Incentive Auction Discussion

[navychop]

A moment of silence for the late, great channel one

Ok, long dead channel one. But some reports said you could see a storm coming on it, sorta.

 

[localclassictvfan]

I need a drink after reading all this......oof....

 

[harshness]

Auction revenue is paying for those moves.

Assuming that they can meet the criteria of the auction stage system. The stage one forward auction was, by many accounts, a resounding failure.

A problem with the current plan might be that the wireless vendors don't yet need the space but they are being asked to pledge for it and that could lead to a monopoly on wireless bandwidth by someone who is cash rich and doesn't need to bid very much to win a lot of it. The revenue is needed immediately but the demand perhaps isn't what it needs to be and the cost of conducting the auctions continues to pile up at what I'm guessing is a staggering rate.

Revenue-wise, I can't imagine that there's a whole lot of marketable bandwidth left after the TV bandwidth is squeezed to a minimum.

 

[localclassictvfan]

Just saying VHF period is a problem....Thankfully most of ours in south Louisiana are on the uhf band.....

 

[Trip]

Assuming that they can meet the criteria of the auction stage system. The stage one forward auction was, by many accounts, a resounding failure.

Your first sentence is, of course, true. If the forward auction revenue never matches the reverse auction's price, then nothing happens and no relocation fund is needed.

As for your second, I think the word "resounding" is a bit much. The auction was designed to go through multiple stages such that supply and demand could attempt to meet. Yes, stage 1 did fail, but that doesn't mean it's not working as designed.

- Trip

 

[harshness]

Your first sentence is, of course, true. If the forward auction revenue never matches the reverse auction's price, then nothing happens and no relocation fund is needed.

Isn't it somewhat likely that the FCC fails their directive and a worthwhile repack doesn't happen?

As for your second, I think the word "resounding" is a bit much.

Resounding comes from missing the mark by almost 75%. Any system that is designed to fail on the first few passes is a system designed by someone who isn't particularly familiar with what's in play and is likely to fail beyond their wildest expectations as confidence in "the system" evaporates.

I'm assuming that the FCC is paying someone to conduct the auctions (whether in-house or a subcontractor) so that cost just keeps adding up. I wouldn't be surprised if the net cost (relocation+administration) doesn't go down even though fewer stations will need to relocate as the stages fail.

 

[Albiondon]

I could have sworn I read about a secondary objective. It is possible that it was, as you say, something being promoted by the broadcasters to try to shoe-horn in another modulation transition. I'm still waiting for strong evidence that they can really fit the largest markets into the post-repack spectrum using DTV.

T-Mobile did offer a plan like that mainly to help save the low power stations for mainly small markets where T-Mobile didnt need all the bandwidth to be used in smaller cities

 

[harshness]

T-Mobile did offer a plan like that mainly to help save the low power stations for mainly small markets where T-Mobile didnt need all the bandwidth to be used in smaller cities

This doesn't help the larger markets where the real scramble for spectrum is (and T-Mobile has more than a token presence). You can bet your bottom dollar that they're not going to set aside their bought and paid for bandwidth for a TV relay and it seems unlikely that the broadcasters are going to be able to justify paying them for translator capacity.

 

[Trip]

Isn't it somewhat likely that the FCC fails their directive and a worthwhile repack doesn't happen?

I wouldn't say "likely" but I would say "possible".

Resounding comes from missing the mark by almost 75%. Any system that is designed to fail on the first few passes is a system designed by someone who isn't particularly familiar with what's in play and is likely to fail beyond their wildest expectations as confidence in "the system" evaporates.

On the other hand, why should the FCC prejudge the market? Wireless companies were jumping up and down about a spectrum crunch and complaining to anyone who would listen about how much they needed spectrum. If the wireless companies had been so serious they were willing to put up $90 billion, who was the FCC to prejudge and say no to that? More to the point, how could the FCC know whether or not they were serious?

It turned out that they didn't actually need that spectrum as badly as they claimed, but they cannot say the opportunity was not presented to them. I don't see it as a bad thing at all. It wasn't designed to fail--it was designed to give the wireless companies the option to pay for as much spectrum as they were willing to. It just turned out they didn't want to spend enough to buy 126 MHz worth of TV stations.

- Trip

 

[harshness]

On the other hand, why should the FCC prejudge the market?

Their job is to realize Congressional direction. Testing foul territory on an experiment as huge and expensive as an auction stage doesn't serve anyone's purpose.

Wireless companies were jumping up and down about a spectrum crunch and complaining to anyone who would listen about how much they needed spectrum.

That's how all major interests manipulate Congress. Pretty much everyone who wants something that somebody else has will exaggerate the need (or the projected benefit) to get it. See more at methanol in gasoline.

It just turned out they didn't want to spend enough to buy 126 MHz worth of TV stations.

What are the chances that they're willing to pay to go below RF40? I'm thinking not very good but I would have started at RF39 out of the gates as I noodled above.

I can't see the future but I'll bet they end up closer to 102MHz than 126MHz.

 

[towerdude]

Keep in mind that LPTV stations and translators are the big losers in this auction. No funds for relocation and no guarantees of any available spectrum to move to. (ex) UTAH could lose up to half of the translators through out the state due to the auction and repack. Take a gander at this list from the NAB.

 

[Trip]

Their job is to realize Congressional direction. Testing foul territory on an experiment as huge and expensive as an auction stage doesn't serve anyone's purpose.

Congress gave authority to conduct an incentive auction. It didn't specify an amount of spectrum. The FCC, in fact, produced band plans for clearing targets all the way up to 144 MHz and did, as you recommend, trim that down to 126 MHz to not waste people's time.

What are the chances that they're willing to pay to go below RF40? I'm thinking not very good but I would have started at RF39 out of the gates as I noodled above.

I can't see the future but I'll bet they end up closer to 102MHz than 126MHz.

Your sentences are contradictory here. 102 MHz would mean RF 33 as the last TV channel, while RF 38 as the last TV channel would account for 78 MHz.

If you go searching, the press and the analysts think 84 MHz is the magic number, which would be stage 4 and have the TV band end with channel 36. We shall see what the future holds.

(For the sake of clarity, there is a big step from 108 MHz at stage 3 to 84 MHz at stage 4 due to the placement of channel 37. There is, necessarily, no band plan which results in clearing 102 MHz of spectrum.)

- Trip

 

[harshness]

Your sentences are contradictory here. 102 MHz would mean RF 33 as the last TV channel, while RF 38 as the last TV channel would account for 78 MHz.

Not contradictory, just a suggestion that they should have started with a much less ambitious goal to avoid wasting stages and speed up the process.

If you go searching, the press and the analysts think 84 MHz is the magic number, which would be stage 4 and have the TV band end with channel 36.

Then why start with a number so much higher? Did they think they were going to wear someone down? A little reasoning with some advice from the pundits could have saved months and a whole lot of money.

 

[Trip]

Then why start with a number so much higher? Did they think they were going to wear someone down? A little reasoning with some advice from the pundits could have saved months and a whole lot of money.

Because hindsight is 20/20. When the rules were being written two years ago, all of this guidance that is available now was not available. Two years ago, major station groups were saying they wouldn't participate anyway because prices would be too low, but the prices offered were sufficiently high enough to get them interested. Two years ago, the AWS-3 auction had not happened yet, and then when it did and shattered records, expectations rose and suddenly those wireless industry predictions looked much more supportable. A lot has changed since then.

- Trip

 

[harshness]

It is puzzling that the first round of forward auctions brought a little over half the bids of AWS 3 for twice the bandwidth.

It seems like there must be better ways to test the water than setting fire to gold-plated straw men.

 

[Trip]

Tomorrow, shortly after 11AM EDT, we should know what the cost of 114 MHz is.

https://auctiondata.fcc.gov/public/projects/1000

(See the Announcements page.)

- Trip

 

[harshness]

Tomorrow, shortly after 11AM EDT, we should know what the cost of 114 MHz is.

How soon before Stage 3 begins?

 

[Trip]

How soon before Stage 3 begins?

Our magic number is $54,586,032,836. When doing your mental math, be sure to add about $2 billion to account for auction costs plus the $1.75 billion relocation fund.

The stage 3 start date likely will not be announced until the forward auction ends, assuming it does not close.

- Trip

 

[harshness]

Our magic number is $54,586,032,836. When doing your mental math, be sure to add about $2 billion to account for auction costs plus the $1.75 billion relocation fund.

I've always kept the stage cost in mind but had no idea it was as expensive as that. Makes it even more important to be thoughtful about where they start as it will just keep stacking up as they go through billions to find out how poorly they understand what they're administering.

I thought the magic number was supposed to include those numbers as it was more or less a zero sum game.

I maintain that they're going to have to tighten the supply by more than 12MHz to create demand for four times the money.

 

[mikekohl]

A stupid question to ponder. Stations forced to relocate from the high end of the UHF band to somewhere below channel 29 (or wherever the cutoff turns out to be): do they have to immediately adopt ATSC 3.0, or will there be an ability to simply change to a new frequency while retaining use of ATSC 1.0 for primary HD transmission until things settle down? I have been told that the 3.0 vs. 1.0 issues are separate from vacating upper parts of the UHF band, but it seems like the first will be forced on the industry almost immediately due to a crunch for space in larger TV markets.