The reverse auction is where broadcasters will bid to voluntarily relinquish spectrum rights in exchange for a portion of the proceeds from the forward auction. Learn about who can participate, what the options are for participating and more.
Eligibility: Who Can Participate in the Reverse Auction
As mandated by the Spectrum Act, the Report and Order states that only full power (commercial and non-commercial) and Class A licensees are eligible to participate in the reverse auction. Licensees of LPTV and TV translator stations will not be eligible to participate. Full power and Class A licensees may bid to voluntarily relinquish spectrum usage rights associated with their station facilities that are eligible for protection in the repacking process. Licensees with pending enforcement matters whose winning bids would result in their holding no broadcast licenses may participate under a streamlined escrow approach that is consistent with current practice in the sales context.
Broadcasters will have four options to participate in the reverse auction, depending on their current channel assignment:
- Bid to relinquish a UHF channel to move to either a high VHF (7 to 13) or low VHF (2 to 6) channel;
- Bid to relinquish a high VHF channel to move to a low VHF channel;
- Bid to relinquish their current channel in order to share a channel with another broadcaster after the auction; or
- Bid to relinquish their license and go off the air.
Each of these options involves different business and strategic tradeoffs, and are designed to make the auction accessible to the widest possible range of broadcaster participants. Of course a broadcaster may choose not to participate in the auction and to continue broadcasting on the same band (UHF, high VHF or low VHF), subject to potential channel reassignment resulting from the repacking process.
Bid Option: Move from UHF to VHF
Under this option, a broadcaster would bid to relinquish its UHF spectrum in the reverse auction, in exchange for a share of auction proceeds plus an assigned frequency in the broadcaster’s choice of either the high-VHF or low-VHF band. The broadcaster would have to determine what it would be worth to move to a high VHF or low VHF channel. While this broadcaster might experience more over-the-air interference operating on a VHF channel, the band change might not affect its cable and satellite viewers at all, depending on how the broadcaster gets its signal to those services’ head ends. Additionally, this broadcaster will still be able to program a full six megahertz of spectrum, including multicast streams. Finally, the FCC will favorably consider post-auction waiver requests from winning UHF to VHF bidders seeking to modify their operations in order to mitigate these over-the-air interference issues.
Bid Option: Move from High VHF to Low VHF
Under this option, a broadcaster would bid to relinquish its high VHF spectrum in the reverse auction, in exchange for a share of auction proceeds plus an assigned frequency in the low VHF spectrum. The broadcaster would have to determine what it would be worth to move from high VHF to a low VHF channel. While this broadcaster might experience more over-the-air interference on a low-VHF channel, the issue might not affect its cable and satellite viewers at all, depending on how the broadcaster gets its signal to those services’ head ends. Additionally, this broadcaster will still be able to program a full six megahertz of spectrum, including multicast streams. Finally, the FCC will favorably consider post-auction waiver requests from winning high-VHF to low-VHF bidders seeking to modify their operations in order to mitigate these over-the-air interference issues.
Bid Option: Channel Sharing
Under this option, a broadcaster would relinquish its entire six-megahertz channel in the reverse auction in order to share another channel (and its transmission facilities) in exchange for a share of the auction proceeds. Each channel sharing broadcaster must retain the ability to broadcast one standard definition stream of programming on the shared six megahertz channel. A channel sharing bidder may propose a community of license change if it cannot satisfy signal coverage requirements from the shared transmitter site, so long as the new community meets certain allotment priorities specified in the Report and Order, and is located in the same Designated Market Areas (DMAs). More information about channel sharing can be found on the channel sharing page.
Bid Option: Go off the air
Under this option, a broadcaster relinquishes its license and goes off the air in exchange for a share of the auction proceeds. Under this option the broadcaster would be responsible for winding down all business relationships and any necessary deconstruction of its facilities.
Reverse Auction Bidding Process
The Commission adopted a descending clock format for the reverse auction. In each bidding round, stations will be offered prices for one or more bid options and will indicate their choices at these prices. The prices offered to each station for options will be adjusted downward as the rounds progress in a way that accounts for the availability of television channels in different bands in the repacking process. “Intra-round bidding” will enable bidders to indicate price levels (between the opening- and closing prices in a round) at which they would like to either choose different bid options or drop out of the auction and remain in their home bands. A station will continue to be offered prices for bid options until the station’s voluntary relinquishment of rights becomes needed to meet the current spectrum clearing target. When all remaining active bidders are needed in this way, the reverse auction for the stage will end. If the final stage rule is satisfied in that stage, then the active bidders are winning bidders, and the price paid to each will be at least as high as the last price it agreed to accept.
Confidentiality of Potential Reverse Auction Bidders
Consistent with the Spectrum Act, the Commission will protect the identity of licensees that apply to participate in the reverse auction. Specifically, the Commission will maintain the confidentiality of information submitted by all licensees that apply to participate until the results of the reverse auction and the repacking process are announced. The Commission will maintain the confidentiality of information from applicants that do not become winning bidders for an additional two years. Confidential information will include licensees’ names, channels, call signs, facility identification numbers, network affiliations, and any other information necessary to protect licensees’ identities.