FCC Will Move Fast on ATSC 3.0, Multiple Auction Stages Should Be Expected, Wheeler Says

LAS VEGAS -- ATSC 3.0 will be put out for comment before the end of the month, and incentive auction watchers “should expect” that it could take multiple auction stages to complete the auction, said FCC Chairman Tom Wheeler during Q&A at the NAB Show Wednesday. Broadcasters and broadcast attorneys watching the speech called Wheeler's remarks on the new standard (see 1604180058) encouraging. Attendees interpreted his comments on the auction many different ways, from being a signal that a high clearing target is likely, to a warning to manage expectations. “This is not a one and done activity,” Wheeler said of the auction. "We will do it again and again for as long as it takes for the market to work."

The FCC needs to “move with dispatch” in reaction to the recent petition for approval of the physical layer of ATSC 3.0, Wheeler said. The chairman is “taking the first step, and for that we are grateful.” NAB President Gordon Smith told us afterwards. Fletcher Heald broadcast attorney Frank Jazzo called Wheeler's pledge “encouraging.” Though some attendees told us they were hoping Wheeler would commit to immediately releasing NPRM on the new standard, others said the commission's releasing the petition in the next few weeks is significant.

The petition's simulcasting-based transition plan is “a creative solution,” Wheeler said. He said many questions remain about the new standard, such as whether ATSC 1.0 would eventually be totally phased out and how smaller broadcasters will transition.

Wheeler didn't announce a clearing target for the auction as many NAB Show 2016 attendees were hoping, but did say the number will be released “before the end of the month.” Predictions for the target number among industry attorneys and broadcasters at the convention have coalesced around numbers that are either slightly over 100 megahertz or in the mid-80s.

Multiple auction stages would occur only if the forward auction doesn't generate enough money to cover the broadcaster reimbursement fund, the costs of the auction, and to clear enough spectrum to reach the clearing target. That is why some show attendees interpreted Wheeler's remarks as indicating a high clearing target, since it would make multiple stages more likely. Others familiar with the auction disagreed, since it's unlikely Wheeler can be sure there will be multiple stages. Broadcasters and broadcast attorneys told us they saw Wheeler's remarks as an attempt to cast the auction going to multiple stages in a more positive light, since most broadcasters would view them as a failure of the auction. “I think he was diplomatically acknowledging that they are biting onto a big elephant here,” Smith told us. The FCC built multiple stages into the auction plan to "account for the possibility that supply and demand might not match at the initial clearing target," an FCC spokesperson told us.

Multiple stages would likely extend the auction process for many months and could result in fewer broadcasters getting paid for their spectrum, attorneys told us. If the officials running the auction have a choice, they won't set the highest possible clearing target, one broadcast industry official told us.

Wheeler was seen in the Q&A as putting the onus for the auction's success on wireless carriers. The wireless industry has had “a constant mantra” of always requesting more spectrum, Wheeler said. With that spectrum about to be available, “whether they step up and bid for it” will “reflect just how serious” the wireless industry is about needing spectrum, he said. “If they don't bid enough, we will ratchet down the clearing target,” he said, referring to multiple auction stages.

If the $1.75 billion reimbursement fund isn't enough to pay for broadcaster expenses for the repacking, Wheeler will “lead the parade” to secure more funding, he said. Wheeler also said that when it came up, he would address the issue of broadcasters unable to meet the 39-month repacking deadline “with specificity,” through either waivers or a blanket rule. The number of “vacant channel instances” after the auction will depend on how much spectrum is cleared, Wheeler said. He also described the repacking as “the heavy lifting” after the auction is over, and cited it as a reason for the appropriations the FCC requested for the incentive auction. Commissioner Ajit Pai opposed that budget item, Wheeler pointed out.

Radio has a future as an industry because it is “portable and free,” Wheeler said. The progress in efforts to get mobile phone makers to include FM chips shows the market is working, he said.

The FCC is “managing toward” a decision on good faith rules for retransmission consent negotiations by the end of the year, Wheeler said. “A lot has changed” since retrans was created, he said after being asked about syndicated exclusivity rules, saying “corporate bickering” was causing consumer harm. Wheeler said he needs three votes to approve the rules, but said he doesn't support any changes to the FCC process, calling himself an FCC traditionalist on the rulemaking process. The FCC's 2014 quadrennial review will go “to the floor” in June, Wheeler said. "I hope it will get three votes,” he said. “I hope it will get five.” Tuesday, judges criticized FCC delay on media ownership rules (see 1604200044).