2015 Incentive Auction Doesn’t Fix Broadcaster Concerns About Repacking, Say Industry Observers

FCC Chairman Tom Wheeler’s decision to push the incentive auction back to 2015 doesn’t address industry concerns about how broadcasters will be affected by the repacking process, engineers, attorneys and broadcasters told us in interviews. The extra time before the auction doesn’t equate to extra preparation time for the various changes in channel assignments that repacking would be required by equipment manufacturers, broadcast stations, and engineers, because “we don’t know what to get ready for,” said Don Everist, president of broadcast engineering firm Cohen, Dippel.

Without more information about the repacking in advance of the auction, broadcasters can’t be sure what their repacking costs will be, or whether the $1.75 billion TV Broadcaster Relocation Fund will be enough to cover them, Everist said. Without enough information to quantify repacking costs, “more time is not necessarily the solution,” said National Religious Broadcasters General Counsel Craig Parshall.

A root cause of uncertainty about the repacking is that it’s impossible to know what stations will participate in the auction and where the ones that do will end up, said Parshall. Without knowing the extent of auction participation, it’s hard to know if the relocation fund will be enough, he said. To clear it up, the FCC should find a way to give broadcasters incentives to declare their intention to participate, said Parshall.

The $1.75 billion “looks a little sparse” if a lot of stations are relocated in the repacking, said Fletcher Heald broadcast attorney Peter Tannenwald. If the commission can limit or control the number of stations that need to be relocated, it will enhance the fund’s ability to cover reimbursements, Tannenwald said.

The cost of the repacking to each broadcast station is extremely difficult to estimate, because of the huge range of individual circumstances, said Joe Zuba, national sales manager at antenna manufacturer Dielectric, which Sinclair purchased last year. Stations relocated to new channels will need new custom-built antennas, which can range in price from $200,000 to “half a million or more” depending on their size and power, Zuba said. “The antenna is going to be different depending on what channel you're assigned,” Everist said. “The auction has to take place before you know."

Other stations may need only an existing transmitter retuned or new filters to prevent interference issues, costs that run in the $50,000 range, Zuba said. Stations installing new equipment may need to pay for new tower rigging, which can run for $50,000 to hundreds of thousands of dollars to buy and install, he said. Costs could skyrocket even further for stations forced to build new towers or retrofit old ones due to capacity or building code concerns, Zuba said.

The variations in possible costs to stations limits the benefits from the extra time granted by Wheeler’s moving the auction, said Everist and Tannenwald. TV station antennas are “all custom,” Everist said. “They're going to be different depending on what channel you're assigned.” That means broadcasters likely won’t be able to order new equipment until after they've been repacked, Everist said. This could lead to the antenna and transmitter industries being hit with a huge demand for manpower and equipment all at once, leading to delays that will likely increase broadcaster costs, said Sinclair General Counsel Mark Aitken (CD Oct 1 p4).

The extra year before the auction will also likely exacerbate the problems of the already floundering antenna industry, Aitken said in an interview Friday. Manufactures that build antennas, towers and other broadcast infrastructure elements have been hit hard by the FCC’s freeze on station modification (CD June 19 p10). Delaying the auction but leaving the freeze in place means “another year of anguish” for those manufacturers, Aitken said. With the freeze constricting business, manufactures can’t afford to ramp up hiring or training to deal with the increased demand that will follow the repacking, he said.

However, the year-long delay could benefit the repacking, said Tannenwald. The delay could give the commission time to design a repacking plan that involves minimal relocation, allowing the reimbursement funds to stretch further, he said. The delay could also mean the repacking process would coincide with the implementation of new broadcast standard ATSC 3.0, possibly giving broadcasters the opportunity to upgrade to that standard as part of the repacking process, Aitken said. And an NAB spokesman said in an email that pushing back the auction “has no impact whatsoever” on infrastructure issues related to the repacking, since the three-year window for the repacking doesn’t begin until after the auction ends. “It was really the timeline we anticipated all along,” said an NAB spokesman. “So the three years is the issue, not when exactly it starts.”