A ‘racing form’ for the FCC spectrum auction

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Forty years ago in Boise, my wife, a friend from work, her husband and I enjoyed taking our small kids of an evening to Les Bois Park, the local horse racing track, where David introduced me to the Daily Racing Form and to his approach to betting. While our toddlers played nearby, I’d tap away on my calculator trying to pick horses. It seemed scientific at the time and I bet conservatively and usually won enough to pay for admission, my DRF, a hot dog and a beer. It was a cheap night out and there were many such.

Fast forward to 2016 and we now have the FCC about to start an incentive auction aimed at clearing a good portion of the UHF television spectrum. For the past several months, for my own curiosity and on behalf of a dozen clients, I’ve been interested in what sort of “racing form” the FCC may have given us that could be helpful in the reverse auction. In fact, I believe it has given us one, and this essay is meant to be a sort of guide to how to interpret this information.

If you’re curious about whether your station or others in your market could be “winners” in the auction, read on.

The closest thing to the Daily Racing Form for the auction is on the FCC Incentive Auction LEARN website. Download and save this large Excel file labeled Revised Opening Price Spreadsheet With Volume. Another helpful document is the FCC’s Procedures Public Notice, FCC 15-78, particularly Section V, Reverse Auction Bidding.

Scroll down to your market and look at Column G, the one labeled “Interference.” The numbers here are derived from the FCC’s “final constraint files,” which provide detailed information for each eligible station about which other stations in the U.S. and Canada would interfere with it, or would receive interference from it, should it be moved to another channel. The larger the number, the more help a station will be to the FCC in solving the repacking problem if that channel is relinquished. Because of that, it and population are the two factors which determine a station’s “volume,” and from that the amount of its opening bid price.

By the same logic, the larger the interference number, the more difficult it will be for the FCC to find a channel, by using these constraint files, to which to move the station should it want to stay in the broadcasting business. The pathway to “winning” in the reverse auction is through a status called “frozen — provisionally winning.” A station gets this status designation if the auction system determines that a station can never be assigned a feasible channel in its pre-auction band in the current stage. So, again by the same logic, the larger the interference number, the more likely a station will be frozen and the more likely the freeze will be at a higher number.

In recent weeks, I’ve been informally sitting in with the Public Media Company’s work with a firm that does reverse-auction simulations using a proprietary implementation of the FCC’s software. An examination of these preliminary runs of UHF-only stations involved in this work has shown that, in what I’d characterize as competitive markets — the vast majority of markets are — among stations assumed to be participating, those with lower interference counts are either not frozen or are frozen at lower prices compared to stations with higher interference counts. These simulations were done at clearance targets of 84, 108, 114 and 126 MHz.

This will be consequential to two stations in channel-sharing agreements in which the host station (the “sharer”) is a station with a higher interference count than the relinquishing station (the “sharee”). Unless the stations are in New York or Philadelphia or a handful of small “squeezed” markets, these CSA partners could have the sharee go uncompensated or compensated at a level lower than the agreed-upon reserve price.

Dennis Haarsager is a consultant on the spectrum auction and strategic planning in public media. He previously served as executive director and president of the Public Television Major Market Group, as interim c.e.o. of NPR and as associate v.p. and g.m. of the radio and TV network at Washington State University. This post originally appeared on his blog Technology360 and is reposted with permission.

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