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On the Intertubes: Davina Sashkin Explains the Incentive Auction

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Down here in the CommLawBlog bunker, when Davina speaks, we all listen. You should, too.

FHH Atty.DS-3If you’re still feeling a bit lost when people around you start talking about the upcoming Broadcast Incentive auction, check out the podcast of our own Davina Sashkin. Available for streaming or download, free, at Washingtech.com (a relatively new addition to the communications law/policy scene), the show provides a quick and painless briefing that covers a lot of ground. Over a 25-minute interview conducted by Joe Miller, the mainspring behind Washingtech.com, Davina explains the genesis of the auction as well as the mechanics of the complex auction process.


LPTV/TV Translators: Post-Repack Plans, Prospects Previewed

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In addressing LPTV/translator future, FCC declines to loosen several regulatory leashes

Low Power Television (LPTV) and TV translator stations face a difficult and uncertain future in the post-incentive auction context. Thanks to the auction (and the consequent spectrum repack), the FCC will reduce the number of channels available for television broadcasting – perhaps eliminating for TV use all channels above Channel 31. All full power and Class A stations will then be repacked into the remaining channels based on computer programs that disregard the existence or fate of LPTV/translators. LPTV/ translator operators have, not unexpectedly, loudly cried “foul”; and two court appeals are pending over their ultimate fate.

Against this background, the FCC has finally started to respond, releasing a Third Report and Order and Fourth Notice of Proposed Rulemaking, addressing, at least in part, the post-repack status of LPTV/translator stations. Whether – and if so, how many – LPTV/translator stations will benefit from the newly adopted measures is unclear. Indeed, it’s even unclear how many will ultimately survive at all over the long run. In its decision the Commission rejected or deferred consideration of several proposals aimed at unleashing the LPTV industry in ways that might attract capital investment. Nevertheless, the Commission has at least (and at last) recognized the need to address the place of LPTV/translator services in the overall regulatory scheme once the spectrum repack has occurred.

As most of our readers probably know well, in the Spectrum Act Congress explicitly accorded protection after the post-Incentive Auction spectrum repack to the facilities of only full-power and Class A stations. By contrast, in the Act Congress addressed LPTV/translators only to say that their rights were not altered. The repack of surviving full-power/Class A stations into a reduced portion of the spectrum will almost certainly lead to the displacement of LPTV/translator stations from their presently authorized channels – but, with less spectrum to work with, many such stations will likely have a difficult time finding alternate channels on which to operate. Aggravating these unpleasant circumstances, LPTV/translator licensees have been subject to a longstanding Commission mandate to convert themselves to digital operation, thereby completing the transition for analog to digital TV that was largely completed for full-power stations in June, 2009.

The FCC has now taken a few steps to address the predicaments faced by the LPTV/translator industries. The highlights:

Digital Construction Deadlines. Five years ago, the Commission announced that all LPTV/translators would have to close down their analog operations by September 1, 2015, and thereafter either transmit in digital format or go dark. Meanwhile, the spectrum repack came along, putting LPTV/translators at risk of having to build digital facilities twice – once by September 1, 2015, and again after being bounced to a new channel after the repack – all without reimbursement of their costs. Recognizing the significant financial burden imposed by the double-build situation, the Commission has tossed the old deadline (which had already been suspended in April, 2015), replacing it with a new deadline tied to the completion of the incentive auction/repack process: The new digital transition deadline for LPTV/translator stations will be 12 months after completion of the 39-month transition period allowed for full-power/Class A stations to move to new channels after the repack. In other words, LPTV/translators will have up to 51 months to move after new full power/Class A channel assignments are announced in an anticipated post-auction Channel Reassignment Public Notice. It is not so clear what will happen when some full power/Class A stations complete their transition in less than 39 months; presumably, any LPTV/translator that stands in the way will have to move aside whenever the full power or Class A station chooses to go on the air on its new channel.

The Commission has emphasized that the new deadline is a “hard” one for termination of analog operation – that is, all LPTV/TV translator stations will have to close down analog operations by 11:59 p.m. local time on the new transition date, whenever that date happens to be, regardless of whether the station’s digital facilities are operational. Any stations without operational digital facilities at that point will be required to go dark while they complete digital construction. By going dark, they will risk losing their licenses entirely if they don’t resume operation within 12 months: under Section 312(g) of the Communications Act, any broadcast license expires automatically if the station fails to broadcast for 12 consecutive months.

Despite its insistence on the “hardness” of the new deadline, the Commission has provided one last safety net: analog LPTV/translator stations experiencing delays in completing their digital facilities will be permitted to seek one last extension of time. Any extension will be for not more than six months; the request for the extension will have to be filed not later than four months prior to the new transition date; and the station will have to justify the extension from among a list of reasons the FCC will accept, which do not include “I don’t feel like it now.”

The new digital transition date also applies to entities with valid construction permits for new digital LPTV and TV translator stations. All permits for unbuilt stations will now expire at the end of the 51-month period, without the need to file individual applications for extensions of time every six months; and those permittees will also be entitled to seek that final six-month extension, if justified.

Channel-Sharing Option Now Available. LPTV/translator stations will now be permitted to channel-share, just like their full-power and Class A counterparts. All channel-sharing agreements (CSAs) will be voluntary, with the terms crafted on the unique business plans and operational needs of the parties. As with full-power/Class A stations that have CSAs, LPTV/translator stations will continue to be licensed separately; each will have its own call sign; and each licensee will separately be subject to all of the Commission’s obligations, rules and policies. Two or more sharing stations may divide the 19.39 MB capacity of one digital TV channel however they like, as long as each party retains spectrum usage rights sufficient to transmit at least one standard definition (SD) programming stream at all times. (The FCC does not state how many bits per second it considers necessary for an SD stream.)

Licensing of CSA participants will be a two-step process. If no technical changes are necessary at the host station (the “sharer”), a channel-sharing station relinquishing its channel (the “sharee”) will file an application for a digital construction permit for the same technical facilities as the sharer station. The application must include an unredacted copy of the CSA as an exhibit. Significantly, the FCC declined to relax the rule that an LPTV station may not move more than 30 miles, and its old and new protected service contours must overlap. These restrictions – which don’t apply to full-power or Class A stations (sharing in those services is permitted as long as the sharing stations are licensed in the same DMA) – will significantly limit sharing possibilities. Requests for waivers of the 30-mile and contour overlap rules will be entertained, but only upon a showing that there is no available channel for sharing within the restrictions, and with a negative presumption against moves to more densely populated areas. After the FCC grants the construction permit, the sharee(s) will move to the host station and notify the FCC of cessation of operation on their old channel.

Channel-sharing LPTV/translator stations will have three years after FCC approval to implement their arrangements. In situations where the sharer station has not been displaced by the repack, the FCC will begin accepting channel-sharing applications after completion of the incentive auction. Where all the sharing stations have been displaced by the repack, applications won’t be accepted until the initiation of the post-incentive auction application window for applications to move to new channels that will be scheduled once the results of the post-auction repack have been announced.

For the time being, such sharing will be limited to secondary stations only; that is, two or more LPTV’s and translators will be permitted to share with one another, but not with primary stations. That limitation, however, may not be long-lived. In the Fourth Notice of Proposed Rulemaking component of its decision, the FCC has proposed to allow “primary-secondary sharing”. The standard channel-sharing rules and policies already announced for primary-primary and/or secondary-secondary sharing are likely to apply to primary-secondary sharing. However, the latter will give rise to some additional wrinkles as to which the Commission specifically requests comment, including the implications of a secondary station achieving at least de facto primary status and how cable and satellite carriage obligations will be applied.

Assistance for Finding New Channels; Displacement Application Filing Window. After the repack, the FCC will open a window for LPTV/translator stations displaced from their present channels to file to move to a new channel. The Commission has directed the Media Bureau, prior to opening the window, to utilize the agency’s repacking and optimization software to identify potential channels that might be used by displaced LPTV and TV translator stations. In areas where the analysis indicates that not all displaced stations may be accommodated, the staff will also come up with possible arrangements based on “other objectives, such as maximizing the number of stations assigned or minimizing the interference that stations might experience.” In other words, it appears that the Commission plans to make a serious effort to squeeze as many displacement channels in as possible. Channels (and “possible arrangements”) so identified will be listed in a public notice at least 60 days before the window opens.

LPTV/translator operators will not be required to apply for the channels listed in the notice, but the notice may provide a useful starting point. The Bureau-provided preview of potential alternative channels may dilute advantages some stations have enjoyed in previous windows (e.g., stations able to move more quickly or hire more capable engineers). There will also be processing priorities that will cut low-priority applicants out of access to the Bureau-identified channels. The first priority will go to DTDRTs (see below), which will be given priority even against earlier-filed applications by LPTV stations and traditional TV translators and will thus be able to get access to the most desirable available channels. In addition, displacement applications by operating stations will be given priority over applications by holders of unbuilt construction permits. The FCC does not state by what date a station must be operational to get displacement priority, but the threat of losing that priority may be an incentive for new stations to be built sooner rather than later.

Replacement Translator Service. The incentive auction is also giving rise to a “new” translator service: a digital-to-digital replacement translator service (DTDRT) that will allow eligible full-power television stations to recover part of their digital “service area” lost as a result of the repacking process. The DTDRT will serve essentially the same role as the Digital Replacement Translator (DRT) service did in connection with the DTV transition, and will largely resemble the DRT overall (e.g., DTDRTs will not get separate call signs, will have “secondary” status vis-à-vis full-power stations, and will generally be subject to the technical rules governing TV translators). Eligibility for DTDRTs will be limited to full-power television stations reassigned in the repacking process that can demonstrate: (1) a loss of a portion of their pre-auction digital service area, and (2) that the proposed DTDRT will be used solely to fill in such loss areas. (Similar requirements existed for DRTs, but the FCC did not always analyze the showings.) Eligible stations will be able to file for DTDRTs, and will be given priority in FCC processing, beginning with the opening of the post-auction LPTV and TV translator displacement window and ending one year after the completion of the 39-month Post-Auction Transition Period. DTDRT permittees will be given three years to build, allowing them to have exclusive claim – and block others’ access – to those channels, regardless of the status of construction (or non-construction) during that period.

So Long, Analog Tuners. The Commission has finally announced the date that will mark the end of the requirement that all TV sets and other devices that receive TV signals include both analog and digital tuners. After August 31, 2017, analog tuners will no longer be required. The requirement has been kept in place, notwithstanding the 2009 DTV transition, because a significant number of LPTV/translator stations continue to broadcast in analog. However, that number is now down to about 38% of LPTV stations and 22% of translators. Plus, the newly-adopted transition deadline sets a (theoretically) hard date by which analog sets will not be needed at all. Unlike during the digital transition, the FCC will not require any labeling to disclose that devices have no analog tuner, nor will it require any notice or efforts to educate the public that analog reception will no longer be possible.

What the FCC Did Not Do. In addressing the post-repack fate of LPTV/translator stations, the Commission declined to adopt a number of proposals aimed at easing restrictions that constrain such stations and threaten their future. For example, one proposal would have allowed LPTV/translator greater flexibility in how they could use their spectrum. Such flexibility would have let them participate in the broadband market. The Commission’s refusal to consider this approach – which could have expanded considerably the availability of broadband, particularly in rural areas where broadband build-out costs are a daunting obstacle – is especially odd in view of the FCC’s urgent efforts to expand such service in precisely such places.

Another proposal rejected by the Commission would have allowed LPTV/translator stations to go dark now and to remain off the air until authorized to move to new channels (or until they know that they will not have to move), even if they remain dark for more than the one-year limit in Section 312(g) of the Communications Act. And a third proposal was to accord primary status to LPTV stations that survive the repack, or at least those that provide local or other unique broadcast services.

By providing opportunities that might attract new capital to the industry, any of these steps would have stemmed the financial drain that LPTV stations will be forced to bear while awaiting their post-repack fate. But the FCC is unwilling to loosen the leash now. Instead, it will require LPTV stations to try to stay alive subject to restrictions that limit entrepreneurial innovation far more strictly than rules that will govern the wireless entities that take over the TV spectrum LPTVs are forced to vacate.

The new rules will become effective after the Commission’s order is published in the Federal Register – except for Sections 74.787 and 74.800 (which create the new DTDRT service). Those two section have to be run past the Office of Management and Budget because they include “information collections” subject to the Paperwork Reduction Act. Check back here for updates on both fronts.

Update: LPTV/TV Translator Rule Revisions, Proposals Hit the Federal Register

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In the closing days of 2015 we reported on the FCC’s long-awaited decision on how it plans to deal with LPTV and TV translator stations as it works its way through the post-auction repack process. The Commission’s decision has now been published in the Federal Register in two separate chunks: the first includes the Report and Order portion of the decision in which new or revised rules were adopted; the second includes the Notice of Proposed Rulemaking portion in which the FCC put out for comment a number of additional rule changes it has in mind.

The publication of the Report and Order serves to establish a number of dates. First, the new rules will take effect on March 2, 2016 (except for Section 74.800, which will have to be reviewed and approved by the Office of Management and Budget first). Second, anyone who wants to ask the FCC to reconsider any aspect of the new rules will have until March 2 to file a petition for reconsideration with the Commission. Third, if you’re inclined to seek judicial review of the new rules, you’ve got until April 1 to do so (unless you’ve got your heart set on having your appeal heard in a particular Federal Circuit, in which case you’d best brush up on the steps you’ll have to take, soon).

Meanwhile, the publication of the Notice of Proposed Rulemaking (actually, it’s the “Fourth Notice of Proposed Rulemaking”, but really, who’s counting?) sets the deadlines for comments and reply comments on the proposed changes. Comments are due by February 22, 2016 and replies by March 3. All interested folks should note the relatively abbreviated comment periods – the FCC doesn’t appear to be wasting any time. Comments and replies can be filed electronically through the FCC’s ECFS webpage: refer to Proceeding Numbers 03-185, 12-268, 14-175 and 15-175.

Attention, Reverse Auction Applicants: An Important Letter from the FCC is on its Way to You!

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First Confidential Status Letters advising of potentially fatal incompleteness flaws have been sent to would-be reverse auction applicants; Deadline for corrections: February 26, 2016 at 6:00 p.m. (ET)

If you’re a TV licensee who submitted an application to participate in the upcoming reverse auction component of the Incentive Auction, you should be checking your mail box regularly for the next couple of days. The Incentive Auction Task Force has announced that, on Friday, February 12, it sent out a First Confidential Status Letter (First CSL) to each applicant. When you receive your First CSL, be sure to review it carefully. If you don’t, you could be risking your ability to participate in the auction.

According to the Task Force’s public notice, the First CSL includes “information on the status of [the addressee’s] application as well as the status of each station that it selected”. These assessments are based on the staff’s initial review of all applications filed last month.

Ideally, your letter will confirm that your application is complete in all respects, including all information about each station that you have put into the auction. However, it may indicate that either the application, or the showing relative to one or more specific stations, is lacking. Lacking how? The Task Force’s announcement doesn’t say, but we heard a rumor that the First CSL will provide little or no detail about any incompleteness found by the FCC’s staff, so don’t be surprised if the First CSL is not as informative as you might prefer. Whatever may be the case, we’ll all find out soon enough.

If your First CSL says that your application is incomplete in some way, you will have until 6:00 p.m. (ET) on February 26, 2016 to fix whatever problem there might be. This will be the only opportunity to fix incomplete applications; late submissions will not be accepted.

The “resubmission window” during which defects may be addressed with “permissible minor amendments” opens at 10:00 a.m. (ET) on February 16. It’s very important that any defects be fixed by the February 26 closing date of the window because, after that date has come and gone, if an application (or any information about a particular station the applicant has entered into the auction) remains incomplete, that’ll be all she wrote. If the application as a whole is incomplete, the applicant won’t be permitted to proceed to the next step of the auction at all; if the information about a station previously selected by the applicant is incomplete, the applicant will not be permitted to move forward in the auction with that station.

In addition to addressing completeness problems, applicants may use the resubmission period to make other administrative and permissible minor changes to their applications. Those would include such things as adding or deleting authorized bidders (up to a maximum of three), changing the “responsible party” identified in the application, or revising addresses or telephone numbers for the applicant and/or its contact person(s). “Major” amendments will not be permitted. (Under the rules, “major” amendments include, but are not limited to: “changes in ownership of the applicant that would constitute an assignment or transfer of control, changes to any of the required certifications, and the addition or removal of licenses identified on the application to participate for which the applicant intends to submit reverse auction bids.”)

All amendments to the Form 177 application must be made online through the FCC’s auction portal. No hard copies will be accepted.

After the resubmission window closes, the Commission staff will review all the changes made during the window. Once that process has been finished, the staff will send out to each applicant a Second Confidential Status Letter (Second CSL) advising of the status of the application and each selected station.

If your application (including information about at least one selected station) is deemed “complete”, you’ll be eligible to participate in the reverse auction by submitting an “initial commitment” prior to 6:00 p.m. (ET) on March 29, 2016. (Reminder: The “initial commitment” means that you are committed to accepting the FCC’s opening price for the preferred relinquishment option specified for each selected station.) To submit that commitment, you’ll need specific instructions and a SecurID® token. Those will be provided with the Second CSL (assuming, of course, that the application is complete).

Does the FCC Want to Postpone the Incentive Auction?

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Publicly, the Commission appears determined to proceed full speed ahead, but a couple of FCC pleadings to the D.C. Circuit suggest otherwise.

calendar-question mark-1Pretty much since the FCC set out on its headlong race to design and implement the upcoming Incentive Auction, one of the Prime Directives appears to have been to get the thing done as quickly as possible. Initially mapped out to kick off sometime toward the end of 2015, it was then pushed off to the first quarter of 2016. And there the target date has remained, with deadlines for reverse and forward auction applications due by January 12 and February 10, 2016, respectively, and final elections for participating in the reverse auction due by March 29.

So it may come as a surprise to many that, in two pleadings recently filed with the U.S. Court of Appeals for the District of Columbia Circuit, counsel for the FCC has created the impression that the court may have to stay the auction. While the Commission will doubtless deny that it has been angling for a stay, the circumstances in which its pleadings were filed and the positions articulated in them suggest otherwise.

To lay this out, we’re going to have to crawl into one of the more esoteric corners of appellate law: mandamus. But stick with us – we’ll try not to make it too painful. (And please bear in mind that this is totally a glimpse of mandamus from the 30,000-foot level, sans much detail or nuance. Don’t try this at home.)

What is mandamus anyway?
Normally, the federal courts of appeals are available only to review an agency’s decisions. Unless and until the FCC has released a decision in a matter, it’s premature to try to bring the court in. But there exists a special – technically, it’s called an “extraordinary” – writ that you can ask for in very limited circumstances. Most often, those circumstances involve “unreasonable delay” by the agency, but they can also include situations where the agency (a) has failed to take some ministerial action which it is required to take or (b) has taken some action that the law plainly prohibits it from taking. A party asking the court for a writ of mandamus is effectively asking the court to step in and make the agency do something, the general goal being to force the agency to issue a decision that can then be appealed.

Courts are notoriously reluctant to issue such writs. Federal judges are loathe to impose their will on an agency’s control of its own docket, reasoning that an agency generally has a broad range of matters pending before it, and the agency should be permitted to set its own priorities for dealing with those matters.

But when an agency has delayed too long, and a party’s interests are, as a result, being severely and adversely affected, the court may step in. And even if a party seeking a writ of mandamus is eventually denied the writ, the fact that the FCC may be forced to explain its delay to the court can have a salutary effect on the complaining party’s situation: in order to deflect any judicial concern that maybe, just maybe, the Commission is not entirely in the right, occasionally the Commission will, in responding to a request for the writ, commit to getting the long-awaited decision out within a particular time frame. In the face of such a commitment, the court will usually dismiss the mandamus petition, but the petitioner will still be in a better position for having sought the writ in the first place, because it now has in hand the commitment, made by the FCC to the court, that the FCC will be cranking out a decision reasonably promptly.

Bear in mind that even getting to the point where the FCC is required to respond to a mandamus petition isn’t easy. Because of the extraordinary nature of the writ, an agency is not required to respond to such a petition until the court has reviewed the petition and determined that a response is called for. In other words, mandamus efforts can, and often are, rejected without the FCC filing any response at all. Indeed, the mere fact that the court does order such a response can be viewed as a very significant victory for the mandamus petitioner.

Which brings us to the case of the Videohouse Three.

The Videohouse Three
As you may recall, while the Incentive Auction will eventually involve a repack of the entire portion of the spectrum used for broadcast television, the Spectrum Act afforded post-repack protection only for full-power TV stations and LPTV stations that had been accorded primary status as Class A licensees. Because of that latter category – and because lack of post-repack protection threatens a station’s existence – it is of overriding importance to many stations that their status as Class A licensees be confirmed.

The trouble is that the road from mere LPTV license status to Class A status has been complicated and frustrating for a number of stations. In its June, 2014 order finalizing (for the most part) many of the nitty-gritty details of the Incentive Auction process, the Commission announced certain standards by which it would determine whether a station claiming protected Class A status would be given that status. And it indicated some willingness to accord such status even if a station did not precisely meet the announced criteria.

But when it came to most stations that fell short of the specified standards, the Commission refused to deem them protected. “Approximately 100” such stations existed, according to the FCC, and giving them post-repack protection would have a “significant detrimental impact on repacking flexibility.” However, one such station – KHTV-CD – was given the coveted protection.

Three would-be Class A licensees that didn’t make the cut sought reconsideration, arguing that they, too, should be entitled to protection. Those licensees were The Videohouse, Inc., Abacus Television (the predecessor in interest to Fifth Street Enterprises, LLC) and Latina Broadcasters of Daytona Beach, LLC. In June, 2015, the Commission rejected those three petitions for reconsideration. But even though it didn’t seem inclined to let those three licensees in, the Commission nevertheless expanded the universe of would-be Class A licensees entitled to protection, as a result of which a small number of additional stations gained protected status. (Irony Alert: Unlike Videohouse, Abacus and Latina, none of those newly-protected stations had themselves sought reconsideration.)

Curiously, though, when the formal list of protected (and, therefore, auction-eligible) stations was released two weeks later, Latina’s station was, without explanation, included, allowing its station to join the protected ranks with KHTV-CD.

Back in for reconsideration went Videohouse and Fifth Street in September, 2015, joined this time by WMTM, LLC and KMYA, LLC. A month later, the Commission announced the deadlines for reverse auction applications – December 18 (later pushed back to January 12) – with final reverse auction participation elections due March 29. Obviously, Videohouse et al. needed to have their petition for reconsideration acted on quickly if they wanted to participate in the auction. In their view, they needed to be declared eligible for the auction in time to file applications by January 12.

By December 22, however, with the application deadline less than three weeks away, the FCC had done nothing. So Videohouse, Fifth Street and WMTM (we’ve dubbed them the “Videohouse Three” for the sake of convenience) asked the D.C. Circuit to issue a writ of mandamus compelling the Commission to rule on their pending reconsideration petition no later than January 4, 2016, which (in theory, at least) would give them time to file their applications – if the FCC were to deem them eligible – or, if not, to get an appeal filed.

On December 23 – the day after the petition walked in the door – the court ordered the FCC to respond no later than December 28, the Monday after the three-day Christmas weekend.

Now if you were paying attention in our quick review of mandamus law, above, you should know that getting such an order at all is pretty remarkable, getting it essentially overnight even more so. To many observers, such a quick and favorable order suggests that the court sees at least some merit in the petitioners’ arguments.

The FCC’s Response to Mandamus
The FCC’s answer is where things started to get interesting.

As is customary when the FCC responds in a mandamus proceeding, its answer emphasized the extraordinary nature of the writ and generally pooh-poohed the Videohouse Three’s various claims. To do that, though, the Commission had to ignore at least one of its own prior admonitions. While the petitioners argued that the deadline for filing reverse auction applications marked their Absolute Last Chance to get themselves into the auction, the Commission said, au contraire,

[i]f either the Commission or the Court rules before March 29 that petitioners are eligible to participate in the reverse auction, the Commission will have the ability to ensure that petitioners “have an opportunity to submit an application to participate in the reverse auction” before the agency commences the auction.

OK, good to know – especially since the Commission had not made that clear previously. In fact, it had said pretty much the opposite: “Each licensee seeking to relinquish spectrum usage rights in Auction 1001 must file an auction application” by the January 12 deadline. (We added those emphases.)

The FCC’s response then went on to say that

[r]egardless of when the agency acts on the reconsideration petition, petitioners will have an adequate opportunity to petition this Court for any appropriate relief concerning their eligibility to participate in the reverse auction and to receive repacking protection…

And that, according to the Commission, is because

[e]ven assuming that the FCC does not issue a reconsideration order before the filing window for the reverse auction closes on January 12, 2016, petitioners remain free to petition the Court for a stay of the auction

(Again, those are our emphases.)

So in answering the mandamus petition, the Commission reversed its earlier admonition that eligible applicants had to file by the January 12 deadline to maintain their eligibility. And it clearly suggested to the petitioners that, in order to protect their interests, they might want to consider filing for a stay.

Two days later – on December 30 – the court issued an order dismissing the mandamus petition. Again, if you were paying attention above, you should be thinking that dismissal may not be a bad thing, depending on what the court said. And sure enough, even though the court technically tossed the mandamus petition, in doing so it included this caveat:

Based on the agency’s representations, … the Court expects the Commission to rule on the pending reconsideration petition promptly, so as to allow petitioners to seek judicial review with an opportunity for meaningful relief before the incentive auction commences on March 29, 2016.

In other words, the court wasn’t going to specify a date by which the pending petition for reconsideration would have to be resolved, but it did make clear that that would have to happen soon enough to let the Videohouse Three get to court for “meaningful relief” before March 29. In other words, the Videohouse Three pretty much got what they had been asking for.

Back to the Commission
In its response to the court, the Commission also indicated that a draft order resolving the petitions for reconsideration was already circulating around the Eighth Floor. (This is another standard FCC mandamus response – an effort to convince the court that extraordinary judicial intervention isn’t necessary because the agency’s already close to getting the job done.) So you might think that, given the urgency apparent in the court’s order, the FCC would have finished up its work tout de suite, to make good on its tacit assurance to the court that the reconsideration order would likely be out shortly.

And that’s exactly what happened … if you view six weeks to be “shortly”. The FCC’s reconsideration order didn’t come out until February 12, six weeks after the court’s order and less than seven weeks before the March 29 deadline. In its order, the FCC again rejected the Videohouse Three’s claims to eligibility. But it handed them a present by deciding that, contrary to what it had concluded in June, 2015, Latina should not be deemed eligible – a re-reversal that seems to underscore the inherent arbitrariness of the FCC’s approach here. This triggered a couple of strong dissents from Commissioners Pai and O’Rielly, both of whom gave the Videohouse Three plenty of arguments with which to challenge the decision (as if the Videohouse Three needed the help).

Back to Court
Back to court went the Videohouse Three, this time with a petition seeking review of the various Incentive Auction orders, including the February 12, 2016 decision. And, given the fast-approaching March 29 deadline, they filed a separate motion asking the court to adopt an expedited briefing schedule that would wrap up by March 7; they also offered to forgo oral argument, if that would help move things along. Their goal, obviously, was to get a decision in advance of the March 29 deadline and thereby avoid the irreparable injury that would befall them should they miss that deadline.

The Commission opposed that motion, essentially saying “March 7???? That’s crazy talk!” Such “breakneck speed” wouldn’t provide the FCC “adequate time to present [its] arguments” and would “strain [its] resources”. (Truth be told, the Commission said that the same concerns would apply to the Videohouse Three – but since the Videohouse Three had themselves proposed the expedited schedule, they presumably don’t share the FCC’s concerns.) In its opposition, the Commission also acknowledged that “[n]ormally, the timeframe for … expedited consideration [by the D.C. Circuit] of a petition for review is measured in months”, indicating that even the FCC recognizes that completion of judicial review is unlikely to occur in the next seven weeks (i.e., before the March 29 deadline).

The FCC went further. In its view,

the traditional vehicle for seeking relief [to avoid irreparable harm] is a stay pending judicial review. Petitioners have not requested such relief here.

Because of these considerations, according to the FCC, the court should not adopt the expedited briefing schedule proposed by the Videohouse Three.

For the time being, the Videohouse Three are holding their ground. In a reply to the FCC’s opposition, they speculate that the FCC’s seeming preference to have them file for a stay (as opposed to an expedited briefing schedule) is a devious tactic to avoid judicial review. Since the standards that must be met by a party seeking a stay are (at least in the view of the Videohouse Three) more rigorous than the standards to be met to get expedited briefing, the Videohouse Three suspect that the FCC is hoping that, by forcing them (and the court) to engage in a “stay” analysis, the FCC might be able to prevail in that analysis. And, without a stay, the auction would come and go with the Videohouse Three on the outside looking in. Sure, they might continue to prosecute their appeal, but to what end? The likelihood of unwinding the completed auction is essentially nil.

(While it is true that the standards to get a stay are difficult to satisfy, it’s not clear that they’re necessarily higher than what would be needed to get the court to approve the proposed expedited schedule, which is ambitious, to say the least. And the court has already declined to expedite briefing in a couple of other appeals brought by LPTV interests relative to the Incentive Auction, so we know that getting such a schedule is not a sure thing.)

The Videohouse Three’s speculation about the FCC’s litigation strategy may be correct, or not. But it seems that the FCC is playing with fire here.

After all, the FCC has clearly indicated that, if the Videohouse Three aren’t in the auction by March 29, they’re not going to be; it has assured the court that the Videohouse Three “will have an adequate opportunity to petition this Court for any appropriate relief concerning their eligibility to participate in the reverse auction”; it has acknowledged that under normal circumstances, the court won’t be acting by March 29; and it has condescendingly counseled the petitioners and the court – not once, but twice – that the Videohouse Three should be asking for a stay. And let’s not forget that, in dismissing the mandamus petition, the court seemed to be pretty clear that it thinks the Videohouse Three are entitled to – how did the court say it? Oh yes – “judicial review with an opportunity for meaningful relief before the incentive auction commences on March 29, 2016”, an expectation “[b]ased on the [FCC’s] representations”.

Again, we’re pretty sure that the Commission won’t admit that they’re fishing for a stay. And maybe they’re not. But given all these circumstances, we’re hard pressed to understand how the FCC hasn’t itself laid the groundwork for a stay.

It may be time to get going with your office pool as to whether a stay is going to happen and, if so, when the Incentive Auction will eventually start.

Check back here for updates

The Videohouse Saga Speeds Up

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calendar-question mark-1Be careful what you wish for, because you may get it. That may be what counsel for Videohouse is thinking just now, as the D.C. Circuit has granted their motion for an expedited briefing schedule. That’s good news for them, right? (Unclear on the background here? Take a look at this post and then come on back for the following update.) 

Yes … but. 

Yes, because it seems to reflect the court’s continued sympathy for their situation and their need to get the matter resolved as quickly as possible. And, to the extent that the FCC’s effort to force the Videohouse Three to seek a stay of the March 29 Incentive Auction deadline may have been (as the Videohouse Three suggested) merely an exercise in gamesmanship to avoid an accelerated briefing schedule, it didn’t work.

BUT the schedule announced by the court may pose some problems.  

First, the court’s order – which was released in the early afternoon of February 23 – specifies that the Videohouse Three’s brief is due on February 25. Two days to prepare a merits brief to the D.C. Circuit? Yoicks! Of course, February 25 was the date they had initially asked for, but hey, that was back on February 17, when they still had, like, a whole week. With the court’s order, they’ve got less than two days.  

Another problem: the order provides considerably more time for the FCC’s brief (until March 28) and the petitioners’ reply brief (until April 1) than they had asked for; it also indicates the oral argument won’t happen until sometime in May. That obviously means that the case won’t be resolved by the court until after the March 29 deadline. So to the extent the proposed schedule was designed to get the appeal wrapped up before March 29, that didn’t happen. 

If we had to guess, we’d say that the next step will be the stay request that the FCC seemed to be asking for. While FCC counsel may have thought that they had a better chance of fighting off a motion for stay, they may be re-thinking that. Against the background of the grant of the petitioners’ motion for expedited briefing, the odds seem to be moving in favor of the Videohouse Three, notwithstanding the unusually high burden a party seeking a stay must meet. After all, it’s hard to imagine that the court would move this quickly and this favorably in response to the Videohouse Three’s emergency motion to hustle up the briefing, only to neuter that action by allowing the auction to go forward with the Videohouse Three on the outside looking in. 

Obviously, there’s more to come. Stay tuned.

Update – Latina to FCC: “Stay!”

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As the FCC plows ahead with plans to start its reverse auction process by requiring initial commitments by 6:00 p.m. (ET) on March 29, 2016, efforts by stations seeking a ticket into the reverse auction through Class A protection continue down at the D.C. Circuit. As we have reported, the Videohouse Three managed to get the briefing schedule in their merits appeal expedited, but not enough to guarantee them entrée to the auction. Whether they’ll be seeking a stay in the coming days remains to be seen.

Meanwhile, Latina Broadcasters of Dayton Beach, LLC – the licensee initially excluded from the auction, then included, then excluded again – has appealed the FCC’s February 12, 2016 decision excluding it. In connection with that appeal, Latina has asked the D.C. Circuit for a stay. And it has asked that the court rule on the stay request by March 11.

The court appears inclined to try to meet that deadline: within hours of the filing of Latina’s stay request on February 26, the court had issued, on its own motion, an order requiring (a) the FCC to respond by noon on March 4, and (b) Latina in turn to reply by 9:00 a.m. on March 7. While the court has given no indication of how it will eventually rule on the stay request, this scheduling order again seems to reflect the court’s awareness of the importance of the fast-approach March 29 deadline for auction participation.

Latina’s stay request presents the court with two alternatives. Latina’s first proposed stay would relate to the February 12 order excluding Latina from the auction. In Latina’s view, if the court were to stay the effectiveness of that order, then Latina could participate in the auction, subject to the caveat that, should its merits appeal of the February 12 order eventually be rejected, Latina would be removed from the auction (or denied whatever benefits it may have been awarded through the auction in the meantime). Should the court be inclined to provide that limited relief, the auction could still proceed as currently scheduled.

Latina’s alternative proposal would be to stop the auction in its tracks until Latina’s merits appeal is finally resolved.

(Latina also suggests that, if the court isn’t able to decide the stay matter by March 11, then the court should issue an “interim administrative stay” effectively staying either the February 12 order or the auction (or, possibly, both) to give the court more time to consider the matter.)

The fact that Latina has presented these alternative stay approaches complicates matters for the Videohouse Three. If the court were to stay the auction as a whole, of course, the Videohouse Three should be happy, as they would then be able to pursue their merits appeal in due course and, ideally, get a ruling one way or the other before the auction eventually happens. But if the court were to grant a stay limited to the February 12 exclusion of Latina from the auction, that wouldn’t appear to help the Videohouse Three much. In that case, they would presumably have to seek their own stay.

Things continue to happen down at the court. Check back here for updates.

Reverse Auction Update: FCC Underscores Initial Commitment Deadline, Offers Workshop, Tutorial and User Guide to Introduce “Initial Commitment Module”

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The actual Module itself is not slated to become available until two business days before the commitment “window” opens.

It’s “damn the stay requests (and appeals), full speed ahead” on the reverse auction front. Notwithstanding the frenzy of activity down at the U.S. Court of Appeals for the D.C. Circuit, the Commission has issued further information underscoring its determination to close the reverse auction door as of 6:00 p.m. (ET) on March 29, 2016. And, to assist would-be auction participants, it has scheduled a workshop and prepared an online tutorial and user guide.

According to a stern public notice, anyone eligible to participate in the reverse auction will have from 10:00 a.m. (ET) on March 28 to 6:00 p.m. (ET) on March 29, 2016, to submit their “initial commitment” through the online “Initial Commitment Module”. And in case you had any doubts about how the Commission views that deadline, it provides this all-boldface admonition: “Initial commitments must be submitted prior to 6:00 pm ET on March 29, 2016. Late initial commitments will not be accepted.

If you’re inclined to check out the Initial Commitment Module to (a) make sure that you can access it and, if you can, (b) see how it works, you won’t be able to do so until it becomes available for a “preview period”. The period will run from 10:00 a.m. on March 24 until the “Initial Commitment Window” opens on March 28. Why the Commission has chosen not to unveil its Module until two business days before the Module is supposed to go live is unclear.

While the availability of the preview opportunity may seem a bit, um, abbreviated to some (what with the closing of the Initial Commitment Window following so closely and all), never fear. The Commission has also prepared an online tutorial and a user guide, both of which are “designed to assist applicants in navigating the initial commitment module and making an initial commitment”, according to the Commission. Somewhat ominously, the FCC also notes that the user guide includes “suggested troubleshooting tips”. (This is ominous because it suggests that the FCC anticipates that there may be some troubles that will need to be shot.) Both the tutorial and the guide are supposed to be available through the FCC’s Auction 1001 webpage (click on the “Education” tab on that page) as of February 29.

And over and above those online resources, the Commission has also announced a workshop on how to make an initial commitment in the reverse auction. Scheduled for March 11, 2016 from 10:00 a.m. – 1:00 p.m. (ET) in the Commission meeting room in Washington, it’ll be open to the public and available through online streaming, both live and recorded. If you’re interested in attending in person, you may want to register beforehand. That’s not required, but it might help speed you through the check-in process. (You can register by sending an email with your name and company to auction1001@fcc.gov; use “Initial Commitment Workshop” in the subject line.) And if you choose not to venture down to the Portals, you’ll still be able to submit questions through that same email address before, during and after the show.

While attendance at the workshop is not mandatory, the Commission “strongly encourage[s]” all would-be reverse auction participants to check it out, whether in person or online. In view of the importance of getting your commitment in before the window closes, we second that emotion.


Incentive Auction Update – Another Stay Request Makes it to the D.C. Circuit

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We have previously reported that one party (Latina Broadcasters of Daytona Beach, LLC) has asked the U.S. Court of Appeals for the D.C. Circuit to stay either (a) the exclusion of Latina’s application from the upcoming reverse auction) or (b) the reverse auction itself. And now the Videohouse Three (about whose appeal we have also reported) have filed their own separate stay request.

And, as happened on the Latina side, the court has issued an order on its own motion calling for an expedited briefing schedule relative to the latest stay request. The motion was filed on March 3; that same afternoon, the court ordered the FCC to respond by March 8, with the Videohouse Three able to reply by the following day. In other words, the pleading cycle will close less than a week after it was opened.

The Videohouse Three have asked the court to rule by March 11, the same target date Latina requested. The court, of course, is not obligated to meet that deadline, but certainly the expedited briefing schedules in both cases are intended to let the court act quickly.

Check back here for updates.

A Glimpse of Reverse Auction Future

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FCC releases samples of file formats to be provided to reverse auction participants during auction.

In case we were all figuring that the reverse auction was going to be a walk in the park, the FCC has given us a glimpse of Reverse Auction Future by posting the “reverse auction file format specifications” that will be available to auction participants (and updated constantly) throughout the auction. As the auction progresses from round to round, the Commission will post each participating licensee’s data for that licensee’s review only. That, ideally, will help each participant in its bidding strategies.

The trouble is that the materials that the FCC has posted may be a bit difficult for the uninitiated to comprehend, at least in the abstract. Because of that, anyone planning to participate in the reverse auction should probably start now to get familiar with the data that will be available once the fun begins. The place to start on that will be to take a close look at this guide to the data. It walks the reader through each of the data files that will be posted and updated as the auction progresses, with explanations of the various data points included in those files (and trust us, there are more data points than we expected).

Once you’ve got a handle on that, you can then take a look at a sample of each of the data files that will be available. To get to those samples, go to this page on the FCC website and click on the “Reverse Auction Sample Data Files” link there. You should then see a message allowing you to open a .ZIP file that contains five separate CSV files. (They can be opened in various spreadsheet programs, like Excel.) The samples are populated with fictitious data for illustrative purposes only. As the Commission emphasizes, these data “do not reflect any predictions or assumptions about the actual bidding in the auction, the number of rounds, or the outcome of the auction”.

The important message here: the reverse auction is coming. Now is the time to start getting ready for it.

Attention, Reverse Auction Participants: A Small Package of (Potentially) Great Value Should Be Delivered to You Shortly

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Second Confidential Status Letters are on the way!

If you’re a TV licensee who submitted a “complete” application to participate in the upcoming reverse auction component of the Incentive Auction, be on the lookout for a package coming to you from the FCC. It’s your Second Confidential Status Letter (SCSL) – a/k/a your Golden Ticket into the auction. The package will be addressed to the “contact representative” identified in the application, and it will have to be signed for (but not necessarily by the contact rep him/herself). According to an FCC public notice, the SCSL’s were to be shipped out on March 17. If you think you should be getting an SCSL but haven’t received it by 12 Noon on Tuesday, March 22, 2016, the FCC instructs you to get on the horn pronto to the Commission’s Auctions Hotline at 717-338-2868.

If your application and your selection with respect to at least one station have been deemed “complete”, the letter will advise you that you will be permitted to participate in the auction. Congratulations. But be forewarned. Waiting for the letter may be a bit like waiting for college acceptance letters: if you get a thin envelope, that’s probably bad news.

All reverse auction applicants should be receiving a letter advising of the status of their applications. Ideally, the letter will show that the application and all selected stations are “complete” – but the public notice indicates that it’s at least possible that some applications (or the specs for some selected stations) may not be “complete”. If that misfortune befalls you, your package will be thin, consisting only of the bad news – and you will be out of luck with respect to the whole shebang (if your application is incomplete) or with respect to the particular stations deemed incomplete.

If, on the other hand, you’ve been deemed eligible to wield a bidder’s paddle in the auction, your package should include not only the letter, but also (1) instructions on how to make an initial commitment and (2) a SecurID® token for each of the individuals identified in your application as authorized bidders. These will be essential to getting to the Next Level in the process: making an Initial Commitment. Participants will have to make an Initial Commitment with respect to all of eligible stations sometime between 10:00 a.m. (ET) on Monday, March 28, and 6:00 p.m. (ET) on Tuesday, March 29. The FCC couldn’t be clearer: “Late initial commitments will not be accepted.”

What exactly is an “Initial Commitment”? It’s how an applicant, with respect to each selected station, commits to a preferred relinquishment option (turning in the spectrum, moving to a high VHF channel, moving to a low VHF channel) during the Initial Commitment window at the opening price offered by the Commission. (The options available to any particular applicant are limited to those the applicant chose in its Form 177 back in January.)

The process of actually making an Initial Commitment is somewhat arcane. To help familiarize would-be reverse auction participants with the commitment process, the FCC has made available some useful materials. Those materials include an online tutorial that can be accessed and reviewed at this link and a workshop (conducted by the FCC on March 11, but available for viewing at this link). The tutorial takes about half an hour to go through. It should be very helpful to get you familiar with the screens, the login process, etc.

It would also be a good idea, now, to block off a chunk of time on March 28 and/or March 29 so that you will be sure to have enough time to get to the Initial Commitment site, log in, make and submit your election, and print a copy of the page reflecting that submitted election – ALL BEFORE 6:00 P.M. (ET) ON MARCH 29. (The commitment process should not take all that long, so don’t worry about having to spend all day doing it; but because of the importance of getting it done before the window closes, trying to get the job done on March 28, if at all possible, would be advisable.) Remember – failure to get your commitment in before 6:00 p.m. (ET) on March 29 will take you out of the auction.

And for those who do make it to the Next Level, you can look forward to yet another letter from the FCC. That is, the technical “auction” does not start as of March 29. Instead, the Commission will grind all the Initial Commitment information into its computer program and come up with an “initial clearing target” for the incentive auction. Once that target has been announced, each reverse auction applicant permitted to make an initial commitment will be sent a letter (technically, a “Final Confidential Status Letter”) informing it of its status with respect to the clock rounds of the reverse auction. Qualified bidders will be automatically registered in the auction and will be sent instructions for participating in the clock rounds. (Educational information on the clock round process should also be released shortly.)

As Tom Petty cogently observed, the waiting is the hardest part. But with the SCSLs in the mail, the actual auction so long in coming is nearly in sight. Check back here for updates.

OMB OK’s Repack Repayment Form

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Blog.form 2100 sked 399 lessonLast fall we reported that the Commission had released the form (official dubbed Form 2100, Schedule 399) to be used by repacked TV licensees seeking reimbursement for their relocation costs once the dust has settled on the Incentive Auction. While the FCC had declared the form it released to be the “final” version, that version still had to be vetted by the Office of Management and Budget before it could be officially unleashed on the public. According to a notice in the Federal Register, OMB has now signed off on the form, meaning that it’s ready for prime time as of March 24, 2016. Of course, it’s unlikely that anybody is going to be needing to worry about completing and submitting Schedule 399 for at least several months, but when that times does come, the form will be there, ready to be filled out. (If you want to see exactly what OMB approved, you can find links to both the form and its instructions at this link.)

Pre-Auction Repack Expenses May Be Reimbursed

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Announcement clears up uncertainty, ideally encourages preparations that might move repack along faster.

Blog.form 2100 sked 399 lessonIf you’re a broadcaster thinking about getting a head start on the incentive auction’s relocation process, you may be in luck. The FCC has announced that some repack-related expenses will be eligible for reimbursement even if they are incurred before the auction wraps up.

We’ve known all along that “costs reasonably incurred” in the relocation process will be subject to reimbursement from the $1.75 billion TV Broadcaster Relocation Fund. But it remained unclear whether reimbursement would extend to costs incurred prior to the close of the auction. Now we know: you can go ahead and start your planning. According to the FCC, the Spectrum Act’s reimbursement mandate does indeed encompass costs incurred prior to the close of the auction, although of course only if such expenses are otherwise reimbursement-eligible.

The Commission’s announcement should help to resolve uncertainty that might otherwise have discouraged stations from undertaking pre-auction work that could go a long way to expediting the post-auction repack process. A “rapid, non-disruptive transition” is, after all, exactly what the FCC is striving for, so it makes a lot of sense to encourage – or, at least, not discourage – steps now that could smooth the repack down the line. (Concern about this uncertainty here was brought to the FCC’s attention by a number of parties, including one repped by FHH’s own Paul Feldman.)

The reimbursement process for pre-auction expenses will be the same as for post-auction expenses. As we described the process generally last November, eligible entities (i.e., stations that are reassigned to a new channel in their pre-auction band through the repacking process) will, following the close of the forward auction and the release of the Channel Reassignment PN, submit to the Commission an estimate of their eligible costs. The Media Bureau will then review the estimates based on the Catalog of Eligible Expenses the Commission has developed. The Catalog, which is technically embedded in FCC Form 2100, Schedule 399, sets forth categories of expenses most likely to be incurred by relocated broadcasters and MVPDs.

The Catalog is not a “definitive list of all reimbursable items”, according to the Commission. Rather, it’s a starting point. Items included on the list may not be reimbursable in some circumstances, while items not included on the list may be reimbursable. How will we know which is which? At this point, we don’t. That will be up to the Bureau, which will review all claimed expenses to determine whether they’re reasonable. (One cautionary note, though: the goal of reimbursement is to permit licensees to end up with facilities comparable to those they already have — i.e., replacing like with like. So don’t get fancy ideas about using reimbursement bucks to upgrade your current ho-hum transmission system with some new whiz-bang distributed transmission set-up.)

For those expenses that pass the test, the Bureau will allocate funds to each eligible entity, and reimbursement will be available from the allocated funds as expenses are incurred. Prior to the end of the three-year reimbursement period, eligible entities will be required to provide information regarding their actual and remaining estimated costs, following which each will be issued a final allocation that will cover (ideally) the remainder of their eligible costs.

As it has repeatedly made abundantly clear, the Commission is determined to do everything it can to ensure the success of the Incentive Auction and repack. The announcement concerning the potential reimbursability of at least some pre-auction expenses is yet another step in that direction.

The End Is Near: Spectrum Auction Clearing Target, Schedule Announced

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It’s crunch time – so everybody looking to participate in the Incentive Auction should pay close attention.

At long last, the Commission has announced the Initial Clearing Target that it plans to shoot for in the Incentive Auction, and it has set the dates for the commencement of the reverse auction. These are developments of the utmost importance to all would-be auction participants, all of whom should be sure to review the Commission’s public notice carefully. Here’s a summary of the highlights.

Clearing Target
Perhaps most importantly – because it could determine the ultimate success of the auction process – is the Clearing Target that the Commission’s auction process software has determined, based on the spectrum relinquishment commitments made by broadcasters. And the target is (drum roll, please): 126 MHz. This means that the Commission thinks that, given the broadcasters who have committed to selling their channels (or moving to a VHF channel), a full 21 channels can be cleared in each market of the country. The 126 MHz clearing target also indicates that the Commission believes there is sufficient interest on the forward auction side that bidders for wireless licenses will pay enough to support the broadcast clearing necessary for success of the Auction overall.

While the Clearing Target may be revised during the course of the auction as developments warrant, the initial target bodes well for the auction’s eventual success.

Final Confidential Status Letters
With the Clearing Target set, the Commission has determined which stations will be qualified to participate in the reverse auction and which won’t. The Commission is sending to each reverse auction applicant a Final Confidential Status Letter (Final CSL) advising it of its status. The letters are addressed to the contact representative identified in the applicant’s Form 177 and must be signed for, although not necessarily the contract rep him/herself. Because the Final CSL contains information essential to participation in further auction preparation – as well as the auction itself – the Commission has emphasized that

any applicant that has not received the Final Confidential Status Letter package by 12:00 noon Eastern Time (ET) on Wednesday, May 4, 2016, should contact the Auctions Hotline at (717) 338-2868.

You have been warned.

In addition to notifying qualified applicants of the happy news that they’ve made the cut, the Final CSL will also provide those qualified applicants with instructions for participating in the mock auction (see below) and placing bids in the actual auction, once it starts. The Final CSL will not, however, advise which of the applicant’s previously specified relinquishment options will be the preferred option. That determination – made by the FCC based on the auction software’s conclusions as to which relinquishment options could be accommodated – can be found only by logging into the bidding system once it becomes available for previews on May 23, 2016 at 10:00 a.m. ET (see below for more on that).

For applicants found not to be qualified to participate, the Final CSL will provide one of three explanations for the non-qualification: either the applicant made no initial commitment, or its initial commitment could not be accommodated, or the Commission determined that the station won’t be needed to meet the Clearing Target. The Final CSL will advise non-qualified applicants how to return their SecurID® fobs.

Important Caveat: In its public notice the Commission reminds all full-power and Class A TV licensees – including those not qualified for the reverse auction – that they remain subject to the prohibition against certain auction-related communications. That prohibition is currently in effect and will remain in effect until further notice from the FCC (which notice will not in any event occur until after the close of the forward auction). In particular, the Commission expressly notes that “communicating that a party ‘is not bidding’ in the auction could constitute an apparent violation that needs to be reported”. That could include disclosure by a non-qualified applicant of its non-qualified status, regardless of the reason for that status.

Commencement of Reverse Auction
Bidding in the reverse auction is set to start on May 31, 2016 and continue on the following schedule:

May 31, 2016 
Bidding Round           10:00 a.m. – 4:00 p.m. ET

June 1, 2016
Bidding Round           10:00 a.m. – 2:00 p.m. ET

June 2, 2016 and after
Bidding Round           10:00 a.m. – 12N ET
Bidding Round           3:00 p.m. – 5:00 p.m. ET

The timing and duration of rounds may be adjusted by the Commission during the auction based on the auction’s progress. Any changes will be announced through the online Auction System.

Pre-Auction Instructional Opportunities
Just because the auction won’t technically begin until May 31 doesn’t mean that there will be nothing to do in the meantime. Au contraire, recognizing the unprecedented nature of the Incentive Auction and the crucial importance of insuring that participants are comfortably familiar with the process, the Commission is making a number of educational opportunities available, including:

FCC Incentive Auction Reverse Auction Bidding System User Guide. An “FCC Incentive Auction Reverse Auction Bidding System User Guide” will be emailed to each authorized bidder on May 5, 2016. A PDF copy will also be posted on the Auction 1001 web page (you can find the link in the “Education” section). The Guide will “describe the features of the Auction System that will be used to bid in the clock phase of the reverse auction”.

Online Bidding TutorialAlso available in the Education section of the Auction 1001 web page as of May 18 2016, an online tutorial regarding bidding in the clock phase of the reverse auction.

Bidding Preview Period. The curtain will finally be pulled back on the Auction System on May 23, 2016 at 10:00 a.m. ET, which will mark the start of the “preview period”. (The preview period will close at 6:00 p.m. ET on May 24, 2016.) This preview will provide authorized bidders the opportunity to log in and:

  • check out which stations they can make bids on once the auction starts;
  • determine each station’s bidding status;
  • learn the initial relinquishment option assigned to the station; and,
  • where applicable, available bid options with associated vacancy ranges and next round clock price offers.

 Clock Phase Workshop. On May 24, 2016, from 10:00 a.m. ET to 1:00 p.m. ET, the Incentive Auction Task Force will present a public workshop on the reverse auction bidding system. (Details about the workshop and remote viewing will be released at a later date.) Don’t worry if you can’t attend: a recording of the workshop will be posted in Education section of the Auction 1001 web page.

Mock Auction and Mock Auction Preview Period. One mock auction for all qualified bidders will be held on May 25-26, 2016. The goal is to let bidders familiarize themselves with the clock phase bidding system by working through as many as five simulated rounds involving purely hypothetical situations similar to what bidders will encounter once the bidding starts for real. Commission staffers will be available to answer questions about the auction system and the conduct of the auction generally. The mock auction schedule is:

May 25, 2016
Mock Bidding Round 1          10:00 a.m. -12N ET
Mock Bidding Round 2          3:00 p.m. – 5:00 p.m. ET

May 26, 2016
Mock Bidding Round 3          10:00 a.m. – 11:00 a.m. ET
Mock Bidding Round 4          1:00 p.m. – 2:00 p.m. ET
Mock Bidding Round 5          4:00 p.m. – 5:00 p.m. ET

The Commission is obviously making elaborate efforts to allow all reverse auction participants to get comfortable with the bidding process before the auction kicks off. We strongly recommend that anyone planning on bidding in the auction take advantage of all these opportunities.

Other Important Information
In addition to the scheduling information above, the Commission’s public notice also sheds useful light on a number of questions that will eventually loom large.

Limit of Repacked UHF Band. Broadcasters who will be repacked, and the vendors and third parties implicated in the post-Auction repack, will be interested to learn that the new UHF band will extend only through Channel 29. That provides a starting point for assessing a station’s likelihood of repack and the capabilities of current equipment. For example, many stations have so-called broadband antennas capable of operating across several channels of the UHF band. Prior to today however, attempting to assess whether a station’s particular antenna would be reuseable in the post-auction landscape was a fool’s errand.

Forward Auction Band Plan. The FCC’s public notice includes not only the band plan framework but the allocation of paired spectrum blocks in every PEA. Of particular interest to wireless bidders is the announcement that 97% of all spectrum blocks to be auctioned will be Category 1 blocks, of which, 99% will be zero-percent impaired.

Mexican Border Considerations. Of interest to both broadcasters and wireless bidders is the impact of Mexican coordination and interference protections on the clearance of paired blocks in the southern border areas. Because the FCC will implement a nationwide band plan, broadcast stations in southern border cities – including LA, San Diego, Phoenix, and cities along Texas’s Rio Grande – will see the same band clearance in the reverse auction as in all other markets. However, the FCC will be limited in what it can reallocate for wireless because Mexico requires ongoing inter-service interference protections below Channel 37 – not Channel 30, as will be the case in the rest of the country. It’s not clear whether this is potentially good news for LPTVs in those areas, who in theory might be able to take advantage of the unallocated spectrum between Channels 29 and 37.

The long-awaited Incentive Auction is now upon us. While the fun won’t start for real until May 31, there is much to be done in the next few weeks to prepare. All would-be reverse auction participants should be sure to review carefully the FCC’s public notice and the Final CSL they receive (and if they don’t receive one, be sure to contact the FCC pronto). This is crunch time, and attention to detail is important.

Reminder: Reverse Auction Workshop Set for May 24; Agenda Now Available

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A couple of weeks ago we reported on the FCC’s announcement of the final steps in the run-up to the start of bidding in the clock phase of the reverse auction portion of the long-awaited, much-anticipated Broadcast Incentive Auction. One of those steps: an FCC-conducted workshop on the online bidding system that participants will have to master by May 31, when the bidding cranks up for real.

The FCC has now released the agenda for that workshop, along with the usual instructions for signing up to attend in person (or accessing in online, whether live or recorded). Attendees can expect to check out, among other things, a walk-through of the reverse auction bidding software for stage one, an overview of the incentive auction public reporting system, and an introduction to the reverse auction bidding software for a new stage. All of this should prove extremely useful once things get rolling on May 31.

If you’d like to attend – and, seriously, why wouldn’t you? – here’s the scoop. The workshop will run from 10:00 a.m.-1:00 p.m. ET on May 24, 2016 in the Commission Meeting Room in the Portals in Washington. Helpful tip from the FCC: In-person attendees would be well-advised to get there at least 20 minutes early, to make sure they clear security in time. (You can streamline the check-in process some by pre-registering. Just submit your name and company affiliation to auction1001@fcc.gov.) Or you can avoid the traffic (and, God forbid, the D.C. Metro system) by staying home and watching on your computer; the workshop will be streamed live at www.fcc.gov/general/live. (If you’re the kind of person who used to sit in the front row of class so you could ask a lot of questions, don’t worry. You’ll still be able to submit questions long-distance through the auction1001@fcc.gov email address.)

After the show is over, a recording will be available at the www.fcc.gov/general/live, and you’ll still be able to email questions, too.

One last thing. Don’t forget that the preview period for the bidding site – your chance to take a look at the system (and check out the bidding status of your own station(s), available bid options, etc.) – opens at 10:00 a.m. ET on May 23. To get the most out of the workshop, you might want to take a gander at the bidding site in advance.

[Blogmeister’s Note: The headline of this post originally indicated, incorrectly, that the workshop was scheduled for May 23. That inadvertent error has been corrected.]


LPTV/TV Translator Deadline … or Punchline … Announced

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Bureau announces, sort of, deadline for eligibility for first post-Spectrum Auction displacement window.

LPTV and TV Translator licensees have known for some time – at least since last December – that they’re going to need to be “operating” as of a certain date in order to be eligible for the first displacement window that will open post-auction. But what that “certain date” might be has been, um, less than certain.

No longer, according to the Commission. In a public notice the Media Bureau says that it has “announce[d] the deadline for identifying operating” stations. And what might that date be? Get your calendars out.

According to the Bureau’s announcement, the crucial date is “the date that the Channel Reassignment Public Notice is released following the completion of the reverse auction.”

Got that? We’ll give you a minute or two to find that in your calendar and mark it up.

To be honest, the Bureau’s assertion that it’s announcing the “date” is less than accurate, seeing as how it provides no actual “date”. But, to be fair, that’s not entirely the Bureau’s fault. The eventual deadline will necessarily depend on when the Spectrum Auction wraps up, and at this point that’s anybody’s guess. But the Bureau recognizes that LPTV/Translator folks deserve some idea of when their eligibility will be determined, since they will be required to have taken steps in order to insure their eligibility as of whatever date the deadline happens to be.

So here’s what we know. The LPTV/Translator displacement window will be available to stations that are “operating” as of the deadline. By “operating”, the Bureau has clarified that a station will be deemed “operating” if it “has licensed its authorized construction permit facilities or has an application for a license to cover on file with the Commission on that date”. And the deadline? The Bureau candidly – oh sure, it’s stuck in a footnote, but it’s still candid – acknowledges that it “cannot predict with certainty” what the deadline will actually be. But it figures that, “given the current status of the ongoing Incentive Auction”, putting everybody on notice now will give all affected folks enough notice to make their plans accordingly.

What exactly does that mean? It’s hard to say, of course. But it’s at least a plausible guess that the FCC’s auction simulations are telling them that the auction could wrap up close to the absolute shortest possible timeline (possibly as little as three months, but it really is anybody’s guess), so they better put out some notice, even if it’s not really a “notice” in the sense that it provides any, like, actual notice.

What this does confirm is the common sense wisdom that any LPTV or TV Translator permittee hoping to get into the displacement window should get cranking on their construction ASAP, if they haven’t already done so.

Update: Effective Date Set for More of the New Rules Governing Wireless Mics, White Space Devices

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Effective date of a Wireless Medical Telemetry Service rule is still pending.

Last August we reported on a number of changes in the rules governing wireless mics and white space devices, and last November we reported that the effective date of some, but not all, of those rule changes had been set. The rules not covered by that latter announcement included §§15.713(b)(2)(iv)-(v), (j)(4), (j)(10), and (j)(11), 15.715(n)-(q), 27.1320 and 95.1111(d). Those exceptions – concerning the operations and administration of white space databases – involve “information collections” that had to run past the Office of Management and Budget before they could kick in. But now the FCC has announced that OMB has given its thumbs up to all but one of those provisions. As a result, §§15.713(b)(2)(iv)-(v), (j)(4), (j)(10), and (j)(11), 15.715(n)-(q) and 27.1320 have taken effect as of June 15, 2016.

That leaves only §95.1111(d) still hanging in OMB limbo. It reads in its entirety as follows:

(d) To receive interference protection, parties operating WMTS networks on channel 37 shall notify one of the white space database administrators of their operating location pursuant to §§15.713(j)(11) and 15.715(p) of this chapter.

WMTS is the Wireless Medical Telemetry Service, which operates at a few milliwatts in TV channel 37 – a channel not used for TV, but by radio astronomers to measure the expansion of the Universe. It’s not clear what is holding up OMB approval. We’ll keep our eyes out for any further announcements on that front.

Update: Channel-Sharing Provision of New LPTV/TV Translator Rules Now in Effect

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Slowly but surely the post-repack regulatory landscape for LPTVs and TV translators is getting established. Back in December, the Commission adopted a number of provisions addressing the predicaments likely to be faced by the LPTV/translator industries once the Broadcast Incentive Auction – and the consequent channel repack – and over and done with. As part of that regulatory package the Commission provided for channel sharing by LPTVs and translators. However, while the rest of the new rules took effect in March, Section 74.800 – the section governing channel sharing – did not, thanks to the hilariously-named Paperwork Reduction Act. Section 74.800, as it turns out, includes “information collection” requirements that had to be run past the Office of Management and Budget for its approval. We’re pleased to report that, according to a notice published in the Federal Register, OMB has given the new rule the big thumbs up. As a result, Section 74.800 has become effective as of June 22, 2016.

Spectrum Auction Update: An FCC Victory in Court, But Disappointing Forward Bidding Sends Auction to Stage 2

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D.C. Circuit tosses LPTV challenge to auction/repack process, but $65 billion differential between forward and reverse auction bids forces second bid round with lower clearing target.

On the Spectrum Auction front, August, 2016 ended in Dickensian style for the FCC: it was the best of times, it was the worst of times. A victory at the U.S. Court of Appeals for the D.C. Circuit seemed to eliminate a potential pitfall for the ongoing auction process. But the presumably disappointing results of the first round of the forward auction could raise serious concerns about the prospects for the auction’s eventual success.

August 30 started well for the FCC, with the D.C. Circuit rejecting an effort by a couple of LPTV licensees who claimed that the Commission’s refusal to protect LPTV stations in the post-auction spectrum repacking process was inconsistent with the Spectrum Act. The Act, of course, prohibits the FCC from “alter[ing] the spectrum usage rights of low-power television stations”. The question before the Court: did the Commission’s treatment of LPTV stations in fact “alter the[ir] spectrum usage rights”.

Since the creation of the LPTV service more than three decades ago, the FCC has designated that service as “secondary”. That is, LPTV stations have to protect “primary” services from interference; if an LPTV station fails to do so, it’s got to modify its facilities or cease operation entirely. Since the goal of the Spectrum Auction/Repack process is to reduce the amount of spectrum available for all over-the-air television services, it’s a foregone conclusion that some, probably many, LPTV stations will be unable to find space in the repacked spectrum and will have to go off the air.

The LPTV petitioners did not dispute that LPTV licenses have long been subject to displacement or termination if they interfere with full-power TV operations, so any such displacement/termination arising from the repack would not alter their spectrum usage rights. BUT, the petitioners argued, the repack would displace and/or force off the air many LPTV stations because of interference to wireless services (i.e., the folks who, through the “forward” component of the Spectrum Auction, will acquire spectrum currently used for television broadcasting generally). As the petitioners saw it, the secondary status of LPTV stations did not historically require them to protect such wireless services. Thus, so the argument went, the fact that the auction process would effectively treat LPTV stations as secondary to wireless services constituted an alteration of LPTV spectrum usage rights, which Congress had forbidden.

The Court didn’t agree. In its view, more than a decade ago the Commission had clearly held that LPTV stations are secondary to licensed non-broadcast wireless services. That being the case, the Court concluded that the repack did not alter any “spectrum usage rights” that LPTV stations may have had, so the Commission has not violated the Spectrum Act in that regard.

Not surprisingly, the petitioners argued that the decade-old precedent cited by the Court was distinguishable from the current situation. No dice, said the Court: in its view, the repack process “subordinate[s] LPTV stations to wireless licensees in the same way the Commission had done before the Spectrum Act.”

While the possibility of further review exists, the likelihood of reversing the D.C. Circuit’s ruling is extremely low. With this challenge to the Spectrum Act now tossed,  there remain only a couple more pending challenges to the Spectrum Auction process. The petitioners in one of those – Free Access & Broadcast Telemedia, LLC v. FCC, No. 16-1100 – will be particularly disappointed in the Circuit’s decision. In their brief on the merits, which was filed less than a week before the Court’s decision, the petitioners – who represent LPTV interests – spent a considerable amount of space arguing essentially the same points that the Court has now rejected. The outlook obviously is not brilliant for those arguments. The Free Access petitioners still have a couple of additional claims involving alleged violation of the Regulatory Flexibility Act and several constitutional provisions (including a “takings” claim arising from the Fifth Amendment, a bill of attainder claim, and an “unconstitutional private delegation” claim). Those arguments, and particularly the constitutional ones, involve relatively esoteric areas of the law not often raised in FCC-related appeals. It will be interesting to see how the Court chooses to address them.

While the FCC’s litigation team was probably celebrating its victory in the D.C. Circuit, developments over on the auction side of the Commission likely tempered any exuberance. In a  notice posted on the Forward Auction page, the Commission announced that Stage One of the auction had concluded unsuccessfully, i.e., “without meeting the final stage rule and without meeting the conditions to trigger an extended round.” Disclosed elsewhere on the Auction website, the grim reason: the Reverse Auction component of the process established that the FCC could clear its initial target of 126 MHz of spectrum for a total pay-out to bidding broadcasters just north of $88 billion, but the amount of cash bid by wireless participants in the Forward Auction barely squeaked past $23 billion. In other words, a nearly 75% shortfall.

That, of course, appears to be Bad News both for the Commission and for broadcasters who might have thought that the FCC’s sky-high initial bids might be even minimally realistic. The shortfall means that the auction will now proceed to Stage 2 (based on a 114 MHz clearing target, down from the 126 MHz target in Stage 1), starting with a second round of the reverse auction followed by a second forward auction. And, since the Commission now has a sense of the level of proceeds it can eventually expect from the forward auction – a number which apparently is dramatically below $88 billion – broadcasters participating in the Stage 2 Reverse Auction can expect to see commensurately reduced bids for their spectrum from the Commission. While it is still possible that the auction will eventually generate significant proceeds for the FCC and broadcasters alike, any hyper-optimism that may have been experienced when the initial reverse auction bids were announced months ago has for sure been dampened substantially, if not extinguished entirely.

The Stage 2 Reverse Auction is currently set to kick off on September 13, 2016; the Stage 2 Forward Auction will crank up the next business day after the conclusion of the Stage 2 Reverse Auction. The Commission will make available an online tutorial for the Stage 2 Reverse Auction bidding process sometime on September 1. Check out this public notice for further details about Stage 2.

Only broadcasters whose status was “FROZEN” in Stage 1 of the Reverse Auction – i.e., their spectrum was deemed provisionally sold – will return to bidding in Stage 2. Stations that exited the auction in Stage 1 will not be eligible to return.  Returning stations will generally start at a bidding level approximately where they were frozen in Stage 1, with some variations.  The Commission also has announced that it has reset the base clock price $900 per unit of volume for Stage 2 of the reverse auction, with a station’s “volume” based on service area and population served.  Also, the price will initially decline by five percent of the reset base clock price as the auction moves to the next round of Stage 2.

Returning bidders need to have held on to their bidding tokens from Stage 1, and only those bidders who have the proper “FROZEN” status will be able to access the Commission’s auction system. That access won’t start until September 7.

In the meantime, the FCC has reminded

all full power and Class A broadcast television licensees that they remain subject to the Commission’s rules prohibiting certain communications in connection with Commission auctions until the completion of the incentive auction as announced by the Commission by public notice. A party that is subject to the prohibition remains subject to the prohibition regardless of developments during the auction process. In addition, though communicating whether or not a party filed an application does not violate the rules, communicating that a party “is not bidding” in the auction could constitute an apparent violation that needs to be reported.

It is essential to recognize that this prohibited communication rule still applies even if you ceased bidding or otherwise exited the auction – if you participated by accepting even the opening bid, it applies to you.

With one auction round under its belt, the Commission will likely be inclined to speed things up in Stage 2 (and any additional stages beyond that). Still, it seems unlikely at this point that the auction process will be completed before November, or even by the end of the year. But you never know.

Check back here for further updates.

Online Repack Relocation Reimbursement System Now Available for Testing

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Blog.form 2100 sked 399 lessonSure, we all still have a ways to go before the Incentive Auction wraps, but it’s not too early to start thinking about relocation reimbursements. As we all know, TV stations re-assigned to new channels as a result of the auction (and the consequent spectrum repack) will be entitled to reimbursement from the Feds. Ditto for MVPDs that will have to adjust their systems to reflect the re-assignments. Almost a year ago the Commission got the ball rolling by releasing the form (Form 2100, Schedule 399) that will need to be completed by those claiming reimbursement.

And now, with the close of the auction and release of the Channel Reassignment Public Notice still some time off as far as we can tell, the FCC has opened up a beta test version of the online claims process. If you’re so inclined (and you’ve got an active facility associated with an FRN), you can log in and check it out.

The FCC’s public notice announcing this opportunity is a bit light on details. But if you go to this “quick start guide” link, you’ll open up an FCC-produced 14-slide PowerPoint deck that walks you through the process. The PowerPoint assures us that “NO filings in the Beta environment will be processed”.

Don’t be surprised or disappointed if the system appears to be down when you try to log in. Since the beta environment is still “under active development”, the Commission warns that it may be subject to “periodic outages”.

Would-be beta testers should get going sooner rather than later, since the deadline for comments, questions, criticisms, suggestions, etc. is November 4, 2016. (Any such feedback should be submitted by email to form399beta@fcc.gov.)

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