose in its Form 177 back in January.)

The process of actually making an Initial Commitment is somewhat arcane. To help familiarize would-be reverse auction participants with the commitment process, the FCC has made available some useful materials. Those materials include an online tutorial that can be accessed and reviewed at this link and a workshop (conducted by the FCC on March 11, but available for viewing at this link). The tutorial takes about half an hour to go through. It should be very helpful to get you familiar with the screens, the login process, etc.

It would also be a good idea, now, to block off a chunk of time on March 28 and/or March 29 so that you will be sure to have enough time to get to the Initial Commitment site, log in, make and submit your election, and print a copy of the page reflecting that submitted election – ALL BEFORE 6:00 P.M. (ET) ON MARCH 29. (The commitment process should not take all that long, so don’t worry about having to spend all day doing it; but because of the importance of getting it done before the window closes, trying to get the job done on March 28, if at all possible, would be advisable.) Remember – failure to get your commitment in before 6:00 p.m. (ET) on March 29 will take you out of the auction.

And for those who do make it to the Next Level, you can look forward to yet another letter from the FCC. That is, the technical “auction” does not start as of March 29. Instead, the Commission will grind all the Initial Commitment information into its computer program and come up with an “initial clearing target” for the incentive auction. Once that target has been announced, each reverse auction applicant permitted to make an initial commitment will be sent a letter (technically, a “Final Confidential Status Letter”) informing it of its status with respect to the clock rounds of the reverse auction. Qualified bidders will be automatically registered in the auction and will be sent instructions for participating in the clock rounds. (Educational information on the clock round process should also be released shortly.)

As Tom Petty cogently observed, the waiting is the hardest part. But with the SCSLs in the mail, the actual auction so long in coming is nearly in sight. Check back here for updates.