Broadcaster group worried FCC will limit auction proceeds

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Carriers are expected to spend billions of dollars for the spectrum rights. Some of that revenue will be used to pay-off the TV stations, and the government will use the rest to build a nationwide broadband network for first responders and for deficit reduction.    

The broadcasting group, which is led by former Disney lobbyist Preston Padden, wrote that FCC staffers have said they are drafting strategies to "manage" auction revenue to reduce payments to broadcasters.

"This is not the statutory scheme and is not the way to attract broadcasters to the auction. It is a prescription for a failed auction,” the broadcasting group wrote in its comment.

The group argued that low-power stations and stations with low ratings should not receive any less money for their spectrum than major market stations, even though they are less valuable businesses. The spectrum is worth the same to the cellphone companies, the group argued.

"The wireless carriers will be buying spectrum – not broadcasting businesses," the organization wrote.

The group also warned that limiting the ability of the two largest carriers—Verizon and AT&T—to buy the spectrum would create a "daisy-chain effect," reducing the amount of possible revenue and reducing the interest of broadcasters to participate.

Consumer advocacy groups have urged the FCC to prevent Verizon and AT&T from buying-up all of the TV spectrum at auction, arguing it would further consolidate market power in the top two carriers and stifle competition in the industry. 

Google, Microsoft and some public advocacy groups have urged the commission to set aside some of the reclaimed spectrum for unlicensed use. Unlicensed spectrum can be used by any company for free, and powers technologies such as garage door openers, remote controls and, most importantly, WiFi routers.

But the broadcasting group warned that the additional unlicensed spectrum would be a give-away to big companies and would limit the value of the auction to broadcasters.

"If that's what those companies want, they can bid for it. Instead they want it for free," Padden said in an interview. 

He argued that promoting competition in the wireless industry and setting aside more spectrum for WiFi can be worthwhile policies, but that the FCC should not risk ruining the auction by pursuing competing policy goals.

"If they keep sending these signals that they are going to nickel and dime the broadcasters, then the broadcasters are not going to show up to the auction, then what's the FCC going to do?" Padden asked.

—Updated at 2:46 p.m.