October 24, 2014 - 12:00 pm
By Gary Epstein | Chair, Incentive Auction Task Force

When Chairman Wheeler arrived at the Commission last November, he described the incentive auction as taking a cutting edge concept to market on deadline. At that time he wrote in a blog post, “managing a complex undertaking such as this also requires an ongoing commitment to continuously and honestly assess its readiness and its project plan.”

Now is a good time to take stock of where we are and where we are going. It is also time to carefully consider and recalibrate our proposed timing for the commencement of the incentive auction.

Following the Commission’s adoption of the Report and Order in May, we have made consistent progress implementing the incentive auction. Of particular note, the Commission has followed through on commitments made in the Report and Order and initiated rule-makings to address the operations of important services affected by the incentive auction, including unlicensed white spaces devices, wireless microphones and Low Power Television.  And just last week, the Commission addressed several broadcast and wireless interference issues.

We are continuing our march toward implementing the incentive auction. Importantly, we anticipate the Commission will vote on the Comment PN before the end of the year. The Comment PN will propose and seek comment on the detailed directions for how the auction will be conducted, including the methodology to be used to establish opening bids for the reverse and forward auctions; how to define “impaired” markets subject to interference; and the components of the final stage rule. In the coming weeks, the Commission will also consider a notice of proposed rule-making to preserve one vacant TV channel post-auction for use by unlicensed devices.

Crafting the right policy decisions and designing a novel two-sided auction are important, but those decisions by themselves are not sufficient to ensure the auction’s success. We also need broadcasters to participate. Earlier this month, we sent every auction-eligible station owner an information package prepared for the FCC by the investment banking firm Greenhill and Co. The information package explains this unparalleled business opportunity and included high-end estimated compensation values for every DMA generated by FCC staff.   We will continue our dialogue with broadcasters in town hall discussions and confidential meetings with individual station owners in markets around the country.

Amidst this multi-front progress, however, there are undeniable impediments to our efforts to implement a successful auction. As Chairman Wheeler indicated several weeks ago, the court challenges to the auction rules by some broadcasters have introduced uncertainty.  Earlier this week, the court issued a briefing schedule in which the final briefs are not due until late January 2015.  Oral arguments will follow at a later date yet to be determined, with a decision not likely until mid-2015.  We are confident we will prevail in court, but given the reality of that schedule, the complexity of designing and implementing the auction, and the need for all auction participants to have certainty well in advance of the auction, we now anticipate accepting applications for the auction in the fall of 2015 and starting the auction in early 2016. Despite this brief delay, we remain focused on the path to successfully implementing the incentive auction.