Update on Broadcast Spectrum Auctions and Repacking Corporation C - PowerPoint PPT Presentation

Update on Broadcast Spectrum Auctions and Repacking Corporation C o r p o r a t i o n f o r P u b l i c B r o a d c a s t i n g for Public Broadcasting Board of Directors Meeting ▪ Washington, DC ▪ December 9 – 10, 2013

Considering the government’s planned broadcast spectrum recapture process and possible implications for public media • Today, CPB and Booz & Company will cover: – Auction context and project background – Station decision-making – Auction impact drivers and expected results – If/then scenarios for considering possible responses – Next steps Corporation for Public Broadcasting Spectrum: 2

The FCC allocates spectrum for a variety of uses in the U.S., with 49 channels allocated for TV broadcasting Wireless Spectrum Increasing Range Decreasing Range VHF LF MF HF VHF UHF SHF EHF Very Low Low High Super High Extremely High Medium Frequency Very High Frequency Ultra High Frequency Frequency Frequency Frequency Frequency Frequency 3 KHz–30 KHz 30 KHz–300 KHz 300 KHz–3 MHz 3 MHz–30 MHz 30 MHz–300 MHz 300 MHz–3 GHz 3 GHz–30 GHz 30 GHz–300 GHz  Maritime navigation signals  AM radio  VHF TV  UHF television  Space and satellite com.  Navigational aids  Radiotelephone  FM radio,  Cellular phone  Radio astronomy  Aviation air to ground com.  Nav. aids  GPS TV Allocation Range ( ~ 55 MHz–692 MHz) TV Tower TV Station TV One 6-MHz Channel Can Carry This Amount Is Divided into 294 MHz of Spectrum Is Multiple Streams of Programming 49 Station Channels Currently Allocated to TV As “Virtual Sub-channels “ of 6 MHz Each Broadcasters Corporation for Public Broadcasting Spectrum: 3

In recent years demand for wireless broadband service has increased rapidly, driving up demand for spectrum in turn U.S. Smartphone Monthly Mobile Data Exabytes/Month Penetration North America, 2012–2017 138 140 100 Exponential Growth of 2.1 Data Volume Drives 116 120 Bandwidth and Spectrum Smartphone Users (Mn) 80 Demand 100 93 +56.5% 1.5 60 Smartphones % 80 63 1.0 60 56% 40 0.6 48% 40 0.4 39% 20 0.2 20 27% 0 0 2010 2011 2012E 2013E 2012 2013E 2014E 2015E 2016E 2017E Smartphone users (millions) Percentage using smartphones Corporation for Public Broadcasting Spectrum: 4

In light of these trends, the FCC has set a goal of reallocating 40% of current television spectrum to wireless Timeline Current State of 2010 Broadcast Television FCC set a goal of reallocating 120 MHz of TV broadcast spectrum – 2011 approx. a 40% reduction TV Station TV Tower  Current broadcast television is highly localized , 2012 Spectrum Congress authorized FCC to providing for the needs of individual areas Act conduct incentive auctions  ~ 10%–20% of U.S. households rely only on over-the-air (OTA) broadcast TV 2013  Reliance solely on over-the-air signal varies significantly by geography and demographics 2014  Cable and satellite providers rely on OTA signal to access content for redistribution The reverse auction is Reverse scheduled to take place in 2015 Auction Corporation mid-2015 for Public Broadcasting Spectrum: 5

To achieve this, the FCC will move some stations to different channels so it can clear a contiguous block. In some areas, the FCC will offer auction incentives for stations to give up their spectrum. EXAMPLE Pre-auction Channel Occupation in a Hypothetical Local Market UHF Channel 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Station on channel Reserved special use Cleared spectrum 21 Channels Occupied Post-auction Channel Occupation UHF 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 To Fulfill Target Goal of Freeing Up 120 MHz, a Minimum 4 Channels Need to Give Up Their UHF Spectrum Cleared for Wireless Use Corporation for Public Broadcasting Spectrum: 6

Proposed FCC auction and repacking process  Licensees can decide voluntarily to bid to relinquish a station’s spectrum by choosing to – Trade a UHF channel for a VHF channel Reverse – Share channel with another station (for both UHF and VHF channels) Auction – Stop broadcasting on that station  Stations can be involuntarily moved to a different UHF channel to either clear contiguous bands of spectrum for wireless use, or to avoid interference as a result of Repacking another station being moved  FCC reimburses stations for expenses directly driven by moving to a different channel  FCC sells spectrum for wireless broadband to the highest bidder, market by market  If FCC can’t collect enough revenue to cover all costs , including reverse auction proceeds, Forward repacking, and auction administration then the forward and reverse auctions will be Auction cancelled Areas impacting broadcasters Corporation for Public Broadcasting Spectrum: 7

CPB actions to date • CPB has worked with APTS and PBS to file formal comments with the FCC, and CPB executives and staff have met with FCC commissioners and staff during: • 2009 - 2010 — preparation of National Broadband Plan • 2010 - 2012 — rulemaking on channel-sharing • 2012 - 2013 — rulemaking on incentive auctions and spectrum repacking Corporation for Public Broadcasting Spectrum: 8

Booz & Company provided policy research and an assessment of the implications for public broadcasting Booz & Company Approach August 12 October 21 Initial Auction Data Gathering Impact Assessment Final Assessment and Discovery and Modeling Report  Expected auction  Policy and market  Auction impact  Consolidation and demand across markets research assessment at station documentation of  Options for rationalizing  Expert and stakeholder level findings  Implications to system  Presentation to channels by stations interviews/consultation  Potential programming – CPB, PBS, APTS, APT as a whole senior stakeholders and distribution – Station executives implications – Additional industry  Potential impacts to experts  Dynamic inquiry public broadcasting funding practices and mission Corporation for Public Broadcasting Spectrum: 9

What we heard in talking with station executives • Station executives’ understanding of the auction and repacking process varies widely • They have no consistent way of gauging whether an auction will occur in their market • Some are open to participation in the auction • Most believe that continuing to offer multicast, over-the-air channels is critical to their public service mission – Diversity of content for under-served audiences – Preferred or accessible distribution for under-served communities • There is mixed concern about interference in the VHF band, and some are considering a move to VHF Corporation for Public Broadcasting Spectrum: 10

Auction context and project background Decision-making framework for stations Auction impact drivers and expected results If/then scenarios for considering possible responses Next steps Corporation for Public Broadcasting Spectrum: 11

Stations have four options where auctions occur A  Do not participate in any way in auction process Do Not Bid B Give Up Spectrum  Submit a bid to move to VHF channel (for UHF stations) or low VHF (for high VHF and Shift to a stations), giving up rights to current spectrum . May be accepted by FCC in the case where Lower Band offer price is low enough and insufficient space is available for simple repacking  Create a contract with another station to share a channel . Submit a bid to relinquish C Offer to spectrum and participate in auction. With channel partner, develop plans to share Share Spectrum spectrum, auction proceeds, and operating costs. Does not require station consolidation. Partner could be either a public or commercial broadcaster D  Submit a bid to simply give up spectrum . Could apply to a subset or all of 6-MHz channels. Offer to Give Up Licensee could move some programming to broadband distribution, arrange for cable Spectrum and distribution instead of broadband, or simply cease programming distribution Stop Broadcasting Corporation for Public Broadcasting Spectrum: 12

Historical transactions suggest a wide range of prices is possible Historical Payouts in $ / MHz-Pop $0.13 $1.00 $2.00 $3.00 $4.00 $5.10 Likely Trend for Markets with Likely Trend for Markets More Bidders than Necessary Without Enough Bidders Historical broadcaster acquisition prices Historical payouts for wireless spectrum (auction 73) Market dynamics affecting pricing  Level of market congestion  Likely number of bidders and resulting competition  Auction mechanics Corporation for Public Broadcasting Spectrum: 13