The Federal Communications Commission needs spectrum and its Chairman Tom Wheeler has come up with a plan. He has proposed a so-called “reverse auction” in which the Commission will establish a price it is willing to pay for “blocks” of spectrum and those broadcasters who are interested in selling will unload some of their spectrum rights.
As the Hill reports, “In the auction, the FCC will buy back airwaves from TV broadcasters and then resell them to wireless carriers, which are hungry for spectrum to meet the growing demand for cellphone services.”
Selling the idea to broadcasters under “first of its kind! Once in a lifetime!” sales hype, the FCC is hoping to raise upwards of $20 billion through the plan. But in order to make it happen, the FCC will have to “deliver ‘very big checks’ for TV stations owners who sell their licenses,” one analyst told Deal Pipeline, and hope to make a killing when they resell the spectrum rights.
The plan has hit a few snags along the way.
“So far no broadcaster has specifically stepped forward and agreed to participate in the auction,” reports FierceWireless.com. The National Association of Broadcasters suggests only 70 stations are interested in the auction; not nearly enough to make the plan work, according to National Journal.
Can’t have an auction if you have no sellers.
What’s more, the FCC has restricted AT&T’s and Verizon’s participation in the auction thereby cutting off the two largest players capable of allowing the federal government to recoup its losses after cutting those “very big checks.”
Can’t have an auction if you have no buyers.
So far the Commission insists that the auction is voluntary. But broadcasters are suspicious. According to Broadcasting and Cable:
But the FCC has said the auction is completely voluntary, something Wheeler and members of the Media Bureau have taken pains to stress. Even the statute says as much.
Again, the broadcast exec remains skeptical. "There is no such thing as voluntary at the FCC," he says. "I think there is tremendous pressure on broadcasters to give up spectrum."
That pressure, he says, comes from the FCC's pattern of doing "anything they want" with pending transactions, many of which have yet to see the light of day. Arguably, the poster-deal for that delay is Sinclair's proposed purchase of Allbritton stations. That said, Nexstar, Gray and others also have deals that remain stuck in neutral.
The federal government has a plan to get specific people to buy something no one is willing to sell. Does the whole thing sounds a little ObamaCare-ish to anyone else?