Incentive Auction Challenges Likely to Lead to Delay, Attorneys Say

NAB’s court challenge of the FCC incentive auction order is likely to delay the auction and unlikely to be the only such challenge, broadcast attorneys said in interviews Thursday. Though NAB, AT&T (see separate report below in this issue) and others have said the broadcast association’s petition for review (CD Aug 19 p1) was filed early enough in the U.S. Court of Appeals for the D.C. Circuit that it can be resolved without causing undue delays, few in the broadcast industry believe that’s the case, attorneys said. Increasing the likelihood of delay, the auction order is also going to be the focus “numerous separate and distinct” challenges from the low-power TV industry, said LPTV Spectrum Rights Coalition Director Mike Gravino.

The NAB petition will likely delay the auction because it challenges fundamental aspects of how the auction is designed, said broadcast attorneys. FCC officials have told us it would be extremely difficult to conduct the auction without the TVStudy software, which is a major focus of the NAB petition. This means the two sides might find that a difficult -- or at least time-consuming -- issue on which to reach a compromise, said the lawyers. Since the FCC is working to design aspects of the auction now, having to go back and adjust complicated processes like the repacking to accommodate NAB is likely to take time, the attorneys said. The FCC did not respond to a request for comment.

Wireless interests such as AT&T and CTIA disagree, and have said they believe the NAB’s concerns can be resolved quickly (CD Aug 20 p8). “If broadcasters prevail on the coverage area issue, that could lead to significant delay in the auction -- anywhere from six months to a year -- while the FCC redesigns its auction rules,” said Guggenheim Partners analyst Paul Gallant in an email to investors. Gallant said the FCC could try to avoid the longer delay of a protracted court battle by changing the repacking plan to suit NAB “which might affect the FCC’s ability to clear as much wireless spectrum as anticipated.” A delayed auction could be pushed to Q4 2016, Gallant said.

If the matter isn’t immediately settled outside the courts, NAB’s case against the FCC is likely to turn on the issue of court deference to administrative agencies’ interpretation of congressional legislation, said attorneys. All the lawyers interviewed agreed that a compromise was the likely result of the case.

Additional challenges could also delay the auction, because Court of Appeals-level challenges like NAB’s are often held to allow petitions for reconsideration at the FCC level to be resolved first, said broadcast attorneys. It’s not clear whether upcoming LPTV challenges to the auction order will come through the commission or the courts, but both options are being discussed, said Fletcher Heald broadcast attorney Peter Tannenwald, who represents many LPTV companies, but is not involved in challenging the auction order.

LPTV operators may seek to challenge the auction order over whether their stations should be protected in the repacking, FCC standards for what can displace an LPTV operator and what rights LPTV operators are entitled to in the auction, Tannenwald said. Though Tannenwald said he believed LPTV operators had a good basis for challenging the orders, other broadcast attorneys told us they believed an LPTV challenge would be on much weaker footing than the NAB petition. LPTV recon and review petitions may not be limited to the repacking, Gravino said. He expects LPTV interests to also file challenges to the upcoming rulemaking on the effects of the auction on LPTV.

Further challenges to the auction order from broadcasters outside the LPTV industry are unlikely, said broadcast attorneys. Letting NAB be the face of the opposition preserves individual broadcasters’ relationships with the commission, they said. LPTV operators won’t look to NAB to address their problems with the auction order, Gravino said.