Spectrum Bill ‘Reverse Auction’ Definition Raises Questions for Industry

A key definition within the new spectrum law has raised questions among communications lawyers about possible drafting errors and/or congressional intent, the lawyers said. The concerns are with the definition within the bill of “reverse auction,” which seemed to limit the authority to only broadcast spectrum, said the lawyers. The confusion is largely due to a misunderstanding of legislation and the bill is meant to allow FCC interpretation, said House and Senate aides.

The new law, signed by President Barack Obama last week (CD Feb 24 p10), gives incentive auction authority to the FCC for broadcast TV and more general spectrum. The general incentive auction ability is limited to where “the Commission conducts a reverse auction to determine the amount of compensation that licensees would accept in return for voluntarily relinquishing spectrum usage rights” and “at least two competing licensees participate in the reverse auction.” The confusion is over the definition of “reverse auction” as described within the law.

"Reverse auction” means “the portion of an incentive auction of broadcast television spectrum under section 6403(a), in which a broadcast television licensee may submit bids stating the amount it would accept for voluntarily relinquishing some or all of its broadcast television spectrum usage rights,” according to the law. If the term “reverse auction” only applied to broadcast spectrum, it would seem to limit the auction ability to only to TV stations’ spectrum, which didn’t seem to be the intent of the law, said a communications lawyer.

There is no inconsistency in the bill over the authority as written, according to a House Commerce Committee GOP aide. The definition of reverse auctions in Section 6001 applies only to the payroll tax bill which sets explicit rules for broadcast spectrum incentive auctions, the aide said. Section 6402 on general authority for incentive auctions amends the Communications Act and purposely leaves the definition of reverse auctions for the FCC to define, the aide said. Several attorneys have asked the aide about whether there was an ambiguity, the aide said. The FCC didn’t comment.