Updates from Rick Kaplan Toggle Comment Threads | Keyboard Shortcuts

  • Rick Kaplan 11:27 am on August 16, 2016 Permalink  

    Time To Put Up 

    It will be important to watch closely how the forward auction unfolds, as this is the golden opportunity for which the wireless industry has lobbied intensely. CTIA and CCA, the leading wireless trade associations, have wholeheartedly supported the Federal Communications Commission (FCC)’s hard work throughout the auction rulemaking process and have approved the agency’s ultimate auction design. These associations have claimed there is “tremendous need for additional spectrum” and that “the spectrum crisis facing the wireless industry continues to grow.” Thus, this auction has now opened for the wireless industry a long-awaited window to put its money where its mouth is, and for those who promised the incentive auction “will play a vital role in addressing the spectrum crunch,” the time to back that claim up is now.

    Although we hear a lot less these days about a so-called “spectrum crunch,” that was the rallying cry that encouraged Congress to provide the FCC with the ability to conduct this unique auction. We’ll find out soon enough whether that lobbying was simply an empty slogan or if the wireless industry is indeed desperate for more licensed spectrum.

    If the wireless industry’s demand doesn’t meet the broadcast industry’s supply, the wireless industry need only look in the mirror. Again, FCC staff worked day and night over the course of years to develop this particular auction design, and the wireless industry has been its biggest cheerleader in that regard. Broadcasters did their part in the first phase of the auction; we now look forward to the wireless industry showing up and demonstrating how accurate its countless comments, tweets and blogs about the incredible demand for spectrum really are.

     

     
  • Rick Kaplan 10:30 am on July 13, 2016 Permalink  

    One Year From Now: Full Speed Ahead With Innovation 

    At its monthly open meeting tomorrow, the Federal Communications Commission (FCC) will vote on an order setting the stage for the next generation of wireless services. The order – part of the “Spectrum Frontiers” proceeding – will make expansive amounts of high band spectrum available for wireless services, including next-generation 5G service. This vote will come just nine months after the FCC issued its Notice of Proposed Rulemaking (NPRM) seeking comment on this matter.

    That’s an admirably fast track, particularly given the scope of the proceeding. To get here, the FCC had to evaluate numerous new spectrum bands for expanded wireless operations – a total of more than 10 GHz of new spectrum – and consider appropriate service rules authorizing mobile operations in those bands. These rules include a combination of licensed use, a commercial-to-commercial shared access regime, and unlicensed use, as well as provisions to protect incumbent federal government uses in some bands.

    NAB commends the Commission for moving with such speed to lay the groundwork for the next generation of wireless services. We hope the Commission will move at least as quickly when it comes to the next generation of television service. In fact, the Next Generation TV proceeding should be much easier; the Commission does not need to authorize new spectrum sharing regimes or provide broadcasters with additional spectrum.

    The key lesson from the Spectrum Frontiers proceeding that should guide the Commission in the Next Gen TV proceeding is that flexibility is key. The Commission’s approach has been to “promote a flexible regulatory environment for the next generation of wireless services.”[1] The FCC stated that its goal was “to develop flexible rules that will accommodate a wide variety of current and future technologies.”[2] The FCC should take a similar approach towards Next Gen TV service.

    The Next Gen TV proposal before the Commission asks it to approve only a new transmission standard. This will ensure that broadcast television licensees have the flexibility to offer services and features the market demands, and will avoid bogging the Commission down while additional layers of the service are defined. In the Spectrum Frontiers proceeding, the Commission noted that it did “not intend to define what qualifies as ‘5G’,” and that standards bodies were still developing requirements.[3]

    5G’s nascent status has not prevented the Commission from moving forward in the Spectrum Frontiers proceeding, and it shouldn’t stop the Commission from moving forward with authorizing Next Gen TV. In fact, the Commission emphatically rejected calls for delay until more was known about how or whether mobile services would develop in higher bands, stating that such “delays could affect the United States’ leadership in mobile communications and hurt consumers.”[4] Similarly, delays in approving voluntary use of a new television transmission standard could affect U.S. leadership in broadcast television and deprive consumers of new features and services.

    NAB and individual broadcasters have asked the FCC to issue an NPRM by October 1 proposing rules for the voluntary use of the Next Gen TV transmission standard. If the Commission can meet that goal, and there is no reason it would be unable to do so, a nine-month benchmark would have the Commission issuing final rules allowing broadcasters to transmit using the new standard no later than July 2017 – a fitting anniversary of the 5G action the FCC will take tomorrow. Just one year from now, the Commission should be in the admirable position of having laid the foundation for the future of both the wireless and television industries.

    [1] Use of Spectrum Bands Above 24 GHz For Mobile Radio Services, Notice of Proposed Rulemaking, FCC 15-138, ¶ 1 (Oct. 23, 2015).

    [2] Id. at ¶ 3.

    [3] Id. at ¶ 1, n.1.

    [4] Id. at ¶ 24.

     
  • Rick Kaplan 2:18 pm on June 30, 2016 Permalink  

    Auction 101: Setting Prices in the Reverse Auction 

    On Wednesday, bidding in the reverse component of the first stage of the broadcast spectrum incentive auction came to a close. As promised, the Federal Communications Commission (FCC) promptly released the total clearing costs needed to close the auction at the initial clearing target. While we wait for the beginning of the forward auction, we thought this might be a good time for a refresher on how the FCC is conducting the auction and what role broadcasters play.

    The FCC enthusiastically marketed the auction to broadcasters throughout the country. It made the application process as straightforward as reasonably possible for interested stations. And it set opening bid prices – the maximum amount stations could ever get for participating in the auction – at very attractive levels to encourage broadcasters to enter the auction. As the FCC has acknowledged, robust broadcaster participation in the auction allowed the FCC to set a high spectrum clearing target of 126 MHz.

    Broadcasters currently operate on ultra-high frequency (UHF) channels 14-51. Clearing 126 MHz will require the FCC to buy enough stations to fit remaining UHF broadcasters in channels 14-29.[1] During the reverse auction, prices offered to broadcasters dropped each round by a predetermined percentage set by the FCC. Stations merely decided whether they were still interested in the auction at the new – lower – price the FCC presented to them, or if they wished to drop out of the auction entirely. At no point could broadcasters manipulate the price they were offered or control which stations the FCC would select as winners.

    Prior to each new round, the FCC ran a simulation to see if they could repack those broadcasters remaining in the auction to new channels in the reduced television band. If a station could be repacked to a new channel, its price continued to drop. If a station could not be repacked – there was nowhere to put it while still clearing 126 MHz – then the FCC froze that station at its current price. Prices for other stations continued to drop until those stations too were needed by the FCC, the stations dropped out of the auction or prices reached zero in the final round of the auction.

    To be clear, then, if a station dropped out of the auction, it received no money. And that station can’t come back and try again. It will not be eligible to participate in a subsequent stage of the auction, if one is needed. Meanwhile, a station that was frozen and is a provisional winner didn’t set its price, it’s simply in line to receive what the FCC was offering when the FCC determined that it didn’t have anywhere left to put the station in the new television band. Broadcasters didn’t have price leverage; they couldn’t “demand” a certain price or “hold out” for a certain price. Nor did they set the opening price, as noted above. Rather, the price they were offered dropped every round unless the FCC needed them to achieve the 126 MHz band plan. In short, the FCC set opening prices, set the level by which those prices would drop and selected which stations would be winners.

    Because there seems to be some confusion on this point, we’ll repeat it. Broadcasters had no levers to drive up prices in the auction. They could not “hold out.” They had no ability to force the FCC to pay a higher price than the FCC was offering. The only options available were stay in or drop out, and the only way a station could win (provisionally) is if the FCC determined it needed that station to meet its current clearing target. At that point the station’s price was frozen.

    We understand the incentive auction is quite complex given all of the moving pieces. That is hardly an excuse, however, for parties to be so far off the mark as to claim that broadcasters somehow held out or drove up the price of spectrum. That view represents a fundamental misunderstanding of the auction and maligns the work of the Commission staff as well as the positive role broadcasters have played in this process.

    Now the wireless industry is on the clock and we’ll see what kind of demand they truly have for spectrum.

    [1] This is an oversimplification, as the FCC can put a limited number of stations in the new wireless portion of the band, from channels 30-51.

     

     
  • Rick Kaplan 10:21 am on March 29, 2016 Permalink  

    It Begins 

    Today is an exciting day at the Federal Communications Commission (FCC), with the official start of the broadcast spectrum incentive auction. And much is at stake – a successful auction means that spectrum will be repurposed, a huge amount of money will change hands and technology and spectrum policy will be shaped for the future. All of these things hang on the outcome of a brave and untested idea dreamed up by economists and enabled by engineers.

    The FCC staff deserves considerable credit for getting us to this point. As the idea of an incentive auction was explored in detail, challenges arose and the Commission’s staff grappled with them in earnest. To be sure, not every solution can be elegant and there remains disagreement about whether each one will prove successful, but the FCC staff is now able to push the “start” button and the initial spectrum clearing target will be revealed.

    A good deal of credit also goes to former FCC Chairman Julius Genachowski, who first presented the incentive auction concept as part of the National Broadband Plan, to Chairman Tom Wheeler, who has led the charge to dot the auction’s i’s and cross its t’s, and to all of the commissioners who have engaged in a difficult process to bring to light the key policy decisions at stake along the way.

    Even on this momentous occasion, we should be mindful that our work is only partially complete. The dedicated FCC staff is now turning its attention to one of the most complex processes of relocating incumbent spectrum users in its history. We must also recognize that the auction will harm low power television and translator services. This will affect many viewers across the country who rely on those services for critical public safety news and information. Broadcasters will continue to work with the Commission to ensure that damage to these and other critical broadcasting operations is minimized.

    What happens next is anyone’s guess, but the FCC staff can certainly be proud that they worked incredibly hard under tight timelines to bring us to the doorstep of this exciting auction.

     
  • Rick Kaplan 12:08 pm on September 23, 2015 Permalink
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    Revisionist History, Cable Goodies and Still Nothing for Consumers 

    On Tuesday, Federal Communications Commission (FCC) Chairman Tom Wheeler’s Media Bureau chief, Bill Lake, took to the blogosphere in an attempt to reverse the palpable lack of enthusiasm for the Chairman’s plan to eliminate the broadcast TV exclusivity rules. Unfortunately, Mr. Lake’s written defense of the Chairman’s proposal is fatally flawed and obscures the larger questions surrounding the Chairman’s recent efforts.

    There are many reasons why Chairman Wheeler’s self-generated push to eliminate the Commission’s network and syndicated exclusivity rules is misguided. As the National Association of Broadcasters (NAB) has detailed in numerous filings, the exclusivity rules enhance localism without granting new substantive rights. They also create a significant marketplace efficiency by preventing protracted and expensive litigation over private marketplace deals. They are part of a larger comprehensive system developed and reworked by Congress over the last several decades and serve as an important deterrent against cable operator mischief of the sort that industry typically reserves for its customers.

    Since the Chairman first circulated his proposal in August, broadcasters across the country have reminded the FCC that Congress already has in place a carefully constructed framework that includes exclusivity protections at its core. As Mr. Lake acknowledges for the first time, Congress, the White House and the FCC forged an agreement among stakeholders in 1971 that would lead to cable’s compulsory license, content owners’ compensation and broadcasters’ bargained-for exclusivity protection at the FCC. Notably, the cable industry received a hefty government subsidy in the copyright deal, as the government and not the market continues to set the rates cable companies pay for the underlying content they re-sell to consumers.

    Mr. Lake argues that despite this agreement, subsequent events nullify the need for the FCC to uphold the part of the system that promotes local broadcast TV service. Specifically, Mr. Lake asserts that because Congress instituted the retransmission consent regime in 1992, there is no longer a need for the FCC to preserve local exclusivity. The thinking goes that broadcasters need not worry about the importation of distant signals because retransmission consent makes it more difficult for cable companies to obtain the rights to import signals from third-party stations.

    This argument, however, is not only inaccurate, but also completely misses the point. When enacting the retransmission consent regime in 1992, Congress stated expressly:

    [T]he Committee has relied on the protections which are afforded local stations by the FCC’s network non-duplication and syndicated exclusivity rules. Amendments or deletions of these rules in a manner which would allow distant stations to be submitted on cable systems for carriage or local stations carrying the same programming would, in the Committee’s view, be inconsistent with the regulatory structure [adopted in the 1992 Cable Act].

    Contrary to Mr. Lake’s central claim, Congress was well aware of the importance of the exclusivity rules when it granted retransmission consent rights to broadcasters. The “major piece[] of the intervening history” (i.e., the 1992 Cable Act) that Mr. Lake identifies in his blog itself recognized that exclusivity is part and parcel of the copyright/retransmission consent framework. It is awfully difficult to claim that an intervening event fundamentally altered an initial deal when the authors of that event stated that they were incorporating all of the elements of the original agreement.

    But even if those pages of intervening history were lost, one could simply look to the satellite reauthorization bill Congress passed just last year to see how hollow Mr. Lake’s claim rings. In reauthorizing the satellite distant signal license, Congress yet again preserved local exclusivity for satellite viewers. Therefore, even if somehow one could claim that Congress didn’t understand the potential impact of retransmission consent on exclusivity in 1992, no one can plausibly claim that Congress was so blind as to miss the implications of local exclusivity in 2014. And does Mr. Lake seriously think that Congress meant to create a mechanism for broadcasters to enforce their exclusivity rights against satellite, but not against their cable competitors?

    Moreover, missing in all of this historical rewriting is that neither the Chairman nor Mr. Lake even attempt to suggest that consumers may benefit from the Chairman’s proposal or that eliminating the rules will alleviate some burden that the Commission currently faces. Their central premise is simply that the rules are “old” and “unnecessary.”

    As NAB has highlighted elsewhere, if age were the measure of a regulation’s validity, why is the Chairman wasting his time with the relatively recent exclusivity rules, when the World War II-era media ownership rules are comparatively low-hanging fruit? The beauty of the Commission’s oversight of the ownership rules is that, unlike the exclusivity rules, Congress actually requires the FCC to review them every four years to see if they are still operating in the public interest. This raises the question of why consideration of the exclusivity rules has vaulted ahead of a meaningful review of the ownership rules, which have been subject to an ongoing proceeding since 2009 with no end in sight.

    It can be a tough pill to swallow to pull back a proposal one has made to his or her colleagues. In this case, however, it appears that no one but the Chairman and Mr. Lake believe that eliminating the exclusivity rules is a good idea, or even, at best, should be a Commission priority. Even the American Cable Association (ACA) only supports the change insofar as it leads to the Commission outlawing exclusive broadcaster arrangements altogether. With history and common sense as a guide, it’s time to shelve this proposal and move on to more important matters that preserve localism, competition and diversity for the benefit of consumers.

     
  • Rick Kaplan 11:52 am on July 22, 2015 Permalink
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    You Want Breaking News Coverage? Then Mind the Gap 

    When was the last time you turned to TV to follow details of breaking news as it unfolded – the real, on-the-ground coverage from reporters in the field? In the first half of this year alone, we learned firsthand about the civil unrest in Baltimore following the death of Freddie Gray, followed with bated breath the manhunt throughout local communities in upstate New York for two convicted murders who had escaped from prison, watched crowds of Americans gather on the South Carolina State House grounds to see a flag come down and heard from those rallying on the Supreme Court steps from local TV reporters at the scene.

    If you care about live, on-the-ground coverage of events that are shaping our world – then you care about something called the duplex gap.

    Last year, the FCC announced it would no longer reserve two channels in each market within the TV band for critical wireless microphone use, which is essential for broadcaster coverage of breaking news and emergencies. Instead, the FCC decided to set aside space for wireless microphones in the duplex gap, a vacant lot of spectrum located within the wireless band. Wireless mics’ new home in the duplex gap was by no means a perfect solution, but it was all the FCC said it could manage, and broadcasters have done their best over the past year to start figuring out exactly how to make these new digs work.

    But just as mics were getting ready to settle into their new home, the FCC just last month said there was one more catch: this real estate would not be available everywhere, as the FCC will place TV stations themselves in the duplex gap in certain markets after the spectrum auction. When a TV station sets up shop in the gap, no other service can use it, including the mics used by reporters rushing to cover tragedy, weather emergencies and other critical events on the ground.

    This was quite a change from the FCC’s initial promise, so many parties, including FCC commissioners, asked Commission staff to explain why this about-face was necessary. In producing its information, the staff revealed that it had only done an analysis of one possible scenario for each of three spectrum recovery targets, but staff argued that data showed that in certain markets the FCC needed to put stations in the duplex gap. Chairman Wheeler has said that the number of affected markets would be no more than six. This proposed change is very bad news for newsgatherers who rely on wireless mics to report the news, for viewers who depend upon local and national reporters to get in the middle of a story and public safety officials, who work hand-in-hand with local broadcasters to keep the public and first responders safe.

    But the FCC staff is insistent on undoing the original compromise and broadcasters are now in a pickle. We support the auction and want to see it succeed. But we also know we need wireless microphone technology to ably cover the news and keep our communities safe.

    So yesterday NAB proposed a new compromise (or “recompromise”) – one that is far from ideal for us – but one that at least holds the Commission to its (new) word, and asks that no more than one station in each of six markets (if necessary) are put in the duplex gap to avoid widespread elimination of wireless microphone use to cover local news. Six markets is damage enough, especially if one of them is the second-largest. But if that’s the number, then let’s agree to it, figure out alternative solutions in those markets for wireless mics and go forward.

    If the answer, however, is that it’s potentially more than six markets, the FCC has a major credibility problem. If the goalposts move again, we should all be wary of what’s in store for this auction. For it to be successful, we all need to be able to trust the FCC.

    Broadcasters have met the FCC far more than halfway. Now let’s put it in ink and move on to the auction and better solutions for broadcasters, their viewers and public safety.

     
  • Rick Kaplan 11:09 am on November 17, 2014 Permalink  

    Let’s Not Fumble the Over-the-Top Opportunity 

    FCC Chairman Tom Wheeler recently circulated a proposal to his colleagues that recommends classifying certain over-the-top providers as multichannel video programming distributors (MVPDs). The proposal aims to stimulate competition in the increasingly consolidated pay-television market.

    NAB agrees these are worthy goals. Emerging over-the-top distribution provides an opportunity to unleash new competitive alternatives while preserving and enhancing localism and diversity in the Internet age. Broadcasters support the deployment of new and innovative video services that have the potential to boost competition to the benefit of consumers. We are committed to providing our highly sought after and unique blend of local and national content on any device wherever Americans want and need access.

    Broadcasters are doing much of that innovation on their own today. ABC developed one of the original iPad apps, now referred to as “Watch ABC,” giving consumers a new avenue to great content from the earliest days of the tablet. Fox and Univision have announced plans for similar services, as has NBC with its NBC Now Service. Syncbak, a smartphone and tablet app developed by broadcasters, provides local viewers access to broadcast television through Internet-enabled devices. And just recently, CBS announced CBS All Access, its new over-the-top service, experimenting with new ways for consumers to access CBS stations from around the country. These are just a few examples of recent innovations that have furthered consumer access to broadcast content online, and the fact remains that local broadcast stations have the most viewed local content on the Web.

    The FCC’s new inquiry, while intriguing, does have its challenges. It will take an open-minded and thoughtful approach to address the complex web of legal, policy and practical implications inherent in applying facilities-based rules to over-the-top providers. It is therefore somewhat concerning that, in recent public comments, Chairman Wheeler appeared not to appreciate these complexities:

    “By facilitating access to [broadcast TV] content, we expect Internet-based linear programming services to develop as a competitor to cable and satellite. Consumers will be able to buy the channels they want instead of having to pay for channels they don’t want. As you know, a startup called Aereo has already proposed doing this, but the broadcasters were able to stop it in court, in part because of the old rules of the FCC. Aereo wasn’t the reason for the new rules, but the idea that entrepreneurs should be able to assemble programs to offer consumers choices is something that shouldn’t be hindered by the FCC.”

    First, by asserting that “the broadcasters were able to stop [Aereo] in court,” the Chairman conveniently ignores that broadcasters were not the only ones to object to Aereo’s illegal operation: the Justice Department did as well. As the Solicitor General argued to the Supreme Court, “[Aereo’s] unauthorized Internet retransmissions violate… statutory requirements and infringe [broadcasters’] public-performance rights under [the Copyright Act].” The Obama Administration was therefore as responsible for “stopping” Aereo as broadcasters were.

    Second, the Chairman misidentifies not only who, but what actually stood in the way of allowing Aereo to continue to misappropriate content. It wasn’t “the old rules of the FCC.” It was a statute: the Copyright Act. The Act is designed to ensure that content creators are fairly compensated for the work they develop, and derives from rights explicitly prescribed by the U.S. Constitution. If the Aereos of the world could simply take what local stations and networks pour billions of dollars into producing and turn around and charge consumers for it – especially with no added value – content creators would have little or no incentive to produce that work. That is why the Supreme Court found that Aereo “infringe[d]” on the networks’ exclusive right” under the Act. Thus, even if the Chairman could unilaterally change the FCC’s “old rules” today, Aereo’s business model would still violate the law.

    Third, simply because someone introduces a new service, he or she is not suddenly an “entrepreneur that shouldn’t be hindered by the FCC.” Shouldn’t it matter to the FCC, at a bare minimum, whether content is distributed legally or illegally? Aereo was innovative only in its creative attempt to skirt the copyright laws, not, for example, in the quality or speed of its streaming service. Let’s not forget that Aereo is only now approaching the FCC to obtain MVPD status, having waited until after the Supreme Court made clear that its attempt to charge consumers without compensating rights holders plainly violated the law.

    NAB supports the FCC examining how best to ensure that online entities can offer competitive alternatives. It is an important inquiry. While it presents exciting opportunities for consumers, however, without the proper level of humility and recognition of all of its challenges, it could lead to serious pitfalls. Tough questions loom, including how to handle a deluge of new potential MVPDs, how to avoid further homogenizing news, weather, sports and entertainment, and how to prevent stifling new business models outside of the MVPD context that could further enhance consumer welfare. These are all essential ingredients that must be in the mix. And yes, the law matters.

    The FCC has a terrific chance to get this challenging and novel proceeding right. If it does, we are likely to see increased competition, localism and diversity. But a healthy respect for the law and the incentives it creates (and prevents) is essential at the outset. We look forward to working with the FCC as it forges ahead in this unchartered territory.

     
  • Rick Kaplan 1:10 pm on September 10, 2014 Permalink  

    Sorry to Disappoint, But NAB Is Playing It Straight Up 

    FCC Chairman Tom Wheeler certainly traveled a great distance simply to accuse the NAB yesterday in Las Vegas of seeking to delay or derail his upcoming broadcast spectrum incentive auction. With all due respect Mr. Chairman, I fear that your comments are not only wrong, but will create the very uncertainties and distractions you say you want to avoid.

    At both the CCA and CTIA wireless conferences, the Chairman seemed overly preoccupied by NAB’s lawsuit to overturn certain targeted elements of the Commission’s incentive auction order. Among other related comments, in his prepared remarks the Chairman noted that, if NAB “w[as] to win, the effect would be to delay the auction, notwithstanding NAB’s claims to the contrary.”

    The NAB “claims” to which the Chairman refers is a blog I recently wrote that details everything NAB is doing to have our legal concerns addressed as soon as possible. NAB did not file a petition for reconsideration first, as T-Mobile and Sprint did, which would have given us another layer of process behind which to hide if we really were aiming for delay. We did not wait until the last minute in the 60-day period during which legal challenges could be filed; we filed on day one. And we affirmatively sought and were granted expedited review of our lawsuit to ensure that it moved rapidly. Hard to assail our efforts to move as expeditiously as possible.

    What the Chairman was really saying, however, is that, if NAB wins, then NAB will have caused the auction to be delayed. I guess in one sense that is correct, as the court finding that the FCC acted unlawfully would necessitate a reworking of the rules in question. But if the court finds in our favor, isn’t it the FCC that is responsible for the delay? NAB has laid out why we believe the FCC has acted outside the law in a few distinct areas. We have even proposed numerous compromise solutions that seek to help the FCC achieve what it wants while not harming broadcasters or skirting the law. So if the FCC insists on seeing the litigation through and loses, then it has no one else to blame but itself. Don’t pin that on us.

    Look, I’ve been around a bit and I get it. It’s easy to blame the broadcasters when everyone else is chomping at the bit to get our spectrum – whether free (“unlicensed”), paid for in full (AT&T/Verizon Wireless) or at a discounted, government-subsidized rate (T-Mobile, Sprint, DISH).  It’s certainly easier to point the finger at someone else rather than ponder other potentially misguided policy decisions that have undermined trust with the very industries needed to participate in the auction. Easier than blaming the rocky net neutrality proceeding which has sucked nearly all of the air out of the auction room and scared wireless carriers into focusing solely on whether they will be subject to a bevy of new government regulation. Easier than blaming the frayed trust with broadcasters as a result of forcing them to unwind scores of sharing arrangements that had only recently been expressly blessed by the Commission. Easier than blaming the fact that, until just recently, senior FCC leadership has shown little interest in collaborating with broadcasters who are interested in continuing to serve their communities. And it is definitely easier than blaming the fact that would-be spectrum sellers still have no idea what kind of return they can reasonably expect in the auction.

    Despite all of these unfortunate self-created obstacles, we at NAB still believe this auction can be a success. We strongly recommend avoiding further finger pointing and getting to the table to try to find the best solutions for all stakeholders. Inventing rumors of wireless carrier disinterest or about NAB “elements” that don’t like the auction is a waste of everyone’s time. NAB has worked very well with all other industries in this proceeding, even when we’ve disagreed with them. We all have an auction to run. NAB is ready. We are willing. But it would sure help if we had a partner at the helm of the FCC.

     
  • Rick Kaplan 2:49 pm on August 18, 2014 Permalink  

    Getting the Auction Back On Track 

    NAB today filed suit against the Federal Communications Commission (FCC) in federal court to challenge certain elements of the Commission’s May 2014 incentive auction order, which was published in the Federal Register last Friday. The order, approved by a sharply divided Commission, establishes the “framework” for the FCC’s first-ever voluntary broadcast television spectrum incentive auction. That framework improperly diminishes key broadcaster protections embodied in the Middle Class Tax Relief and Job Creation Act of 2012 (“Spectrum Act”), and undermines the overall efficacy of the auction. Unfortunately, the Commission’s action has left NAB with no choice but to seek legal redress.

    Before explaining the substance of some of our objections, let me be clear about what our petition is not about: delay. NAB has never advocated for – in words or deeds – any undue delay in the auction. Where we’ve identified concerns with the auction or repacking design, we’ve suggested multiple reasonable and expeditious solutions. Consistent with that approach, we have filed our petition at the outset of the 60-day filing window and we will be seeking expedited review. Our aim is to resolve our core challenges as quickly as possible, so the FCC can immediately return to its auction preparations. We believe the court can help us swiftly address our discrete issues.

    The Spectrum Act was hailed largely because it achieves an important balance. On the one hand, it seeks to fuel the commercial wireless industry’s insatiable desire for spectrum. On the other hand, as with the recent DTV transition, the Act aims to protect broadcasters and their viewers in an otherwise unsettling repacking process.

    Broadcasters ultimately supported the auction legislation not because it gave them a chance to get out of the business – even a “successful” auction will only see no more than 15 percent of the 2,200 eligible broadcasters go off the air – but because Congress ensured, with the FCC’s backing, that broadcasters who choose not to enter the fray will not be harmed in the process. While there are many aspects of the legislation that make this point clear, perhaps the simplest and most direct expression of this balance for broadcasters is that participation in the auction is voluntary.

    There are three critical ways in which Congress did its best to ensure that auction participation remains voluntary and protect broadcasters and their viewers during and following the auction. Unfortunately, the FCC’s order is not faithful to these elements, and thus, fails to meet Congress’ mandate.

    First, Congress instructed the FCC to take “all reasonable efforts” to preserve broadcasters’ coverage areas and to allow them to continue to serve the same people they serve today. Unfortunately, the FCC reads this passage as if they must only take “reasonable” efforts to protect broadcasters and their viewers. The FCC believes that Congress left a substantial gulf between “reasonable” and all other kinds of efforts, and therefore Congress developed a fairly low bar for Commission compliance.

    A plain reading of Congress’ direction to the FCC, however, requires it to do all it can to protect broadcasters and the viewers who rely on them. Congress inserted the word “reasonable” simply to give the FCC some measure of flexibility in the unusual case where perfectly replicating a particular broadcaster’s coverage area and population served would jeopardize the success of the entire auction. If that circumstance were to arise, Congress provided the FCC with the flexibility to allow the auction to proceed, even if a small reduction in service area occurred for a particular broadcaster in a particular market. That is the fair equilibrium that Congress desired.

    Second, in an effort to ensure that broadcasters do not have to pay for their forced moves during repacking, Congress established a fund for the FCC to reimburse non-participating broadcasters that the FCC requires to relocate. The reimbursement concept was a key part of the FCC’s pitch to Congress in the run-up to the passage of the Spectrum Act. As former FCC Chairman Julius Genachowski said to broadcasters in a speech at the 2011 NAB Show, in the auction “it’s essential that broadcasters be treated fairly. That means, for example, that broadcasters should be fully compensated for any costs of any channel changes.”

    The FCC incentive auction order, however, does little to ensure that the Commission won’t repack beyond its financial means and that broadcasters won’t get stuck with the bill. Indeed, conservative projections suggest that broadcasters will be out of pocket at least $500 million dollars by the conclusion of the auction and repack. And for what purpose; which broadcasters gain? None. Local broadcasters should not be forced to go out of pocket to help multi-national wireless giants.

    Third, Congress took the unusual step of instructing the FCC on exactly how to compute the broadcasters’ coverage areas and populations served. It specifically stated that the FCC must use the same approach it uses today to evaluate any new station application, called OET-69. The FCC, however, sees Congress’ direction as inconvenient, and thus has made changes to this time-honored methodology (and for purposes of this auction only). The result is that, what Congress assumed to be a constant in the auction process – the methodology for calculating broadcaster coverage areas and population served – now is reducing the coverage areas and populations served for the majority of broadcasters. That methodological change was not part of the deal, and the FCC has improperly and imprudently moved the goalposts from the goal line on which we all agreed. In fact, the OET-69 provision was inserted into the Spectrum Act precisely to avoid this kind of mid-stream resizing.

    The net effect of all of these changes (and others) is that broadcasters are effectively left with an auction that benefits everyone else while harming only them. NAB’s lawsuit is not designed to derail the auction, or even slow it down. We are looking for a mid-course correction that better reflects Congress’ intent and that protects broadcasters and the millions of vulnerable over-the-air TV viewers. We believe strongly that the FCC itself can achieve a better balance. If not, with this litigation we can right the ship that puts more spectrum out in the marketplace while ensuring a vibrant and robust broadcasting service for the American people.

     
  • Rick Kaplan 9:12 am on May 23, 2014 Permalink  

    The Point of Being a Ninja Is to Avoid Attention 

    As my 8-year-old works to navigate the travails of making friends in second grade, one of his most unfortunate emerging strategies has been to do silly things to get his peers’ attention. He took that approach to a new level this week when he spent some quality time with the school principal after dumping chocolate milk out of the school bus window on a dare.

    I was reminded of that incident when, in another second-grade moment, CEA’s CEO Gary Shapiro dumped his chocolate milk out of the window with a silly and misguided missive in The Hill (“Broadcasters’ madness hurting the public,” May 21).

    Mr. Shapiro’s innovative thesis is that NAB “implor[es] the federal government for all sorts of favors while completely ignoring what the public wants and needs.” As Exhibit A, he suggests that broadcasters have “done all [they] can to delay implementation of voluntary spectrum auctions,” and that “the NAB has dragged its feet since the law passed and is seemingly discouraging broadcasters from participating in the auction.” Mr. Shaprio’s Exhibit B is broadcasters’ suit against Aereo, an Internet service that takes free, over-the-air broadcasts and converts and repackages them and sells them to consumers for a fee.

    At the outset, Mr. Shapiro’s high-level thesis is absurd. He conveniently ignores the incredible and life-saving coverage broadcasters recently provided in communities hit hard by severe weather events. I may be way off base here, but I think what the public “wants and needs” is information that helps them stay informed and stay safe. These are services radio and television broadcasters provide across the country on a regular basis, and they are unequaled.

    In fact, if CEA really cared about the public interest, it would lean on its wireless carrier and device members to take the simple step of unlocking the FM chips already in their phones. Then, when the wireless alert system is activated to say “check your local media,” a consumer could simply hit a button and have instant access to a local radio station that provides critical information.

    With respect to the voluntary broadcast spectrum incentive auction, Mr. Shapiro is completely out to lunch. His initial claim, that broadcasters are doing all they can to delay implementation of the auction, has zero basis in fact. Indeed, he does not, and cannot, point to a single instance where NAB has attempted to delay the auction.

    NAB has been constructively engaged in the auction process at least as much as any other entity, and has consistently provided concrete solutions for every problem we have identified. We have faithfully lived up to our public statements that we will do what we can to give the voluntary incentive auction the best chance for success. At the same time, it is essential that the auction remains faithful to Congress’s intent of keeping it voluntary, and NAB will work to ensure that broadcasters who want to remain on the air and continue serving their communities can do so without any repercussions.

    What Mr. Shapiro also overlooks is how NAB played a major facilitating role in what is likely to be a $10-$15 billion auction this year of AWS-3 spectrum. As the FCC scratched its head to figure out how to auction largely valueless unpaired spectrum to meet a Congressional mandate, NAB, along with the Department of Defense worked quickly to develop a sharing framework that enabled the FCC to pair that spectrum. NAB gained nothing from that endeavor. We simply recognized that there was a significant public good to be gained by sharing our spectrum with DoD, and found a way to make it happen. NAB has clearly done its part.

    Mr. Shapiro’s second auction claim, namely that NAB is “seemingly” discouraging broadcasters from participating in the auction borders on libel. How are we “seemingly” doing this? Are we “actually” doing it or “seemingly”? I don’t even really understand his point, beyond its goal of attempting to poison the well with an irresponsible suggestion.

    That comment is akin to us saying that because CEA vigorously opposed basic laws and regulations that made electronics accessible to disabled Americans, “CEA seemingly doesn’t care about Americans with disabilities.” Or that, “CEA’s members seemingly exploit children overseas for cheap labor.” Or that, because its members manufacture millions of shiny new objects that end up polluting our oceans and landfills every day, “CEA seemingly supports devastating the environment.”

    I’m not saying these things are true, but hey, it may seem like they are.

    The other nonsensical point in Mr. Shapiro’s piece is his attack on broadcasters for taking Aereo to court. His argument is that, because broadcasters are supposed to provide their content for free, broadcasters can’t and shouldn’t prevent someone else from taking that content and selling it for profit. That makes no sense and is wholly inconsistent with his own advocacy on behalf of his members. I am confident that his members would not support the notion that they should pour a ton of investment into new technologies only to have their competitors steal it and sell it as their own.

    As Mr. Shapiro knows all too well, there are very good reasons why the law provides copyright and patent protection. Those protections are not merely there to coddle multi-national electronics manufacturers, but to protect the innovations of America’s broadcasters as well.

    NAB has an unofficial internal rule that we only respond to Mr. Shapiro’s comments once for every three or four of his outbursts. This is because, like my second-grader, if you react to something an attention-seeker does, it encourages them to keep doing it. And perhaps this blog is the equivalent of laughing at my son’s milk-scapade. But given the importance of the issues discussed, and the forum in which Mr. Shapiro elected to express his views, we believe it makes sense to correct the record.

    As I explained to my second-grader, there are appropriate and inappropriate ways to get people’s attention. In my son’s case, getting attention from others is best done through his intelligence, thoughtfulness and appropriate sense of humor. In Mr. Shapiro’s case, it’s attempting to stick to the facts, and also taking a good, long look in the mirror before penning another piece in The Hill.

     
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