Preparing For Spectrum Repack - Imagine Communications · Spectrum Repack Jay Adrick, Technology Advisor . ... “Spectrum market watchers say that Ion Media and Univision are also

Harris Broadcast is an independent company not affiliated with Harris Corporation. Proprietary and Confidential. 1

Harris Broadcast is an independent company not affiliated with Harris Corporation.

Preparing For Spectrum Repack Jay Adrick, Technology Advisor

Harris Broadcast is an independent company not affiliated with Harris Corporation. Proprietary and Confidential. 2 Harris Broadcast is an independent company not affiliated with Harris Corporation. Proprietary and Confidential. 2

Introductions

Emily Etzkorn

Manager

Internal Communications

Jay Adrick

Technology Advisor

Today’s Presenter(s): Webinar Moderator:

"Jay Adrick is a 49+ year veteran of the broadcast industry. He currently serves as the chairman of the ATSC Mobile Emergency Alerting Implementation Team and has been involved in ATSC mobile DTV since the inception of this technology. Jay is retired from Harris Broadcast, but continues to serve Harris Broadcast as a Technology Advisor. He is widely recognized for his industry work and was the recipient of the 2013 NAB Engineering Achievement Award.”



Background on Spectrum Battle A Broadcast Perspective


National Broadband Plan (NPB) • Released March 2010

• Calls for harvesting 500 MHz between 225 MHz and 3.7 GHz

• Proposes a spectrum auction process

National Broadband Plan


Federal Communications Commission (FCC) • An independent agency

• Oversight conducted by Congress

• Regulatory activities governed by Congressional acts

FCC Reports to Congress


NAB, MSTV, OMVC, APTS, individual stations and a few manufacturers, including Harris Broadcast

All lobbied the FCC, members of Congress and FCC Congressional oversight committees

Industry Lobbying Effort


Buried in the Middle Class Tax Relief and Job Creation Act of 2012

Congressional Authorization for NBP - 2012

Authorizes FCC develop a plan to recoup spectrum from various sources, including TV broadcast

Implements safeguards for TV broadcasters


Participation in the auction process is voluntary

Stations may elect to share a channel and retain full “must carry”

No station forced to move UHF to VHF or high to low VHF

Must reasonably compensate stations forced to move ($1.75B fund)

Reasonable efforts made to preserve coverage area of each licensee

Only one auction – must be completed by 2022

Negotiations with Canada and Mexico required before reassigning channels

Key Congressional Safeguards


“Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions”

• Proposes a reverse auction followed by TV band repacking, held before forward auction

• Limits compensation for relocation of channel assignment to Full Power and Class A TV licenses

• Proposes a 600 MHz band plan

Docket 12-268 NPRM


Flexible band plan to accommodate market variations

FCC Proposed 600MHz Band Plan


Broadcast and wireless respondents object to a split band plan – “no useful purpose”; oppose broadcast assignments in duplex gap

“Adequate time be given to those who must relocate…18 months is not enough…”

Alternative Band Plans suggested by broadcasters & wireless industry

Industry Responses to Docket 12-268 NPRM


10/12/12: FCC held the first in a series of Repack Workshops focused on: 1. Station compensation for channel relocation

2. Time allocation for repacking

3. Industry resources to support repacking

FCC Repack Workshop


Engineering study

Transmitter(s)

Transmitter installation

Channel filter

Antenna

Tower rigging

Permits

Building modifications

Electrical service modifications

Leasing temporary antenna and transmission line

Reimbursement Items Proposed

Tower loading study

Proof of performance testing

Coverage verification

Transmission line

Channel combiners at common sites

Constructing a new tower if needed

Legal services for filing

Clean up and removal of old equipment


NPRM responses rejected proposals put forth on the 600 Mhz band plan proposed by the FCC Wireless Bureau engineers

In response, the FCC hosted a Band Plan Workshop on 5/3/13

FCC Workshop on 600MHZ Band Plan

• Wireless and the broadcast attendees again rejected the split band plan with TV assignments in the split

• Co- Channel spacing between wireless and broadcast also an issue

• Resulted in NOI/Notice of Inquiry:

– Slight revision of plan, based upon rejection by NPRM responses and Band

Plan Workshop attendees


NAB and Harris Broadcast responded to the NOI on behalf of the broadcast industry • The Wireless Bureau does not take issue with the engineering conclusions

reached by these commenters, but…

• Does not adopt the near-consensus approach that has emerged

Industry Responses to NOI on 600 MHZ Plan


“The Notice recognizes that nearly all commenters have significant concerns about allowing high power services to operate in the

duplex gap. It queries, however, whether such concerns are dissipated if TV broadcast services are permitted only in those

markets where less spectrum is available. The simple answer is no. The record makes crystal clear that high power TV operation in the

duplex gap is problematic for television viewers and wireless operations. Such operation has the potential to cause harmonic

and intermodulation interference to both services, and there is no technical justification for suggesting that limiting such operation to

only certain markets will eliminate or lessen the interference situation.”

NAB’s Strong Response to NOI on 600 MHZ Plan


…but not part of the current Spectrum Activity: T-Band (Channels 14 through 20) • Certain channels in major markets to be migrated out of T-Band by 2021

• Vacant channels to be auctioned in a separate FCC action

FCC’s “Oh, by the way…”


9/23/13 FCC released a Public Notice (PN) for comments on a Catalogue of Eligible Expenses re: stations required to move • Searching for cost control ideas

• 17 groups responded, including Harris Broadcast

FCC Public Notice on Repack Costs…and Responses

Responses: • Concerns about stations

that might be impacted, but were not changing channels

• Concerns regarding:

• Soft costs

• Forced selection of products or pricing

• Clearly-defined scheduled and staged deployment


How much spectrum is the FCC actually expecting to reclaim?

How many stations will have to relocate based on spectrum reclaimed?

Repack’s Long List of Unknowns…

• Chart only illustrates the direct displacement of stations

• Doug Lung - TVTechnology: Mar. 29, 2012

– Impact of UHF Spectrum Reallocation on full-power and Class A TV stations vs. amount of spectrum volunteered in auctions and reallocated, based on FCC CDBS files as of March 9, 2012


Impact of the move for each station, based on their unique equipment and needs

Time required for the channel change process

Adequacy of compensation fund to cover expenses / all impacted stations

Ability to preserve stations’ current coverage area via revised OET-69 software

… and More Unknowns


Statutory Obligation • “Commission shall make all reasonable efforts to preserve, as of (February 22,

2012), the coverage area and population served of each broadcast television licensee, as determined using the methodology described in OET Bulletin 69…”

What is OET-69? • Longley-Rice methodology for evaluating TV service

coverage and interference

• First developed over 16 years ago (1997; updated 2004)

What is TVStudy? • Modern software implementing the OET-69 methodology

with improved datasets

• Provides more accurate and efficient modeling and analysis, which is critical for a successful incentive auction

Repacking: New Software – Same Methodology


Auction model proposes to look at a station’s valuation including:

• measured viewership, network affiliation, market size, revenue generated and…stations’ ability to contribute to those markets needing additional spectrum

Fueling speculation: those who hope to profit from the auction process have spent >$370 Million for Class A and full power stations

Will Stations Volunteer for Auction?

$370 Million In TV Deals Done for Spectrum Auction Tender; Up to $8 billion in station assets could move NEW YORK — Around $370 million worth of TV stations have traded hands with the express purpose of offering them up in the incentive auction, Wells Fargo analysts report….


“…LIN Media CEO Vince Sadusky…. acknowledged that the station group might sell some of its TV spectrum in the FCC’s planned incentive auction. • It would be a way of turning Class A low-power stations and full-power

duopoly stations into cash, Sadusky said. “

“Spectrum market watchers say that Ion Media and Univision are also considering taking spectrum to market with far greater implications • … they are loaded with spectrum in the top 25 markets,

the kind most in demand and most valuable.

• For some group owners…the FCC’s upcoming incentive auction is starting to look like an opportunity to reap a cash windfall.”

Will Stations Volunteer for Auction?*

*TVNewsCheck, October 30, 2013 8:40 AM EDT


Working directly with broadcast and cable industries on transition planning and reimbursement issues

Transition and Reimbursement Planning

Reviewing preliminary findings on cost models, timing, and logistics of transition planning

Beginning long term planning for a Fund Administrator



Repack Issues – The Broadcast Industry View Many Factors to Coordinate


Remaining “On Air” during channel change

Addressing local zoning law and regulations

Engineering considerations: building modifications, site surveys, tower loading, etc.

Will reimbursement cover a station with 2 transmitters: 1 main & 1 alt./ multiple sites?

Repack Issues - Station


Logistical limits: • Number of qualified tower crews:

antennas and feed lines

• Number of technical crews: retune/install transmitters

• Manufacturing capacity for replacement antennas, channel filters, RF line systems and transmitters

Compensation of stations • Antenna facilities

Repack Issues - Industry


Technology • Moving to lower frequency channel

assignments:

– larger antennas for equal gain, or…

– lower gain for equal-sized antennas

Repack Issues – Technology & Regulatory

Regulatory

• Mandate that compensation must be made within 3 years of the reverse auction

• Adequacy of compensation fund

• International treaties with Canada and Mexico

• FCC’s unwillingness to wait for new technology that could impact spectrum issues


Most transmitters ~8 - 20 years old

Current UHF transmitters designed around three band segments • May require new amplifier pallets, combiners or

driver modules - adequate device availability unlikely

Transmitter Replacement is Likely


Most UHF transmitters currently deployed are designed around segmented bands…usually three band segments

• Moving across segments would require new amplifier pallets and combiners if solid state TX or new driver modules if IOT type TX – and device availability is unlikely

Example: DiamondCD® TX Band Splits:

Transmitter Replacement is Likely


Channel change within the technical limits of the existing transmitter and antenna

Channel change beyond the technical limits of the existing supported transmitter and antenna

Channel change beyond the technical limits of the existing un-supported transmitter and antenna

Channel Change Scenarios


Impact Assumptions

Least: <5% • 3 steps

Worst Case: 5% - 10% • 12 steps

Almost Worst Case:

15% – 25% • 12 steps

Likely: 45% - 55% • 10 steps

Moderate:

10% - 15% • 9 steps

Likely (example):

Install temporary antenna and transmission line

Modify building and electrical for additional transmitter

Install new transmitter

Install new channel mask filter

Remove original antenna

Remove original transmission line

Install new transmission line

Install new antenna

Conduct system proof tests

Cut over to new channel

Remove temporary antenna and transmission line

Remove original transmitter or convert to new channel as back up transmitter


"The FCC will be buying 6 MHz of spectrum, not ongoing broadcasting businesses…”

Television stations affiliated with the major networks have no interest in selling their broadcast licenses back to the Federal Communications Commission

Notable Quotes

“A large majority” of the nation’s broadcasters will sit out the TV incentive spectrum auction, NAB Executive Vice President Rick Kaplan predicted


"The FCC seems hell-bent on doing this one way," says a source with an interest in the spectrum auction.

Senators, including John McCain (R-Ariz) and Dean Heller (R- Nev.), Amy Klobuchar (D-Minn.) and Mark Udall (D-Colo.), said: "[W]ithout translators and low power television stations, many Americans would be unable to receive the latest news and emergency information, which is critical to their well-being. We look forward to working with the FCC and Congress to preserve translator service during the spectrum auction process."

Notable Quotes


"Owners of Class A stations and smaller market stations have proposed that “spectrum is spectrum” and the valuation within a market should not vary based on any other factors

• “Their 6 MHz is worth the same as any other stations spectrum”

“With Sinclair taking the lead, some broadcasters support the idea of waiting for a new broadcast standard - ATSC 3.0 – to be implemented in the next few years. The new standard would have far more capacity than the current digital standard.” • Should the FCC wait for ATSC 3.0 to get more

“volunteers”?

Notable Quotes


The new FCC Chairman, Tom Wheeler, has now targeted “the middle of 2015” for the broadcast television spectrum incentive auction • An incentive auction Report and Order will circulate in

early 2014, with a Commission vote “in the spring.”

• The Incentive Auction Task Force will release two public notices “in the second half of” 2014

And the Latest From the FCC…*

*By Kathleen A. Kirby and Henry Gola on December 6, 2013 Posted in Broadcast Regulation, Spectrum

The new timeline announced by Wheeler accounts for “the recognition that we have but once chance to get the incentive auction right.”


The spectrum harvest and auction process will focus on the top 25-30 markets and adjacencies

Conclusion

Combining the auction process with the transition to a next generation digital TV system would increase participation

Harris Broadcast is on your side – your partner through the process

120 MHz of spectrum recovery will likely not be achieved – estimated 36 – 60 at best • Goal of contributing to the reduction of the US deficit is

unlikely

Many unanswered questions regarding the auction process - likely to be challenges



Questions?


Support Information

Resources

Technology Advisor Jay Adrick

+1 513-459-3802

[email protected]

Market and Product

Development Manager

Joe Seccia

+1 513-459-3427

[email protected]

Product Marketing Manager Bill Betts

+1 513-459-3678

[email protected]

Broadcast Forums E-mail [email protected]

mailto:[email protected]



[email protected]



Addendum: The Repack Process as Viewed by the FCC

Current Status


Repacking: Process of reassigning broadcast TV channels to free up contiguous blocks of spectrum for mobile broadband use

Key Components of the Repacking Process • Two key initial steps in the process are:

Repacking: The Process

1. Calculating TV station coverage and interference characteristics (OET-69 and TVStudy); and

2. Using the OET-69 coverage and interference calculations with other data to analyze repacking constraints (July 22nd Repacking Data Public Notice)


Preserve Population Served • Updating census data to 2010

– Population grew 9.7% (27M) from 2000 to 2010

– Over 30% of population moved residences between 2005 and 2010

• More precise geographic coordinates

– More decimal places = more precise block locations

Repacking: Updates to Adhere to Statute

Preserve “Coverage Area” • More accurate terrain data

– 3X more granular terrain elevation data

• Actual antenna beam tilt – Default angle resulted in inaccurate

calculation

• Corrected calculation of depression angle – Using proper antenna height parameter

• Universal cell/grid – Necessary for repacking – allows

station-to-station, “pair wise”, interference calculation


Repacking: Different From DTV Transition


The Public Notice released on July 22, 2013 was the first of several Public Notices on the repacking process. That Public Notice includes: 1. Updated TVStudy software

2. Data about Canadian and Mexican television allotments, domestic TV stations, and other incumbents in the band

3. Descriptions of how station could be assigned or reassigned to particular channels

The preliminary data released with the Public Notice are for illustrative purposes only. Many of the assumptions relate to issues that will be decided by the Commission

Repacking: Data Public Notice


Repacking: Domain File


Repacking: Interference_Paired File



Addendum: Press Articles


Harris Broadcast - Industry Education


Harris Broadcast - Industry Education


One View of Station Participation

$370 Million In TV Deals Done for Spectrum Auction Tender Up to $8 billion in station assets could move NEW YORK — Around $370 million worth of TV stations have traded hands with the express purpose of offering them up in the incentive auction, Wells Fargo analysts report. In round numbers, at least 70 TV stations are going on the block through the group led by former Disney lobbyist Preston Padden, who described them as “heavily weighted toward the largest markets.” Padden said his group “remains bullish about the prospects for a successful auction by the end of 2014.” Broadcasters at the summit pegged 2015-16 as a more realistic timeframe, Ryvicker said.



Network affiliates not interested in FCC auction, TV exec says By Brendan Sasso - 08/20/13 02:02 PM ET

ASPEN, Colo. — Television stations affiliated with the major networks have no interest in selling their broadcast licenses back to the Federal Communications Commission, according to Preston Padden, the director of a coalition of broadcasters who want to sell their licenses.

"To the best of my knowledge, the commission is extremely unlikely to attract affiliates of ABC, CBS, NBC and Fox to this auction," Padden said during a panel discussion at a Technology Policy Institute conference. "I am not personally aware of any affiliate of a major network who is planning to participate in the auction.“

Padden explained that his group, the Expanding Opportunities for Broadcasters Coalition, is made up entirely of independent stations.



Continued from Brendan Sasso - 08/20/13 02:02 PM ET

He argued that the FCC's system for scoring the value of broadcasters is discouraging stations from participating.

The FCC plans to buyback the licenses of interested TV stations and to then sell them to cell phone carriers, which have been struggling in recent years to accumulate enough airwaves to meet their customers' skyrocketing demand for mobile data.

The auction is expected to generate billions of dollars in revenue, which the government plans to use to pay for a nationwide wireless network for emergency responders and to pay down the national debt.

But the auction will only succeed if enough broadcasters agree to sell their licenses and go out of business.

http://thehill.com/blogs/hillicon-valley/technology/317871-network-affiliates-not-interested-in-fcc-auction-tv-exec-says




Will Stations Volunteer…More From Preston Padden

Padden On Spectrum: Take The Sure Money The head of a coalition of broadcasters buying stations with the intent to sell spectrum in the upcoming FCC auction says the alternative, adopting a new transmission standard and then leasing some of their spectrum, is "highly speculative" and requires too many variables to go right over the next few years.

By Harry A. Jessell

TVNewsCheck, November 15, 2013 8:27 AM EST

Like retirees sizing up their pensions, broadcasters can go for the lump-sum payout or opt for an annuity that will fill their checking accounts each month.

That's the way Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, explains it in a speech prepared for delivery this morning at a George Mason University conference on TV's future.




Continued from TVNewsCheck, November 15, 2013 8:27 AM EST

Only Padden is not talking about pensions; he's talking about TV spectrum.

Broadcasters can take a lump sum by selling their spectrum in the FCC's planned incentive auction or they can adopt a new broadcast standard and lease all or some of their spectrum to wireless carriers for that "annuity.“

Both represents ways that broadcasters can monetize the "10-fold" increase in spectrum when it is made available to wireless carriers rather than used solely for broadcasting, he says.

For Padden, the choice is clear: sell and take the cash. That's not surprising. His coalition represents broadcasters who have been buying marginal large-market stations with that intention.




The opportunity could come as early as 2015 if the FCC sticks to its plan to buy spectrum from willing broadcasters in a "reverse auction" so that it can turn around and sell it to wireless carriers in a forward auction.

Getting the annuity — leasing the spectrum, that is — requires too many things to go right over the next few years, Padden says. He calls it "highly speculative.“

Before broadcasters could lease, he says, they would need to coalesce around a new broadcast standard; they would have to convince the FCC to adopt that standard; they would need to spend billions of dollars to help consumers transition to the new standard; they would have to persuade mobile device manufacturers to develop new standards and devices to receive the broadcast signals; they would have to switch to a cell-like broadcast architecture; they would have to develop a plan with wireless carriers for aggregating and leasing spectrum; and, finally, they would have to cope with disputes resulting from the leasing.




But a successful auction is far from a given, too, Padden also acknowledges. For it to work, the FCC has to convince a critical mass of broadcasters to participate and that will not be easy, he says.

"To even begin to contemplate participation in the auction, broadcasters need to know what initial price offers they will see, when the auction will be held and when they will be expected to cease broadcasting. The sooner the FCC commissioners and their hard-working staff can provide answers to these questions, the sooner the FCC will begin to attract more broadcast sellers.“

Some of the FCC's current thinking on compensating broadcasters in the auction is self defeating, Wheeler says. "For example, in an apparent effort to suppress payments to some broadcasters, the FCC has proposed to 'score' stations offering larger payments to bigger and more successful stations," he says. "This proposal is driving away from the auction some of the stations otherwise most likely to be willing to participate.




"The FCC will be buying 6 MHz of spectrum, not ongoing broadcasting businesses. Since all stations bring the same 6 MHz to the table, the FCC should offer the same starting prices to all stations and let the design of the auction itself freeze at early high-priced rounds those stations most important to clearing the spectrum.

"Buying smaller stations not located at a market’s main antenna farm will have a greater effect on clearing spectrum because of adjacent channel preclusion — preclusion that is not a problem for co-located stations."


Will Stations Volunteer for Auction? TVNewsCheck, October 30, 2013 8:40 AM EDT “On Oct. 3, at an investors' conference in Texas, LIN Media CEO Vince Sadusky and CTO Brett Jenkins acknowledged that the station group might sell some of its TV spectrum in the FCC’s planned incentive auction. It would be a way of turning Class A low-power stations and full-power duopoly stations into cash, Sadusky said. "[W]e think that there could be a value creation capability option.“ Then last week, during a quarterly earnings call, Meredith CEO Stephen Lacey was asked whether his company's station group would hang on to all its spectrum when the auction rolls around. Maybe not, he said. Meredith has several markets — including Atlanta, Portland, Ore., and Kansas City — with multiple stations. And while he doesn't figure on being a "major player" in the auction, he said, he might be a "smaller player.“ And LIN and Meredith are probably not the only ones doing some arithmetic.”



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT

“Spectrum market watchers say that Ion Media and Univision are also considering taking spectrum to

market with far greater implications. Unlike LIN and Meredith, they are loaded with spectrum in the top

25 markets, the kind most in demand and most valuable.

For Ion and Univision, the auction must be tempting.

With 29 stations in the top 25 markets, including four duopolies and a triple play, Ion covers nearly 157

million people in those markets with 6 MHz of spectrum.

Univision, with its 36 top-25 market stations, including 10 duopolies and four triple plays, reaches just

under 120 million.

In the 2008 spectrum sale known as Auction 73, spectrum in the 700 MHz band in top 25 markets sold

for around $4 per MHz per pop.”


Selling Spectrum – Another Opinion

To Some, Selling Spectrum Could Makes Sense For some group owners, especially those with multiple stations in major markets, the FCC’s upcoming incentive auction is starting to look like an opportunity to reap a cash windfall. Both LIN and Meredith say they’re considering participating. And for others like Ion and Univision, the financial rewards are very tempting. By Price Colman TVNewsCheck, October 30, 2013 8:40 AM EDT On Oct. 3, at an investors' conference in Texas, LIN Media CEO Vince Sadusky and CTO Brett Jenkins acknowledged that the station group might sell some of its TV spectrum in the FCC’s planned incentive auction.




Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT It would be a way of turning Class A low-power stations and full-power duopoly stations into cash, Sadusky said. "[W]e think that there could be a value creation capability option.“ Then last week, during a quarterly earnings call, Meredith CEO Stephen Lacey was asked whether his company's station group would hang on to all its spectrum when the auction rolls around. Maybe not, he said. Meredith has several markets — including Atlanta, Portland, Ore., and Kansas City — with multiple stations. And while he doesn't figure on being a "major player" in the auction, he said, he might be a "smaller player.“ The comments mark the first times what I would call mainstream broadcasters have registered publicly their interest in participating in the controversial auction, which the FCC hopes will reallocate up to 120 MHz of spectrum from TV to wireless broadband.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT And LIN and Meredith are probably not the only ones doing some arithmetic. Spectrum market watchers say that Ion Media and Univision are also considering taking spectrum to market with far greater implications. Unlike LIN and Meredith, they are loaded with spectrum in the top 25 markets, the kind most in demand and most valuable. For Ion and Univision, the auction must be tempting. With 29 stations in the top 25 markets, including four duopolies and a triple play, Ion covers nearly 157 million people in those markets with 6 MHz of spectrum. Univision, with its 36 top-25 market stations, including 10 duopolies and four triple plays, reaches just under 120 million. In the 2008 spectrum sale known as Auction 73, spectrum in the 700 MHz band in top 25 markets sold for around $4 per MHz per pop.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT That would translate into Ion's big market spectrum being worth roughly $3.8 billion and Univision's being worth about $2.9 billion. Those are impressive numbers, and they don't include the value of the broadcasters’ considerable, but somewhat less valuable spectrum holdings outside the top 25. For Ion, the auction could be an exit plan for investors. According to Moody's, the EBITDA of Ion's broadcasting business is currently about $140 million a year. At a slightly aggressive nine-times-EBITDA multiple, Ion would be valued at roughly $1.3 billion. Let's see, $1.3 billion (broadcasting) versus $3.8 billion (top 25 market spectrum sale). What would you do if you were an Ion investor? After a bankruptcy, Ion is finally prospering under CEO Brandon Burgess, but its business model is limiting.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT According to Moody's reports, Ion derives about 54% of its revenue from old-school infomercial-direct response advertising. It is transitioning to an audience-driven CPM advertising model, but it gets no retrans money and, given its reliance on off-net programming, it's unlikely to ever be any more than an also-ran. Not that there's anything wrong with that. Still, that's some mighty attractive spectrum. Different story for Univision. With EBITDA of around $1 billion, it's worth perhaps $9 billion as a broadcasting concern. That far exceeds the value of its Top 25 market spectrum ($2.9 billion). Univision is also on a promising growth trajectory. It has recently forced the Big Four network designation to become Big Five, thanks in part to winning six first-place weekly ratings over the past year in the key 18-49 demographic. Credit the growth of the Latino population in the U.S., a trend that looks like it's only going to continue.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT Univision also keeps launching new networks, including Fusion, a partnership with Disney-ABC that premiered Monday and targets an ethnically diverse, younger demo — 16-30 year-olds. The company also is reportedly is considering an initial public offering of stock. As one analyst put it, "Univision is hitting on all cylinders.“ However, it is also highly leveraged with $9.4 billion in debt. Its investors would undoubtedly like to whittle that number down. The spectrum auction is one way of doing that. Univision has multiple stations in 14 markets covering nearly 39 million pops. At the $4 per MHz per pop value, selling the spectrum of the extra stations could fetch about $1 billion. In one fell swoop, Univision could cut its debt more than 10%.

http://www.tvnewscheck.com/article/71579/fusions-debut-shows-serious-fun-sides?ref=search



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT Selling the duopolies would have minimal impact on Univision's business. Programming now on the stations, mostly Univision's flanker UniMas network, could easily be moved to digital subchannels on the main stations in each market carrying Univision. This have-your-cake-and-eat-it-too strategy is also open to Ion. But with multiple stations in only five markets, the numbers are less compelling. Those stations encompass nearly 16 million pops. Using the same math as before, the spectrum would fetch roughly $380 million. In one shot, Ion could erase its $250 million in debt, deliver a nice little bonus to investors and top management, and plug ahead with its current business model. Not exactly a bad option.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT At its investors' conference, LIN said it was looking at the have-your-cake option, too, using its duopoly in New Haven, Conn., as an example. According to LIN's Jenkins, LIN could auction off WCTX and put its MNT-anchored programming on a subchannel of ABC affiliate WTNH. Figuring the WCTX spectrum is worth $4 per MHz per pop because of the market's proximity to New York, Jenkins said auctioning off the spectrum could yield "something around $115 million....That's a very, very high valuation versus potentially looking at just the value of the station in terms of [broadcast] cash flow.") So what are Ion and Univision thinking? "That's the $64,000 question," says one market watcher. "I've been in meetings after meetings where companies like that say they're not interested. Maybe if they get dangled enough money they do.“ Univision declined to comment on its plans. Ion did not respond to multiple queries seeking comment.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT Meanwhile, a lot of questions swirl around the spectrum auction plan itself. The FCC intends to harvest up to 120 MHz of TV spectrum in what's called a reverse auction and sell it to bandwidth hungry wireless broadband providers in what's called a forward auction. The broadcast auction is called a reverse auction because participants will attempt to underbid each other in an effort to sell their spectrum. The wireless broadband auction is a conventional forward auction because potential buyers will attempt to outbid each other. The auction was originally scheduled for next year. But the rules are still being written and the smart money says that it will not take place until 2015. It’s also hard to say whether the $4 rate will hold or go up or down, says Mark Fratrik, VP-chief economist at BIA/Kelsey.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT "The 2008 auction … provides a benchmark for possible values in the upcoming auction," Fratrik says. "While this will be an increase in supply of spectrum, at the same time the demand for wireless spectrum has increased.“ Another big question mark is whether the FCC will offer attractive enough prices in the reverse auction to entice broadcasters like Ion and Univision to sell. “The FCC needs to offer prices high enough to attract around 400 stations to give up their spectrum," says Preston Padden, the former Fox and ABC executive who now represents the Expanding Opportunities for Broadcasters Coalition, a group of potential spectrum sellers, mostly speculators. That 400-station critical-mass number comes from an NAB study. There's another option that broadcasters including Ion and Univision may be considering: Leasing spectrum instead of selling it.



Continued from TVNewsCheck, October 30, 2013 8:40 AM EDT With Sinclair taking the lead, some broadcasters support the idea of waiting for a new broadcast standard — ATSC 3.0 — to be implemented in the next few years. The new standard would have far more capacity than the current digital standard. As a result, broadcaster could stick with their traditional businesses, but have ample spectrum for other uses, including leasing to wireless broadband providers. But nobody knows if the FCC would permit leasing. "The FCC seems hell-bent on doing this one way," says a source with an interest in the spectrum auction. "ATSC 3.0 is a long process. One of the worst problems is the broadband people don't want to wait, they want to go right now. The broadband lobby in Washington won't put up with the lease model."


When Should the Auction be Held?

No Reason for FCC to Hold Incentive Auction in 2014, NAB's Kaplan Says

NAB - November 20, 2013 - Howard Buskirk “A large majority” of the nation’s broadcasters will sit out the TV incentive spectrum auction, NAB Executive Vice President Rick Kaplan predicted Tuesday during a webinar sponsored by the Digital Policy Institute. Kaplan, a former FCC Wireless Bureau chief, also questioned why the FCC continues to push for a 2014 auction. Preston Padden, head of the Expanding Opportunities for Broadcasters Coalition, said the auction should be a huge success as long as the FCC gets the rules right. “A majority of broadcasters, a large majority, are going to stay in the business and the FCC wants them to as does Congress, because we fulfill a role that nobody else does,” Kaplan said. “We’re reliable when wireless networks go out.” Emergency alerts issued by carriers through the Commercial Mobile Alert System tell people “go check your local media in a time of emergency,” he said. Most broadcasters “just want to held harmless,” Kaplan said. “There should be no cost" to broadcasters from the transition.



Continued from NAB - November 20, 2013 - Howard Buskirk "It’s a voluntary auction. They didn’t want to be involved and that means their service area should be almost essentially the same as before.” Viewers should be able to receive the same stations they receive now after the auction, he said. The FCC needs to take the time to get the 600 MHz band plan and other rules right, Kaplan said. “The number one thing is for the FCC to take its time to make sure that the technical decisions that it’s making are the correct ones,” he said. “We’ve seen what happens when you roll out something too quickly. You can have problems with it. Spectrum policy is no different.” Kaplan said interference issues between the 700 MHz A-block and Channel 51 licensees were recognized before that auction took place: “Those were known quantities, but not really talked about and explored deeply by the FCC so then you ended up with an interoperability problem that took the better part of several years to even start to chip away at.”



Continued from NAB - November 20, 2013 - Howard Buskirk Kaplan questioned why the FCC needs to hold an auction in 2014, the agency’s often-stated target timeline. “There really is no rush, there just isn’t,” he said. “Any rush is self-imposed. Something can be a priority but not a rush.” Kaplan also warned that litigation could slow the auction. “If you look at the hockey stick growth in the demand for wireless broadband and the dearth of other places to look for spectrum I can’t imagine the FCC going for anything less than the 120 MHz that was identified in the National Broadband Plan as the goal to remove from broadcasting,” Padden said.



Continued from NAB - November 20, 2013 - Howard Buskirk Padden said broadcasters could see high prices for their spectrum in many markets. “You could well get more than the price the wireless carriers are offering in your market because the chief of the Media Bureau has announced the FCC is only going to be buying spectrum in 25 or 30 markets and in the other 180 markets they will get the spectrum they need essentially for free and they can use all of that revenue to cross-subsidize the purchases they need to make in the biggest markets,” he said. Some broadcasters could see a “tenfold increase” in the value of their spectrum, he said. “It is important that the auction timetable not really slip unduly,” said Randolph May, president of the Free State Foundation, who was also on the webinar. “It’s also important that you get it right and you can’t throw something together just in the name of speed.”



Continued from NAB - November 20, 2013 - Howard Buskirk The discussion veered into the question of whether the FCC should impose restrictions of bidding by Verizon Wireless and AT&T in the incentive auction. Auctions “shouldn’t be encumbered or conditioned with extraneous conditions,” May said. “Experience has shown ... that when the FCC starts to mess around with the auctions in a way that attempts to deviate from that principle of an unencumbered auction the results are not always pretty.” May cited the 1996 PCS auction, where auction rules favored small businesses with limited resources. NextWave, which eventually filed for bankruptcy and defaulted on its payments for the spectrum, was a leading bidder in the auction. “The conditions that time had to do with the FCC essentially becoming a banker for the first time and that resulted in the NextWave fiasco and that tied up spectrum for about 10 years,” May said.



Continued from NAB - November 20, 2013 - Howard Buskirk Padden agreed the FCC "does not currently have in its possession the spectrum that it’s proposing to auction to wireless carriers. If they impose bidding restrictions on AT&T and Verizon it could well reduce the pool revenue coming into this proceeding so that the commission does not have enough money to meet the price expectations of willing broadcast sellers with the result that the auction would fail and no carrier would get any new spectrum.” Sprint and T-Mobile would be the primary beneficiaries of caps, May said. “The market in my view really is effectively competitive now,” he said. Sprint and T-Mobile “aren’t mom and pop operations,” he said. “They’re owned by some of the largest companies in the world really, global corporations that are highly capitalized. ... They have the resources to bid in an open, unencumbered auction.” — Howard Buskirk .


Low Power Television and Translators

Senators to FCC: Don't Forget LPTVs, Translators Advise Wheeler on importance to rural America By John Eggerton -- Broadcasting & Cable, 11/13/2013 5:40:56 PM A bipartisan group of senators has asked new FCC chairman Tom Wheeler consider the value of low-power TV stations and translators to their rural constituents as the FCC finalizes a plan for incentive auctions and station repacking. "Countless farmers and ranchers, small businesses and families living in remote areas rely on receiving over-the-air television through translators and low power televisions stations," they wrote to Wheeler. LPTVS and translators are not eligible to participate in the auction, and do not have any protections for coverage and from interference in station repacking after the auctions, a point they also made in asking the FCC to "to minimize the impacts of repacking spectrum in rural areas following the upcoming incentive spectrum auction."


Low Power Television and Translators

Continued from Broadcasting & Cable, 11/13/2013 5:40:56 PM In the letter, the senators, including John McCain (R-Ariz) and Dean Heller (R- Nev.), Amy Klobuchar (D-Minn.) and Mark Udall (D-Colo.), said: "[W]ithout translators and low power television stations, many Americans would be unable to receive the latest news and emergency information, which is critical to their well-being. We look forward to working with the FCC and Congress to preserve translator service during the spectrum auction process." The LPTV/translator issue is just one facet of a Rubik's cube's worth of elements in the FCC's broadcast incentive auctions.



Addendum – The Digital Policy Institute:

Top 10 Unanswered Questions Involving Spectrum Auctions


Reverse Auction 1. What happens if not enough broadcasters volunteer to give up spectrum? The target is to recapture 120 MHz.

What if they can only get half of that? Will the auction continue or go back to square one? • Unclear. Though FCC officials say that there is no "Plan B," there is no shortage of speculation about what might

happen. There is no guarantee that enough broadcasters will voluntarily participate in the auction to provide the requisite spectrum. Among the possible alternatives being discussed include a market-based solution (cutting out the government "middle-man" as the market-maker), changing other key elements of the proposed process and the nuclear option of the government simply taking frequencies from incumbent licensees. That last option is highly unlikely and would certainly be challenged in the courts.

2. Is it possible that some markets will see more broadcasters contributing more spectrum for auction to wireless providers than is needed, while in other markets too few broadcasters may be willing to offer up their spectrum? What then? • Unclear. The purpose of the reverse auction is to obtain spectrum specifically in those places where there is the

greatest demand, which is directly correlated to population density. The more people per square mile, the more demand that exists for wireless broadband. Not surprisingly, these are also the locations with the greatest demand for broadcast spectrum. For example, Glendive, Montana, is the nation's smallest television market. It has only one television station and wireless networks covering the locale are not faced a capacity crunch. (Nielsen divides the U.S. into 210 Designated Market Areas (DMAs), and Glendive is ranked 210th. Rankings are done by number of TV Households. Glendive has one full-power station (KXGN) and one TV translator (K13PL), but translators are not included in the forward auction process.) On the other extreme, New York City has 22 full power TV stations, and is one of the most congested wireless broadband spectrum markets in the country. Thus, while it may not be necessary for a broadcaster to give up spectrum in Glendive for wireless networks to work well, it will be critical to have some broadcasters in the New York market offer up some spectrum to offset capacity crunches on wireless broadband networks covering the New York market.


http://www.tvnewscheck.com/article/67510/but-what-if-fccs-incentive-auction-flops?utm_source=NetNewsCheck-rss&utm_medium=latest-news-feed&utm_campaign=latest-news-feed-But-What-If-FCC-s-Incentive-Auction-Flops-


Repacking 3. Will the audiences for over-the-air broadcast stations be negatively affected by a smaller service area?

• Maybe. The FCC has been adamant that broadcaster participation in the auction will be completely voluntary. Repacking, on the other hand, could affect all broadcasters, whether or not they choose to participate in the auction. After it is determined which stations have volunteered for the auction, and the extent to which these stations would cede service areas or go off the air entirely, the stations remaining in the market, and in nearby markets, would be "repacked." This would result in some station operations being moved to other frequencies, while others stations could lose some of their coverage areas, whether they want to or not, but for which they will be compensated.

4. While the FCC and others are now anticipating and sometimes obsessing about the forward and reverse auctions over current TV broadcast spectrum, are there other spectrum auctions underway or being considered that might also help quench the insatiable thirst of wireless companies for more and more spectrum? If so, when will these auctions take place and for what purposes are those portions of the spectrum currently allocated?

• Yes, the FCC plans to conduct several other auctions of spectrum that could be used for commercial wireless services and public safety purposes. One is the anticipated 2014, auction of "H-block" spectrum that originally was allocated to the "personal communications service." Some of the spectrum earmarked for near-term auction is that used by the military, which has agreed to move its operations there to other portions of the spectrum. Indeed, and although it's a politically sensitive issue, many observers suggest that there are significant other portions of "military" spectrum, currently not used or lightly used, that also should be considered for future wireless auctions.


http://www.fiercewireless.com/story/fcc-sets-h-block-spectrum-auction-jan-14-sprint-seen-lead-bidder/2013-09-13



http://thehill.com/blogs/hillicon-valley/technology/313305-fcc-targets-additional-spectrum-ahead-of-incentive-auction

http://thehill.com/blogs/hillicon-valley/technology/313305-fcc-targets-additional-spectrum-ahead-of-incentive-auction


5. What will be considered an acceptable level of interference for broadcasters? For broadband providers? • Unclear. The FCC has proposed allowing broadcasters, if not going off the air, to agree to accept additional interference

in their reverse auction bids. A station might accept payment in exchange for accepting increased interference and, thereby, accepting a reduced service area. These levels have not been established. Further, as stations are repacked, some existing interference in some geographic areas might actually go away, while new interference may be introduced elsewhere. That is, those who currently are able to watch an over-the-air signal might not be able to after repacking, but some who are unable to see a particular station over-the-air now might then be able to receive the signal in the future. The FCC's Notice of Proposed Rule Making addressed the thorny interference issues involved in this process; but it provided far more questions than answers.

Forward Auction 6. Who will be allowed to participate in the auction? If "caps" are imposed, what frequencies will be included in

computing the cap? • Unclear. Once the FCC has "harvested" what it hopes will be adequate amounts of spectrum, it must then redistribute it

to wireless broadband providers, though an auction process. There has been no shortage of debate about whether the nation's largest providers, AT&T and Verizon, ought to be allowed to participate in the auction or, if allowed, whether there ought to be limits on the amount of spectrum each might acquire. Either banning or placing limits on these two bidders likely would result in fewer broadcasters proffering their spectrum for auction, because of reduced prices for ceded spectrum, thus undermining Congress' goal of the FCC reallocating a sizeable chunk of broadcast spectrum. Some anticipate that revenues from the auction would be as much as 40 percent lower if bidder restrictions are imposed. This would be a particularly bad outcome in light of Congress' instruction to the FCC to raise revenues in this auction that would pay for the construction of a nationwide, interoperable public safety network.


http://www.fcc.gov/document/broadcast-television-spectrum-incentive-auction-nprm

http://www.fcc.gov/document/broadcast-television-spectrum-incentive-auction-nprm

http://www.optimalauctions.com/fcc-spectrum-auction-att-verizon.jsp

http://www.optimalauctions.com/fcc-spectrum-auction-att-verizon.jsp


7. What are the government's choices if not enough money is raised in the forward auction to cover the expenses incurred in the reverse auction?

• Unclear. Television broadcasters, and trade associations and organizations representing their interests, have expressed concern, as noted above, over the prospect that not enough money will be raised in the forward auction, especially in light of the possibility that the forward auction is restricted. It is unlikely that Congress would allocate funds for the acquisition of the frequencies, particularly because of the government policy of taking in revenue from spectrum auctions, not expending money. Would the entire process be scrapped? Would there be a new Notice of Proposed Rulemaking issued, with revised rules? No one knows.

8. What is a realistic expectation for the first available date for new wireless frequencies?

• Unclear. The FCC has been stating that it intends to complete its rulemaking and policy decisions by the end of 2013, and to have all three steps (reverse auction, repacking and forward auction) completed before the end of 2014. But many have been skeptical ever since that ambitious schedule was announced. One potential monkey wrench in the process is the likelihood, as noted below, of court appeals brought by those displeased with the FCC's decisions. Most commentators now suggest that the end of 2014, would be the absolute earliest that the forward auction could be completed, and only the following year would spectrum be available for mobile broadband use. Yes, these timetables are moving targets.


http://www.adweek.com/news/technology/tv-station-coalition-accuses-fcc-manipulating-spectrum-auction-147842

http://news.cnet.com/8301-13578_3-57522584-38/fcc-kicks-off-effort-to-reclaim-tv-spectrum-for-wireless/


The Future 9. Will this spectrum action permanently satisfy the need for more wireless broadband spectrum?

• Unlikely. In 2004, a prestigious engineering journal published an article where the co-authors made the provocative assertion that the country was in fact approaching the end of spectrum scarcity because of the ability of new technologies and regulatory reform to better utilize frequencies. That perspective on the future spectrum needs in the United States breaks from the now majority view in the engineering community that more spectrum will be needed as demand continues to outpace projections. Anyone can speculate, but no one knows for certain, what the next big demand for spectrum will be, or whether technological advances will accommodate new and expanded uses into an already-packed spectrum, absent an influx of new, reallocated spectrum. The only thing that is clear is that every projection ever made about how much spectrum was needed to power the nation's largest wireless networks have fallen short of the reality.

10. Will "losers" in the process be able to stall the process from going forward through legal challenges and other means? • Yes. There is no shortage of examples of FCC decisions that have had to be delayed due to legal challenges in the

reconsideration process at the agency and subsequently in the courts. [Under the earlier system of broadcast station licensing, those who were not selected for the assignment would often challenge the FCC's decision, delaying the new station's construction, sometimes for years. This was one of the rationales for moving station licensing from a "comparative application" process to an "auction process" in 1993. It is highly likely that one or more dissatisfied parties would challenge a part or all of the process, in which case implementation might be delayed for the duration of the appeal. It also is possible that some of those displeased with the process may –- at most any stage – try to persuade the Congress to weigh in and force politically-inspired changes to the process.


http://spectrum.ieee.org/telecom/wireless/the-end-of-spectrum-scarcity

http://spectrum.ieee.org/telecom/wireless/the-end-of-spectrum-scarcity

http://mason.gmu.edu/~thazlett/pubs/Assigning Property Rights.pdf

http://mason.gmu.edu/~thazlett/pubs/Assigning Property Rights.pdf


Barry Umansky, J.D., and Dom Caristi, Ph.D. are affiliated with The Digital Policy Institute, an independent, interdisciplinary research and policy development organization located at Ball State University in Muncie, IN. The DPI has served as a catalyst for research and education on digital media issues since 2004. Additionally, the DPI is also a member of the Consumer Advisory Committee at the Federal Communications Commission (FCC).

Read more: Digital Policy Institute: Top 10 unanswered questions involving

spectrum auctions - FierceWireless http://www.fiercewireless.com/story/digital-policy-institute-top-10-unanswered-questions-involving-spectrum-auc/2013-10-18#ixzz2kfZJn4U2 Subscribe at FierceWireless


http://cms.bsu.edu/Academics/CentersandInstitutes/DigitalPolicy.aspx

http://cms.bsu.edu/Academics/CentersandInstitutes/DigitalPolicy.aspx

http://www.fiercewireless.com/story/digital-policy-institute-top-10-unanswered-questions-involving-spectrum-auc/2013-10-18




























http://www.fiercewireless.com/signup?sourceform=Viral-Tynt-FierceWireless-FierceWireless

Documents

Preparing For Spectrum Repack - Imagine Communications · Spectrum Repack Jay Adrick, Technology Advisor . ... “Spectrum market watchers say that Ion Media and Univision are also