July 12, 2017 - 4:45 pm
By Jean Kiddoo | Chair, Incentive Auction Task Force
Hillary DeNigro | Deputy Chair, Incentive Auction Task Force

Today marks another milestone in the incentive auction transition – the deadline for TV stations that have been assigned a new channel to file for construction permits for their new facilities and to submit their estimated eligible costs for relocation. The cable and satellite companies that carry those relocating stations will also file their estimated costs today.  Tomorrow, the 36-month phased transition schedule to implement construction, testing, and operation on the reassigned channels formally begins.

Although construction permits and cost estimates aren’t due until tonight, we wanted to give you a preview on how the next steps in the construction permit and reimbursement process will unfold.

Construction Permit Processing

Several hundred TV stations have already filed for construction permits on their new channels. The Commission has been busy reviewing and granting construction permit applications on a rolling basis, enabling stations to begin construction. We will continue to process applications and to grant construction permits as quickly as possible. 

There will be three additional sequential filing windows. First, we will shortly issue notice of a priority filing window in which certain stations may seek alternate channels and expanded facilities because: they are unable to construct facilities that meet the assigned channel’s technical parameters (a total of 25 stations); they are a displaced Class A station ineligible for repack protection; or they predict a loss in population greater than 1% as a result of the repacking. That window will be open for 30 days. 

Second, stations ineligible for the priority window that seek an alternate channel or expanded facility may file in a second window that should open a few weeks following the close of the priority window.

Finally, once applications filed in these two windows are processed, we will make data available to eligible low-power TV (LPTV) and TV translator stations to enable them to identify and apply for available channels in the event that they are displaced. The Incentive Auction Task Force and Media Bureau will announce the opening of a Special Displacement Window for LPTV and translator stations with at least 60 days’ notice so that stations have sufficient time to review the data and prepare their applications.

Review of Cost Estimates

Stations as well as cable and satellite companies are in the process of filing their Form 399 reimbursement estimates.  The initial estimates received as of July 12th will be preliminary and, for a number of reasons, are likely to change as the transition progresses.  For example, estimates will be subject to an in-depth review for reasonableness, may be revised by the filers as they begin incurring costs, and do not include all estimates from stations seeking alternate facilities in the priority window or from some cable and satellite providers awaiting their local stations’ final transition plans.

We have begun our careful examination of the submissions received to date.  That process begins with our reimbursement fund administrator, EY (formerly Ernst & Young).  EY and its team of engineers will review the estimates and, if necessary, communicate with filers to gather more information in order to recommend whether the submitted costs are, as the Spectrum Act requires, “reasonably incurred … in order for the licensee to relocate its television service from one channel to the other” or for cable and satellite companies “to continue to carry the signal of a broadcast television licensee” moving as a result of the auction. The fund administrator will advise stations and cable and satellite companies of any additional information or justifications of expenses that may be required in support of their reimbursement claims.

Initial Allocation

Based on results of the fund administrator’s review, the Task Force and Media Bureau will calculate an initial allocation of up to $1 billion of the total $1.75 billion authorized by Congress for the reimbursement fund.  As the Commission outlined in its 2014 Incentive Auction Order, commercial broadcast stations and cable and satellite providers will see an allocation of up to 80% of their approved estimates, and non-commercial stations are eligible for an allocation of up to 90%. The overall allocation will be announced in a public notice and each filing entity will be able to see the dollar amount of its individual allocation(s) in the CORES Incentive Auction Financial Module. 

Additional allocations will be announced by public notice throughout the reimbursement period to assure that the Commission can account for adjustments as stations, cable companies, and satellite providers better understand their actual costs.

Submitting Invoices for Reimbursement

After the initial allocation, entities can seek reimbursement payments against that allocated amount. To ensure correct payments and prevent fraud, all eligible entities seeking reimbursement are required to submit payment instructions on Form 1876 (available in the Commission’s Licensing and Management System) and certify their banking information.  (We encourage reimbursement-eligible entities to complete this task as soon as possible so as not to delay payments.)  We expect that funds will likely be available to eligible entities in the fourth quarter of this year.