FCC Says TV Spectrum Incentive Auction to Cost $226 Million

The Federal Communications Commission reports that the auction of 600 MHz broadcast TV spectrum in 2016 should cost about $226 million in administrative costs. The FCC finally released the rules relevant to the auction, after it postponed its vote on them in July. The auction will have two parts: first, the reverse auction, which enables broadcasters to accept opening bids if they want, and second, the forward auction in which wireless companies bid on TV spectrum that broadcasters release in the first auction.

According to TV Technology, the FCC’s Public Notice deleted a rule that was previously included: “dynamic reverse pricing,” which would have permitted the Commission to pay a TV station a lower price than the last bid the station accepted.

Also new is a graduated clearing-target model that is intended to reduce interference-impaired spectrum at higher levels. TV Technology says the FCC estimates that, at 144 MHz, “8 percent of the population will experience some interference with wireless service, over-the-air TV reception, or both, in the 600 MHz band. At a 84 MHz, impairment would be around 14 percent; below 78 MHz, it’s capped at 20 percent.”

The reverse auction bidding will begin March 29, 2016, and opening prices for TV stations will be announced 60 days before the deadline to apply; the FCC’s Wireless Bureau will announce the application window and deadlines at a later date.

Opening prices will be based on a maximum value of $900 million divided into 1 million units of interference-population volume, or a “$900 base clock price,” says TV Technology, and prices will also be affected by whether the TV licensee chooses to go off the air, move to a low VHF or a high VHF.

Stations that choose to channel-share will receive full $900 x volume pricing, as will stations that go off the air. Once the auction is complete, channel assignment will begin for the remaining TV stations.