Analyst projections for incentive auction revenue range from $30 billion to $60 billion because of differing evaluations of participation in the forward auction from wireless carriers and new entrants, financial analysts and auction watchers told us. Almost as soon as the FCC issued a public notice Friday (see 1604290048) saying the auction would seek to clear the maximum amount of TV station spectrum the commission had been targeting, 126 MHz, stock and other analysts started emailing investors their estimates for the total auction proceeds. The wide range of estimates is due to multiple factors that are subject to change until bidding is done, said analysts in interviews Tuesday.
Monty Tayloe
Monty Tayloe, Associate Editor, covers broadcasting and the Federal Communications Commission for Communications Daily. He joined Warren Communications News in 2013, after spending 10 years covering crime and local politics for Virginia regional newspapers and a turn in television as a communications assistant for the PBS NewsHour. He’s a Virginia native who graduated Fork Union Military Academy and the College of William and Mary. You can follow Tayloe on Twitter: @MontyTayloe .
Though the ATSC 3.0 transition plan has gotten a favorable reception from some broadcasters and FCC Chairman Tom Wheeler (see 1604200051), questions abound about how broadcasters transitioning to the new standard will interact with pay-TV providers and smaller broadcasters, broadcast and cable attorneys told us last week.
Comcast's recent announcement that it would include set-top box functionality in some Samsung smart TVs (see 1604200047) validates the FCC set-top proposal, agency Chairman Tom Wheeler said at a news conference after the commission's open meeting Thursday. Comcast “is proving our point,” he said, since the arrangement involves a third-party device performing the function of a set-top. That comparison is specious, since Comcast and Samsung were able to privately negotiate that deal, and work out stipulations about respecting copyright and data and similar concerns, Commissioner Ajit Pai said in a subsequent news conference. Since there would be no such arrangements under the FCC proposal, it would be “like the wild West,” Pai said. Wheeler said the FCC proposal would allow all companies to accomplish what Samsung and Comcast did, and keep the deal from being withdrawn. Comcast has made similar arrangements in the past, but it didn't lead to change in the market, he said. “What Comcast giveth, Comcast can taketh away,” he said. “We’re glad that Chairman Wheeler has noticed that the marketplace is already producing real technology solutions” for watching pay TV without a set-top, emailed the Future of TV Coalition. “But these market-driven, app-based solutions bear no resemblance to the sweeping, Google-backed mandate he has proposed.” Comcast's deal with Samsung involves an app that is very different from what the FCC is proposing, a pay-TV industry official told us. The Samsung device won't have any ability to change Comcast's user interface or advertising, the official said. The “groundswell” of opposition should persuade Wheeler that the FCC to “take some time” instead of “barreling ahead,” Pai said. Comcast didn't comment.
The FCC is expected to release a spectrum clearing target for the incentive auction before the end of this week, numerous broadcast attorneys and industry officials told us. Many broadcast officials now expect the number to be relatively high, such as 114 or 126 megahertz. Those predictions are based on an expected high level of broadcast participation and on FCC Chairman Tom Wheeler's comments at the NAB Show (see 1604200051), where he dwelled on the incentive auction going into multiple stages. Wheeler also said that the clearing target would be announced before the end of the month, and some officials told us they expected an announcement at Thursday's FCC meeting.
The director of the FTC Consumer Protection Bureau weighed in Friday in FCC docket 16-42 on FCC-proposed changes to rules for set-top boxes, alongside comments from pay-TV carriers, programmers, and advertisers. Set-top proposal opponent the Future of TV Coalition and proponent Consumer Video Choice Coalition filed thousands of citizen comments on the matter. Consumer Protection Bureau Director Jessica Rich didn't weigh in either way on the merits of the FCC plan but commented on the possibilities for enforcing privacy rules on third-party set-top makers, in a letter some industry officials said strengthened the case for the FCC proposal and others characterized as staking out a jurisdictional claim.
LAS VEGAS -- ATSC 3.0 may have been the belle of the ball at the NAB Show (see 1604200051), but some large broadcasters and networks, most notably CBS, had reservations about the new standard and NAB's support of a petition for FCC authorization of ATSC 3.0's physical layer (see 1604130065), broadcasters, attorneys and other industry officials said in interviews last week. Those misgivings are believed to stem from the uncertainty of the undertaking, the expense and its possible effects on the network/affiliate dynamic, they said. They are part of the reasoning behind ATSC 3.0's voluntary transition plan, they said.
LAS VEGAS -- ATSC 3.0 will be put out for comment before the end of the month, and incentive auction watchers “should expect” that it could take multiple auction stages to complete the auction, said FCC Chairman Tom Wheeler during Q&A at the NAB Show Wednesday. Broadcasters and broadcast attorneys watching the speech called Wheeler's remarks on the new standard (see 1604180058) encouraging. Attendees interpreted his comments on the auction many different ways, from being a signal that a high clearing target is likely, to a warning to manage expectations. “This is not a one and done activity,” Wheeler said of the auction. "We will do it again and again for as long as it takes for the market to work."
LAS VEGAS -- The FCC should hold a summit of incentive auction stakeholders to plan the repacking process, Commissioner Ajit Pai said Monday at one of several panels on the incentive auction at the NAB Show 2016. Pai praised the idea as a way to resolve the repacking process, which wireless and broadcast industry panelists agreed is extremely complex. “We can't embrace an every-broadcaster-for-itself policy in the repacking,” Pai said. Panelists from NAB and CTA also said Monday that the repacking is complex, speaking about the effects on the industry if the auction were to enter into a second stage after failing to meet its initial clearing target. Since the FCC is required to choose the highest amount of spectrum it believes it can get as a clearing target, some believe that a second stage “will probably happen,” Wilkinson Barker attorney Jonathan Cohen said.
LAS VEGAS -- Third-party set-top boxes having the capacity to strip out or overlay the advertising in a pay-TV content stream with new, different ads shouldn't concern opponents of the FCC's set-top box proposal because market forces will prevent abuse, TiVo Chief Technology Officer Joseph Weber said Monday during a contentious panel at the NAB Show.
LAS VEGAS -- NAB doesn't expect opposition at the FCC to the joint petition for approval of the ATSC 3.0 next-generation broadcasting standard, NAB CEO Gordon Smith told us at the NAB Show after his keynote Monday. "We have no reason to believe they are opposed in any way." The FCC "has a choice before it," Smith said during the speech, praising the standard's voluntary transition plan. "It is our job as your association to make sure you have choices for the future," Smith told the NAB Show crowd. "It is not our job to make those choices."