What is the incentive auction?

The incentive auction is a new tool authorized by Congress to help the Commission meet the nation’s accelerating spectrum needs.  The broadcast incentive auction itself will comprise of two separate but interdependent auctions ‒ a reverse auction, which will determine the price at which broadcasters will voluntarily relinquish their spectrum usage rights; and a forward auction, which will determine the price companies are willing to pay for flexible use wireless licenses to deliver high-speed data services. TV stations have a number of options by which they can participate: they can choose to go off the air, share a channel with another station, or move from their current channel to a channel in a different band. You can read more about how the auction works on the How It Works page.

Why is the FCC using the incentive auction for broadcast television spectrum?

In February 2012, Congress authorized the Commission to conduct incentive auctions and directed that the FCC use this innovative tool for an incentive auction of broadcast television spectrum. Over the next three years, the Commission conducted a series of public rulemaking proceedings, with input from broadcasters, wireless companies, economists, engineers, and the general public, to establish the rules and policies for the auction.

How will the incentive auction benefit the consumers and the public?

Americans’ demand for wireless broadband continues to grow each year. Today, there are more connected devices than there are people living in the U.S., and about 70 percent of Americans use data-hungry smartphones.  The incentive auction will align the use of broadcast spectrum with 21st century consumer demands for video and broadband services. At the same time, it will preserve a robust broadcast TV industry while enabling stations to generate additional revenues that they can invest into programming and services to the communities they serve. And by making additional airwaves available for wireless broadband, the incentive auction will benefit consumers by easing congestion on wireless networks, laying the groundwork for “fifth generation” (5G) wireless services and applications, and spurring job creation and economic growth.

We now know that the auction has successfully repurposed 84 MHz of low-band spectrum, including 70 MHz of licensed spectrum and 14 MHz for unlicensed use. Winning broadcasters will receive more than $10 billion while American taxpayers will benefit from the more than $6 billion deposited to the U.S. Treasury for deficit reduction.

When will the incentive auction take place?

The broadcast incentive auction began on March 29, 2016. Bidding in clock phase of the auction on May 31, 2016 and is currently in Stage 4.

Are all broadcasters required to participate in the incentive auction? Can a broadcaster opt-out?

Participation in the incentive auction is entirely voluntary. Stations that are not interested in relinquishing spectrum usage rights in exchange for payment of auction proceeds need do nothing. After the auction there will be fewer available channels for TV, but Congress has mandated that the FCC make all reasonable efforts to preserve the geographic footprint and population served of each station that participated (or would have been eligible to participate) in the auction but ultimately remains on the air.

When will the auction end?

The auction does not have a set “end date.” On January 18, 2017, forward auction bidding satisfied the conditions of the “final stage rule,” assuring that the auction will close in the current stage. Bidding in the clock phase will continue until there is no excess supply for any product in any bidding market. At that point, the auction moves into the “assignment phase,” during forward auction winners can bid for specific frequencies. Following assignment phase bidding, the Commission will issue a public notice announcing the conclusion of the auction and listing the winning bidders in both the reverse and forward auctions as well as the post-auction channel assignments for auction-eligible stations.

What will happen after the incentive auction ends?

After bidding in the reverse and forward auctions ends, the Commission will publicly announce the auction results including the winning bidders in both auctions and those TV stations that will be reassigned to new channels (or “repacked”). The release of this public notice will begin the 39-month post-auction transition period.

Will I be able to continue watching over-the-air television programming during the incentive auction?

Yes, any changes will not take place until after the incentive auction ends.

What will happen during the 39-month post-auction television transition?

During the post-auction transition period, some auction-eligible broadcasters will make modifications to their facilities in order to broadcast on their new channels. To facilitate an orderly transition, each eligible station will be assigned to one of ten “phases” with a particular end date by which the station must cease broadcasting on its pre-auction channel. 

Transition specifics will vary by market depending on which broadcasters participated in the incentive auction, which ones have been selected as winning bidders, and which spectrum relinquishment options they chose. During this transition period, some stations that were winning bidders in the auction will relinquish their spectrum usage rights and discontinue over-the-air operations. Other winning bidders will relinquish their existing television channel and begin sharing another station’s channel. Still other winning bidders will voluntarily switch from a higher frequency (like a UHF channel) to a lower frequency (like a VHF channel). Stations that did not participate or submit winning bids in the auction may also have their channel assignment changed as a result of the repacking process.

Any of these changes could affect which stations may be received over-the-air by viewers in a particular area. If you receive a station over-the-air and that station receives a new channel assignment, you will need to scan for new channels, but cable and satellite subscribers should not need to do anything. The transition scheduling plan is designed to limit the number of times viewers in a market would have to rescan to two.

Will I have to do anything in order to continue watching free over-the-air television during or after the transition?

In most cases, no.  You will not need to purchase a new receiver as you did during the analog to digital television transition that ended in 2009. If you receive your programming over-the-air, you may need to “rescan” for available TV stations that have moved to a new frequency. The Commission’s transition scheduling plan is designed to limit the number of times viewers in a market would have to rescan to two.

If my favorite station’s channel is changed, will my cable/satellite company still be required to carry my station?

Stations that receive a new channel assignment as a result of the incentive auction, or move from a UHF to a VHF channel, will continue to qualify for carriage on their existing cable and satellite systems. In the limited case in which a station moves its antenna to a different geographic location within the market to use the tower of its channel-sharing partner, that station’s cable carriage rights will be on the cable system that serves the station’s new location. This is a possibility any time a station modifies or moves its broadcast facility to a new location.

Will the identity of stations participating in the auction be kept confidential? If so, for how long?

As required by the Spectrum Act, the Commission will maintain the confidentiality of information submitted by all broadcast licensees that apply to participate in the reverse auction until the results of the reverse auction and the repacking process are announced. At that time it will announce the identity of the winning reverse auction bidders. Information about applicants that are not winning bidders will be kept confidential for an additional two years. Confidential information will include licensees’ names, channels, call signs, facility identification numbers, network affiliations, and any other information necessary to protect licensees’ identities. We will maintain this confidentiality even if the licensees publicly announce their participation in the auction.

Do you need spectrum only in the top 30 markets?

There is more wireless congestion and therefore greater demand for additional spectrum in the largest markets, but we will also need stations in smaller markets to clear a uniform amount of spectrum nationwide. Because of interference “daisy chains” created by station overlaps, we will also need many stations in markets adjacent to the largest markets, as well as stations along the U.S. border. Even in smaller markets much further away from a large market, a certain number of stations will likely be needed depending on how many stations choose to participate in the auction.

If my favorite station moves its transmitter to a new location in order to share a channel with another station, will I still be able to view it over-the-air?

If a station moves to a new location to channel share, some of the station’s current viewers may no longer be able to view the station over-the-air at its new location. But even if a station moves its transmitter to a new community to channel share, it must remain in the same market area (such as the “Philadelphia market”).

What happens if a broadcaster that participated in the reverse auction decided to exit the auction at some point? Will it still be able to continue broadcasting?

Yes. Broadcasters who participated were free to reject a lower bid offer after the first round and drop out, with no penalties. A station that chose to withdraw from the bidding process will be treated the same for repacking and relocation reimbursement purposes as an eligible station that does not participate at all.

What is repacking?

Repacking refers to the process of reassigning broadcast TV channels to a smaller portion of the TV band in order to free up spectrum for flexible wireless use. In repacking broadcasters who elect to remain on the air or who are not winning bidders in the auction, the FCC is bound by the Spectrum Act's requirement to “make all reasonable efforts to preserve … the coverage area and population served of each broadcast television licensee.” In implementing this requirement, the FCC has determined that it will make all reasonable efforts to preserve the same specific viewers a station served as of February 22, 2012 – the date Congress passed the Spectrum Act. Channel assignments that, considered on a station-to-station basis, would reduce the population served by a station by more than a de minimis (0.5 percent) amount will not be allowed.

Will all stations remaining on the air, including those in smaller markets, need to be reassigned to different channels?

It may not be necessary to reassign all remaining stations to new channels. However, we will not know until after the nationwide repacking exactly how many or which specific stations will be reassigned. Regardless of the size of the market, stations that occupy channels that are repurposed for flexible wireless use will be required to change channels in the repacking in order to allow the creation of a nationwide new wireless band. Even if it does not occupy a channel repurposed for wireless use, a station may be assigned to a different channel to avoid interference from a reassigned stations located on a nearby channel in another television market. Thus, broadcasters that remain on the air may have to change channels even if they operate in smaller markets.

Friday, February 3, 2017