Black Friday - 11/28/14 - 00:01 AM Eastern

With Thanksgiving day over, and Black Friday begins, it might be useful to take a look at the current AWS auction and how that might impact the Incentive Spectrum Auction.  If you have not kept up with how the current AWS spectrum auction is progressing then you should review these two articles:

In the three days in between these two articles an additional $3 billion was bid, and when the auction resumes on Monday, who knows how high it will go.  Congress is happy since the proceeds from the AWS auction will pay for First Net, and then return billions more back to the Treasury.  And this could mean that Congress now will be a lot more hungry for the billions from the Incentive Auction, and want it to happen as soon as possible.  It also could mean that the major auction bidders will need some time to replenish their coffers before the Incentive Auction, which at the earliest will be conducted in early or mid-2016.

But what does this mean for LPTV?  I have been asked this question a lot in the last week.  Some of you are of the opinion that a successful AWS auction spells doom for LPTV, while others have no idea of what to make of it.  So let's take a quick look at what it could mean for LPTV.

The high bids of the AWS auction are very positive for LPTV because:

1)  It really puts the pressure on the FCC to get the Incentive Auction correct, and to get it done as soon as possible.  This pressure is excellent for LPTV because it heightens the influence we have to stall, stop, and/or change the process to our advantage.  As decision makers start to understand the Incentive Auction is the LPTV auction, they will start to reframe how to assist us so we do not mess up what they want to do and when.  

2)  Any legal counter moves by LPTV can now be dramatically amplified because of what is at stake for the FCC, the Congress, the Treasury, and the auction sellers and buyers.  The more successful the AWS auction becomes, the more important LPTV issues become to be solved to our advantage.  If LPTV issues are not addressed adequately, we just throw whatever we collectively can do to blow up the process.  

3)  Both Congress and the FCC decided in 2012 to attempt to destroy LPTV, and so we will gladly return the favor now in 2015.  This is not to say individual members in the Congress are not sympathetic to our plight, but they did vote in favor of the the auction as designed.  So we should not care at all what we do to stop or slow down the Incentive Auction.  

4)  Members of Congress and Committee staff can now see with the current rule makings that the discretion they gave the FCC has totally marginalized LPTV and could destroy it.  And they are waking up to the fact that the design also will severely limit or stunt the unlicensed economy, which will have a far larger and long lasting impact on the economy.  Estimated to be over $120 billion a year, the unlicensed economy is the best friend LPTV has right now.  The LPTV Right of Displacement means that there will be virtually no empty space for unlicensed or TV White Space users.  All we have to do is to start building out the 3500 construction permits and you can kiss goodbye all of the MHz Google and Microsoft and the wireless internet service providers are counting on.  LPTV can negatively impact over a decade more than $250 billion of unlicensed economy activity! 

5)  A very successful and profitable AWS auction gives Congress some breathing room, and some time, so that it can address the flaws in the 2012 Incentive Auction design.  It has been over 1200 days since the Incentive Auction legislation was passed, and four major parts of the legislation are fast becoming successful:

>  The first is the freeing up and sale of underutilized or unused Federal spectrum. 
>  The second is that First Net is now paid for.  

>  The third is that the upfront costs of the Incentive Auction are now almost fully funded. 

>  And fourth, the Treasury will be netting over $20 billion towards the budget, which puts it on schedule to fiscally balance.  

6)  These factors will either push the Congress to want to hurry up and get the Incentive Auction done by early 2016, or it just might move them to really slow it down and look to provide their input into it to fix problems.  If they want to speed it up they will need to give LPTV accommodations such as displacement channel relocation funding, and maybe even technical flexibility.  The AWS auction will also allow them to increase the Incentive Auction auction eligible channel repacking costs which NAB has been complaining about.  If they get more, we will get some.  

7)  and most of all...the AWS auction, when done, should dramatically increase the MHz-pop price of LPTV spectrum.  The FCC's own Greenhill Book, which currently values the LPTV spectrum being contributed (taken) for the Incentive Auction (60% of all auction spectrum, 90% of 51-38) could have a value of $27 billion!.  The AWS auction could bring that valuation to well over $30-$35 billion for the LPTV spectrum.  The higher the value the AWS auction, the more the damages of the taking from LPTV.  So bid away Verizon et al, raise as much money as you can for the government.  The higher the prices, the higher the value of the spectrum which LPTV now occupies, and that which we will ask our fair share for.

For me this is all great news...
>  Greatly increased reasoning to apply process pressure with.  
>  Valid reasoning to provide political cover for decision making.
>  Greatly increased potential valuations for all of us, not just the Class-A's!

If you think differently I welcome your opinions...

Mike Gravino, Director
LPTV Spectrum Rights Coalition