Wireless giants await auction as customers burn through data plans

A multi-billion dollar auction of the nation’s airwaves has been pushed back a year, a delay the Federal Communications Commission is chalking up to legal opposition from broadcasters.

The change of schedule could throw a wrench into one of the Obama administration’s top tech priorities, though industry groups hope the setback is only temporary.

“We are confident we will prevail in court, but given the reality of [the court] schedule, the complexity of designing and implementing the auction, and the need for all auction participants to have certainty well in advance of the auction, we now anticipate accepting applications for the auction in the fall of 2015 and starting the auction in early 2016,” auction task force chairman Gary Epstein wrote in a blog post on Friday.

“Despite this brief delay, we remain focused on the path to successfully implementing the incentive auction.”

The complicated two-step auction will involve the FCC buying up spectrum licenses from TV broadcasters and then reselling them to wireless companies like AT&T and Verizon, which are hungry for the resources to beam videos, games and other data-heavy applications to cellphones and tablets.

The auction, originally scheduled for the middle of next year, was mandated by Congress and is expected to generate billions of dollars for the federal government to pay down debt and build out a national broadband safety network for emergency communications.

Given the complexities of the auction, the delay is not surprising, former FCC commissioner Robert McDowell told The Hill.

“Congress handed the FCC literally the most complex spectrum auction in world history,” said McDowell, who is now a partner at the Wiley Rein law firm. “It has a lot of moving parts, there are a lot of highly complex technical issues involved, and the FCC is prudent to try to get it right rather than do it fast.”

Earlier this year, broadcasters sued the FCC over technical matters involving the way that the commission counts how many viewers each TV station has, a metric that they feared could end up shrinking the footprint of stations after the auction.

Broadcasters also want more money to compensate stations that decide not to sell their airwaves but nonetheless are required to repackage their signals after the auction and shift to a new consolidated channel. Without additional FCC funds, broadcasters could be on the hook for at least $500 million out of their own pocket, they predict.

“Local broadcasters should not be forced to go out of pocket to help multi-national wireless giants,” National Association of Broadcasters executive Rick Kaplan wrote.

The first briefs in that lawsuit aren’t due until January, however, with a decision unlikely until next summer.

A spokesman for broadcasters denied that the lawsuit was cause for the delay, but said it is important for the FCC “to get the auction done right [rather] than right now.”

“We look forward to a speedy resolution of our legal challenge and a successful auction that preserves access to free and local TV for every American," National Association of Broadcasters spokesman Dennis Wharton said in a statement.

Other industry groups said they are hopeful that the latest delay would be little more than a minor setback.

“While any delay in spectrum auctions is unfortunate, we appreciate the thoughtful focus the FCC has brought to this complex auction to ensure it is conducted properly to the benefit of all Americans,” said Scott Bergmann, the vice president of regulatory affairs at CTIA-The Wireless Association, a trade group that represents major phone companies and device manufacturers.

“When the auction is held, mobile companies will have their checkbooks ready to participate in this critical auction that will be key to our nation’s wireless future,” he added. 

The head of rural telecommunications group the Competitive Carriers Association agreed that the auction is “still on track, even with the slight delay.”

But if the broadcasters win, the court could order the FCC to go back to the drawing board with its rules, which could hold up the auction even longer.

Still, it’s unclear how the delay will affect the decision-making of broadcasters. The FCC’s auction won’t be a success unless they voluntarily decided to sell spectrum.

“The question is, the longer you wait, is that going to create incentives for the broadcasters to increase participation or decrease participation?” said Lawrence Spiwak, the president of the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

“We don’t know.”