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FCC Spectrum Auctions: Big Deal Or No Deal?

Success hinges on undetermined broadcast participation
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Federal Communications Commission chairman Julius Genachowski called today's launch of the world's first incentive spectrum auctions a "big deal." But depending on TV broadcasters' participation, it could turn out to be "no deal."

As wireless companies gleefully issued press statements applauding the FCC's move in anticipation of grabbing more spectrum, broadcasters held a press conference with reporters, expressing more skepticism than enthusiasm.

"We recognize the FCC has a daunting task, but we are committed to working constructively with them to protect those broadcasters that aren't volunteers. That remains the focus of our concern," said Gordon Smith, president and CEO of the National Association of Broadcasters, during a press conference.

Earlier in the day, Genachowski told reporters he thought there would be broadcasters, even in the largest markets, participating in the auctions.

The NAB's Smith isn't so sure. "If there is a stampede coming, we certainly haven't heard any hooves," Smith said. "Genachowski's belief that some big broadcasters in big markets are interested is predicated on some misbegotten belief that broadcasting is in decline. What we have heard from our members is how committed they are to their business."

Broadcasters have three choices if they want to participate in the FCC's auction. They can give up their entire spectrum, two stations can share a channel, or a UHF station can move to the VHF band, a less desirable frequency.

But by sharing a channel, the station would be giving up a lot of its future, Smith said. "By matter of physics, stations that share a channel would be disqualified from mobile and ultra high definition and they wouldn't be able to multicast. Channel sharing may get you short-term financial gain, but not long term opportunity," Smith said.

Genachowski thinks the process will give broadcasters the certainty they need to make a decision and reassure those that want to stay in the business. "The desire is to have more certainty and clarity in advance of the auction," he said.

Because an auction like this has never been done, what will happen is hard to predict. Once the buying and selling prices are set, the agency needs to figure out how to repack the stations into a smaller spectrum space.

"Interference and signal contour protection causes us the greatest concern," Smith noted. "We're inferring what this means and how [spectrum auctions] will work, but we've not seen the inside of the black box and what decisions will be made. We're in the dark," Smith said.