Why the FCC’s Plans to Auction Off TV Airwaves Next Year Just Got Harder

auction bidding



A new lawsuit from broadcasters mad at the Federal Communications Commission’s plans to shuffle broadcast channels after an upcoming auction just added more uncertainty into the government’s effort to get TV airwaves into the hands of wireless carriers.

Broadcasters sued the FCC late Monday, challenging the agency’s decision to change how it will determine local coverage areas for TV stations after the auction. Losing viewers could also mean lower advertising revenue for some stations.

The FCC wants to auction off TV airwaves currently used by some stations to wireless companies for their 4G LTE networks so carriers can keep up with consumer demand for wireless data. The agency is trying to convince TV stations to give up their airwaves — which they received for free years ago — in exchange for some of the proceeds from an airwaves auction.

Station owners also asked the court to review whether the agency erred in not promising to cover all of the costs for TV stations to move antennas and other equipment after the auction, when the government will squish TV channels closer together.

FCC Chairman Tom Wheeler says he wants the auction to take place next year, but the broadcasters’ lawsuit could make that timeline challenging.

One FCC official noted that many of the agency’s actions are regularly challenged in court and this lawsuit is nothing different. That’s true, but the suit could be particularly problematic for the agency because it is being sued by some of the same TV stations that it needs to participate in the auction.

An FCC spokeswoman said the agency was confident its action “fulfills the mandates established by Congress on this complex matter.”

Congress said TV stations don’t have to participate in the auction and directed the FCC to ensure broadcasters that didn’t take part weren’t harmed. The National Association of Broadcasters has estimated TV station owners could be on the hook for almost half a billion dollars in uncovered costs after the auction.

The auction of TV airwaves is arguably the most complex the FCC has ever undertaken. That’s because it will basically hold two auctions at the same time: One for broadcasters seeking to sell their airwaves and the other for wireless carriers hoping to snatch them up.

It’s a complicated effort. In May, the FCC released two orders describing rules and regulations for the auction. Combined, they totaled 595 pages.

Broadcasters asked a federal appeals court Monday for expedited review of its suit, saying they weren’t deliberately trying to delay the auction.

“We merely hope that, if the FCC does not change course on its own, the Court will help put the auction back on the track Congress envisioned,” said Rick Kaplan, a former FCC official who is now an executive vice president for the National Association of Broadcasters. He said the action was needed to ensure the auction is “truly voluntary and holds harmless the millions of viewers who are reliant on local TV.”

It’s the second challenge to the agency’s auction rules this month. Earlier, Sprint and T-Mobile both asked the FCC to reconsider some set-aside limits that it put on the auction designed to make it cheaper for smaller carriers (like Sprint and T-Mobile) to win some of the airwaves.

The wireless carriers had reportedly considered bidding together for the airwaves but that plan was nixed after FCC officials indicated they wouldn’t allow it. Now, the companies want more airwaves set aside for smaller carriers like themselves so AT&T and Verizon can’t buy them all.

The agency needs several TV stations in the largest markets in the U.S., including New York, Los Angeles and San Francisco, to voluntary give up their airwaves but it’s not clear how many stations will do so.