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.
Eligibility: Who Can Participate in the Reverse Auction
The Spectrum Act states that only full power and Class A commercial and noncommercial licensees are eligible to participate in the auction.
The Notice of Proposed Rulemaking proposes to allow all full power and Class A broadcast television licensees with valid licenses to participate in the reverse auction, regardless of pending license renewal applications or complaints. The Notice also seeks to identify processes that would allow us to resolve complaints efficiently while enforcing broadcasters’ compliance with their legal obligations.
Broadcasters would have at least three options to participate in the auction:
- participate and bid to give up all rights to their channel but move from UHF to VHF and remain on the air;
- participate and bid to give up all rights to their channel but share a channel with another broadcaster after the auction; or
- participate and bid to give up all rights to their channel and go off the air.
Of course a broadcaster may choose to not participate in the auction and stay on the air on the same or another channel in the same band, as determined in the repacking process.
Each of these options involves different business and strategic tradeoffs and may appeal to different types of broadcasters. All of the options are designed to help make the auction accessible to the widest possible range of broadcaster participants. The FCC is also considering additional bid options and has sought comment on other possibilities in the Notice.
Bid Option: Move from UHF to VHF
Under this option, a broadcaster would formulate its price to return its UHF spectrum to the FCC for auction, in exchange for a share of auction proceeds plus an assigned frequency in the VHF spectrum. The broadcaster would have to determine what it would be worth to move to VHF. While this broadcaster might experience more over-the-air interference in VHF, its viewers through cable and satellite might not be affected at all, depending on how the broadcaster gets its signal to those services’ head ends. This broadcaster would still be able to program a full six megahertz of spectrum, including multicast streams.
Bid Option: Channel Sharing
Under this option, a broadcaster would team up with another broadcaster in its market and combine their broadcast operations on one transmitter and antenna. This means that one of the broadcasters would contribute its entire six-megahertz channel into the auction and move onto the remaining broadcaster’s tower. If it submits a winning bid, the broadcaster that contributes its spectrum into the auction would receive a cash payment which could be used to compensate its new broadcasting partner for use of its channel. The broadcasters would share the capacity of this remaining channel, and any operating and capital expenses of the shared facility, however they decide. More information about channel sharing can be found on the channel sharing page.
Bid Option: Go off the air
This option is the most straight-forward. A broadcaster would decide to contribute its entire six-megahertz channel to the auction and go 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 deconstruction with respect to its facilities.