Spectrum reallocation

Background

A spectrum auction in 2008 generated $19.6 billion as companies such as AT&T and Verizon Communications bid for the 700 MHz band.

More of the broadcast spectrum was needed for wireless broadband Internet access, and in March 2009, Massachusetts Senator John Kerry introduced a bill requiring a study of efficient use of the spectrum.

Later in the year, the lobbying group CTIA said 800 MHz needed to be added. David Donovan of The Association for Maximum Service Television said the 2 GHz band, allocated for mobile satellite service, was not being used after ten years, and switching to this band would be better than asking broadcasters to give up even more. Because of the digital transition, television had lost 100 of its 400 MHz. The National Association of Broadcasters (NAB) and the AMST commented to the FCC that the government should make maximum use of this newly available spectrum and other spectrum already allocated for wireless before asking for more, while companies that would benefit asked the government to look everywhere possible. Many broadcasters objected.

A Consumer Electronics Association (CEA) study claimed that $62 billion worth of spectrum could become $1 trillion for wireless, and one proposal would require all TV stations, including LPTV, to give up all spectrum, with subsidized multichannel services replacing over-the-air TV, even after viewers spent a great deal of money on the DTV transition. Broadcasters responded, "In the broadcasting context, the 'total value' is not a strict financial measure, but rather is one that encompasses the broader public policy objectives such as universal service, local journalism and public safety." Broadcasters pointed out that the government, viewers and the related industries spent $1.5 billion making sure that a minority of the audience would be ready for the DTV transition. Any change could mean the loss of free TV to people in rural areas, broadcasters said, particularly "local journalism, universal service, availability of educational programming, and timely and reliable provision of emergency information."

Meredith Attwell Baker, the newest Republican FCC commissioner, agreed that properly using the existing spectrum was important, and part of doing this was using the latest technology. The wireless industry needed more spectrum, both licensed and unlicensed.

FCC broadband advisor Blair Levin wanted a plan by February 2010. Another proposal was "geo-filtered WiMAX", which would allow HDTV but only in a particular market, with the remainder of the spectrum sold for $60 billion. WiMax would replace the existing services but would make MVPD services cheaper, while still allowing broadcasters to make more money. The additional spectrum made available could then be sold to pay the industry's debt.

Bob Powers, vice president of government relations for the National Religious Broadcasters, pointed out that the Levin proposal did not provide for religious broadcasters.

In 2009, venture capitalist Tom Wheeler called broadcaster opposition a "jihad", but he went on to say broadcast TV was "without a doubt ... the most efficient means of delivering common content to a large audience." Wheeler was nominated for FCC chairman in 2013.

Broadcaster resistance

Regarding the CEA study's findings, Donovan said to Broadcasting & Cable magazine:

Wireless companies are asking the government to participate in the biggest consumer bait-and-switch in American history. For the last few years, the government told consumers that digital television would bring them free over-the-air HDTV and more channels. Now, after purchasing billions of dollars in new digital equipment and antennas, wireless advocates are asking the government to renege on its promise. High-definition programming and more digital channels would become the sole and exclusive province of pay services. The American public simply will not stand for this.

PBS and its stations also opposed the plan, saying they had spent a lot of money on the digital upgrade which they need to earn back, and viewers had contributed expecting the digital broadcasting to continue. They claimed PBS was "efficient and productive, and abundantly serves the public interest." Noncommercial broadcasters said they needed broadcast spectrum for superior educational and children's programming. PBS said 85 percent of its stations used HDTV and 82 percent had two or more standard channels. Ohio State University said it had "no excess" spectrum.

An FCC workshop on November 23, 2009 produced several ideas. Virginia Tech professor Charles Bostian said sharing should be done, but not in the white spaces; WiFi spectrum should be used instead. Vint Cerf of Google said cable companies could share some spectrum, which the companies would like to do except they have "must-carry" rules that will not allow this. BBN Technologies chief engineer Chip Elliott called for government-funded broadband to be shared by researchers. Collaboration was the key to advancing the technology, and the word "collaboratories" referred to broadband as "not only the goal of the research, but the vehicle as well."

Wi-Fi testing using white spaces took place in Virginia in Fall 2009 and in Wilmington, North Carolina in 2010.

The National Association of Broadcasters (NAB) opposed ending broadcast TV because the industry spent $15 billion, in addition to giving up spectrum already. On December 14, 2009 at a hearing before the Communications Subcommittee of the House Energy & Commerce Committee, NAB president Gordon H. Smith said the government and individuals had spent too much money on the DTV transition and for HDTV for further changes to make their efforts worthless, and that broadband and broadcasting could co-exist. He pointed out that in the 1970s, broadcasting used 60 percent of the spectrum that it does now to deliver a much higher quality product, and that existing regulations required more efficient use of the spectrum than would be the case for new devices. On the subject of what could be done instead, Smith recommended using white space in rural areas with fixed devices rather than mobile devices, and new types of broadband service such as those developed by Sezmi.

CTIA president Steve Largent said that the industry needed spectrum, "wherever it comes from." He said government spectrum probably was not efficiently used and would "likely" be "repurposed", while other broadcast and satellite spectrum "may" be used better for wireless. Largent also said without more spectrum, companies might merge to better use what they had. Consultant Dave Hatfield, former FCC engineering and technology chief, said making maximum use of existing spectrum through compression and modulation would help, but it would not be enough. Oregon Republican House member Greg Walden criticized the FCC for hiring Distinguished Scholar in Residence Stuart Benjamin, whose essay recommending replacing broadcast spectrum entirely Walden called an "abomination".

Voluntary methods

The February 17, 2010 deadline was extended by a month. Phil Bellaria, the director of the FCC broadband team, said any plan calling for broadcasters to give up spectrum would be voluntary, and the focus would be on more efficient use of existing spectrum rather than taking that away. Some stations might choose to be paid to give up their position, for example, and some might pair up with other stations using DTV subchannels (or two channels might both be primary channels within the same 6 MHz). Without voluntary action, though, changes could be mandated in 2011 or 2012. On March 16, at the FCC's monthly meeting, Connecting America: The National Broadband Plan was revealed, with a combination of mandatory and voluntary efforts expected to increase spectrum by 300 MHz; 120 MHz of that was expected to come from broadcasters, and 90 MHz from mobile satellite service. By 2015, broadcasters would have to leave channels 46 through 51, allowing another 36 MHz to be used for wireless Internet access by "repacking", or relocating channels now on those frequencies. A total of 120 MHz needed to be reclaimed from broadcasters, the rest voluntarily. The FCC Chairman's Senior Counselor Colin Crowell explained that the spectrum crunch wasn't an imminent crisis, but rather "it’s a crisis in five or six years." Failure to act could make Internet access more expensive and leave the United States less able to compete with other countries, the FCC report said. House Communications Subcommittee chairman Rick Boucher, a Virginia Democrat, said it would take four years from the time a bill passed to determine where the new spectrum would come from.

The FCC had 50 MHz of spectrum available for wireless broadband, but this was expected to increase to between 500 MHz and 800 MHz over 10 years. 300 MHz would be made available by 2015. The National Association of Broadcasters opposed the plan, issuing this statement:

We are concerned by reports today that suggest many aspects of the plan may in fact not be as voluntary as originally promised. Moreover, as the nation's only communications service that is free, local and ubiquitous, we would oppose any attempt to impose onerous new spectrum fees on broadcasters.

Mark Wigfield, broadband spokesman for the FCC, pointed out that even in the unlikely event all broadcasters in a market gave up their spectrum, the FCC would have to guarantee that some over-the-air service remained.

In April 2011, FCC chairman Julius Genachowski said "realigning" would be necessary if broadcasters did not volunteer, while Intel's Peter Pitsch told Congress "the repacking process should not be made voluntary." The NAB's Smith worried that the process could cause numerous problems for broadcasters and viewers. The spectrum auctions were authorized by Title VI (The Spectrum Act) of the payroll tax cut extension passed by Congress on February 17, 2012.

On April 27, 2012, the FCC approved letting stations share channels, with all stations that had "full channels" keeping rights such as must-carry. At the first "reverse incentive auction" workshop on October 26, FCC Media Bureau chief Bill Lake said stations would not be able to decide their channel but could apply to change it.

At a September 30, 2013 workshop, broadcasters and equipment makers were asked what the changes would cost. The result was that answers would only be possible after the FCC said who would be moving and how. The Spectrum Act provided $1.75 billion for the reasonable expenses of relocating stations, and the money would have to be paid in three years without further action by Congress. Among the expenses would be meeting new tower standards for dealing with wind and ice, interim facilities so some stations would not be temporarily forced off the air, and translators in areas that needed them, mostly in the West. The FCC asked for comments to be received by November 4, 2013, with spectrum auctions coming later. Providers of wireless services recommended that broadcasters give up two channels, or 15 MHz, of Broadcast auxiliary service, which is used for relaying breaking news, but the NAB said this spectrum could be shared with the United States Department of Defense.

In March 2014, KLCS and KJLA conducted a channel sharing trial in partnership with CTIA and the Association of Public Television Stations, which tested the viability of broadcasting two sets of television services within the same 6 MHz channel band, including varying combinations of high and standard definition feeds. The experiment was deemed successful, although certain scenarios (particularly two HD feeds on both channels) were found to affect video quality on more complex content. Later in September 2014, KLCS announced that it would enter into a channel sharing arrangement with fellow public station KCET and participate in the 2015 auction.

In March 2014, the FCC voted to ban joint sales agreements—arrangements in which a station brokers the sale of its advertising to another station in the market, by making them count the same as outright ownership if the senior partner sells 15% or more of the brokering station's advertising, and give two years for station owners to unwind joint sales agreements that are in violation of the new rules. It was speculated that the move to ban JSAs was an attempt to devalue television stations (particularly, the smaller outlets that were commonly operated under JSA's and similar agreements), and in turn, push their owners to participate in the incentive auction. FCC Media Bureau Chief Bill Lake denied that the push to ban JSAs was connected to the spectrum auction.

The AWS-3 auction, closed January 29, 2015, generated $44.9 billion. This involved 65 MHz of spectrum which would mostly be used by AT&T, Verizon and T-Mobile. The reserve price was $10.6 billion and the total expected was about twice that. AT&T bid $18.2 billion, Verizon $10.4 billion, and Dish Network 13.3 billion but expected to reduce its payments to $10 billion by using subsidiaries. T-Mobile bid $1.8 billion.

Broadcast incentive auction

After taking over as FCC chairman, Tom Wheeler moved the spectrum auction to mid-2015. With a year to go, 77 stations were interested in giving up spectrum, with the possible actions being to share a channel, going off the air, moving from UHF to VHF, or moving from high-VHF to low-VHF. The FCC planned to pay 80 percent of expenses for commercial stations and 90 percent for noncommercial stations. The estimated cost per station was between $2 million and $3 million. Rick Kaplan of the NAB said, “It is likely that a 'successful auction' will require approximately 250 stations in the most congested markets (plus border markets) to volunteer to go off the air." On April 18, 2014, the FCC announced guidelines for the auction. All stations would keep their coverage area as of February 22, 2012, if possible. Channel 37 would become a "guard band" between broadcasting and wireless services. Each station would be given a deadline to make its upgrades, with all stations expected to complete the transition after 39 months. Wheeler later said if stations could not meet the deadline, they would not necessarily have to go off the air. The FCC approved the framework 3-2, with the NAB claiming the commission had not met its obligation to compensate broadcasters and guarantee service for viewers.

Wheeler later moved the broadcast incentive auction to "at least" 2016. The entire process was expected to take until 2022. A Broadcasting & Cable editorial said, "The FCC has conceded ... this is the most complicated auction undertaking it, and probably any other agency, has tried."

In a July 2, 2015 filing, the Expanding Opportunities for Broadcasters Coalition (EOBC), representing over a hundred TV stations planning to participate in the incentive auction, said that population data was too important and could cause an $8.3 billion drop in opening prices without "relatively minor" changes. Because the incentive auction was a reverse auction, even these prices were the highest possible. On July 16, the FCC planned to make final the rules of the auction, including requiring stations to move to their new channels 39 months after the auction, and no reserved channel for noncommercial broadcasters. The procedures vote was moved to August 6 but the auction was set for March 29, 2016.

After the vote, FCC commissioner Ajit Pai said the plan "permits too many broadcasters to be placed in the wireless band", which would result in interference between TV stations and others using the band. Dennis Wharton, NAB executive vice president of communications, said that the vote minimized what stations would receive for giving up broadcasting, guaranteed numerous interference problems and gave "a handout of free spectrum with no public interest obligations to multibillion dollar companies" while hurting local television news and especially LPTV stations and translators. The LPTV Spectrum Coalition and CTIA objected to the vote, while the EOBC said no one would be happy but the compromise would be enough.

The NAB filed petitions asking for the FCC not to penalize stations that did not participate in the auction, and asking that stations not be moved to the duplex gap.

On October 15, the Applications Procedure Public Notice set the filing window as noon December 1 through 6 P.M. December 18 (this was later changed to December 8 through January 12). After that time, no more stations could join, but bids from those who did would not be final until March 29, 2016. The FCC released opening bid prices on October 16. These included three categories: stations giving up or sharing channels (which would mean the offering the full price), stations moving from UHF to high VHF (less than full price), and stations moving from high VHF to low VHF (lower than full price but not the lowest). Other factors were the number of people served and interference.

The FCC designated the auction as Auction 1001, with the purpose being to make 144 MHz available for resale to wireless companies. If that target is met, broadcasters will be repacked into channels up to 26. If the minimum target of 42 MHz is met, channels up to 44 will be used. The "clearing target" might not be met, in which case a lower target might be set, with the process continuing until a target is reached. In each market where vacant channels remain, the FCC intends for one of those channels to be used for unlicensed devices.

Rep. Frank Pallone introduced a bill in January 2016. The Viewer Protection Act would provide an extra $1 billion for the costs of the post-auction moves, in case the estimates of costs were wrong. Emphasizing the importance of local news, Pallone said, "[I]t is critical that we make this transition as seamless as possible for consumers without interruptions in their service."

The FCC announced the clearing target would be 126 MHz. This meant fewer channels for relocation of LPTV stations, which would not be protected after the auction. It was believed thousands of LPTV stations would have to be relocated. LPTV stations argued that because they were not allowed to participate in the process, they could lose spectrum. On May 5, Scott Caulkins of Caulkins & Bruce PC, representing one of the owners of LPTV stations, argued before the DC Circuit Court that the Spectrum Act and FCC authority gave LPTV stations "essentially the same [spectrum] rights" as full-power stations. He said they could only be considered secondary if they caused interference, but that the result of repacking would be more interference. FCC attorney Jacob Lewis said LPTV stations would be secondary and that considering their rights would mean too many stations to relocate.

Each bidder in the forward auction was required to bid on 95 percent of census blocks in which an interest was shown. As of August, Comcast, AT&T, T-Mobile, Verizon and others had submitted bids for 100 MHz of spectrum in the forward auction totaling over $11 billion, with the goal $88.4 billion.

Only $22.45 billion had been raised when the FCC ended stage one of the forward auction after two weeks. After the second stage of the reverse auction, the target for stage two of the forward auction was 114 MHz, with the desired goal $54.6 billion, enough for two channels per market. With less spectrum to be purchased, lower demand could mean lower costs for wireless providers. Failure of stage two could reduce the target further, to 108 MHz, or one channel per market. If stage three also fails, the target could even be 84 MHz, an additional four channels per market. The lower the target, the lower the amount paid to stations, but the fewer the number of public stations that could participate. And public stations that are not "repacked" must pay for their own equipment upgrades.

Stage two of the forward auction ended October 19 with $21.5 billion in total bids, $33.1 billion less than expected. The reverse auction's third stage began November 1 with a 108 MHz target. The number of paired blocks per market started at 10, reduced to 9 in stage two, and 8 in stage three. Four impaired blocks, with interference in less than 15 percent of an area, protected Mexican channels below 37. Two markets had interference in 15 to 50 percent of an area.

Stage three of the forward auction began December 5 after total bids for stage three were $40.3 billion for 108 MHz. Stage four of the reverse auction ended January 13, 2017 with $10.05 billion paid for 84 MHz, or seven licenses in each market. 70 MHz of that goes to the wireless companies. With less spectrum cleared, fewer stations will move and none will be in the buffer or wireless bands.

Repacking

The estimated number of channels moving is still over 1000. Although moving channels by region was considered, which would work better for the companies doing the work, channels will instead move according to which moves are related. 710 stations are part of "a sort of interference daisy-chain", meaning the stations must work with each other, and that it is unlikely stations can meet the deadline or complete the process using the funds allocated. Some stations would be required to go off the air or have temporary facilities or temporary channel sharing (thought the FCC was reluctant to ask viewers to rescan twice, and the Cable Act did not allow "must carry" requirements for stations that used temporary facilities). So-called "bottleneck stations", if they did share, would allow the spectrum to be used by wireless services sooner without interrupting broadcast service. Weather delays and important rating events would also need to be considered. Companies doing the work might also have their own reasons for how they schedule work. The NAB filed comments October 28 asking that the 39-month deadline for moving be changed, or allow waivers. The repack would take place in ten phases, and Michael Dell's OTA Broadcasting asked the FCC to provide information on bottleneck stations so that they could be given incentives to give up licenses or move to temporary channels.

"Spectrum speculators"

Beginning in 2010, a large number of television station acquisitions began to occur among a group of companies referred to as "spectrum speculators". Backed by private equity groups, these companies have primarily purchased smaller, low-rated stations within or in close proximity to major markets, with an intent to possibly sell the stations and their licenses during the incentive auction, and no interest in their future operation as a television station. Among these "speculators" have included the Blackstone Group-owned LocusPoint Networks, the Fortress Investment Group-backed NRJ TV LLC, and Michael Dell's OTA Broadcasting LLC. Spectrum speculators do not typically identify themselves as being broadcasting companies, but as part of the wireless industry.

Public concerns surrounding spectrum speculators surfaced in 2013 with the announcement that Atlantic City's NBC affiliate WMGM-TV would be sold to LocusPoint Networks, and a belief by local residents that the fate of WMGM was in jeopardy because of their position as a speculator. In response to the concerns (which also included viewers establishing a Save NBC 40 website), LocusPoint co-founder Bill deKay stated that they planned to continue operating the station as an NBC affiliate, and allowed Access.1 to continue operating the station on its behalf through December 31, 2014. At the same time, however, NBC declined to renew the station's affiliation past December 31, 2014. On January 1, 2015, the station began carrying Soul of the South programming instead, but the station's fate following the spectrum auction remains unclear. Access.1 has retained most of the station's staff to form a new operation expected to launch in 2015.

Other countries

In the 20th century, the International Telecommunication Union often held regional or global conferences with users and national regulatory agencies to fix allocation problems in select part of the radio spectrum.

In Canada, Innovation, Science and Economic Development Canada manages spectrum re-allocations. However, due to the lack of spectrum crowding—except for the seven most populated cities—this has largely not been a political issue.

At the November 2015 meeting of the World Radiocommunication Conference, companies wanting to use spectrum below 700 MHz for purposes other than broadcasting asked that countries be willing to offer spectrum for mobile broadband.