Disruption and Expense in the Repacking Process

If the FCC manages to clear 84 MHz of spectrum, Booz & Company (now known as PwC Strategy&) estimated that 70 to 80 of the 355 public television stations would be reassigned to new channels. If it clears 120 MHz of spectrum, Booz estimated that there would be 110 to 130 of the 355 public television stations reassigned to new channels.75

Congress established a $1.75 billion fund to reimburse broadcasters for channel relocation expenses if they choose to retain their spectrum, stay in business and are required to relocate as a result of the repacking process. The FCC has determined that, once its repacking plan is

announced, stations will have three months to apply for a construction permit for the required transmission system changes, and at most three years to complete the construction process. The FCC will determine how much time each station will have, with some stations being required to complete construction in less time. While the FCC has also stated that stations will be allowed to apply to extend their construction periods, at the end of the three-year period all stations being

74 _{The Spectrum Act provided for the payment of reverse auction proceeds solely to the licensees of the spectrum} rights surrendered. While a trust fund for public broadcasting has been discussed by public broadcasters and elected officials for several decades, Congress did not provide for one in the Spectrum Act. Further, as CPB’s Alternative Sources of Funding for Public Broadcasting Stations Report to the U.S. House and Senate Committees on

Appropriations in 2012 noted, “spectrum sales would not provide an ongoing source of funding for public television and radio stations generally that could replace federal funding” and “that it would be revenue at the cost of services lost.” CPB, Alternative Sources of Funding for Public Broadcasting Stations, pp. 42-43 (June, 2012) The Report

further stated that “in the absence of some sort of requirement that funds from the sale of public television channels be placed into a trust fund to support public television stations generally…any such revenue would flow on a one- time basis and only to the particular television station giving up its channel.”

75 _{If the FCC seeks to clear at least 72 MHz of spectrum, as it has most recently indicated, that would mean that any} station currently operating on a channel that is numbered 39 or higher is likely to be repacked. Examples of stations currently operating on those channels include: WEDW (Bridgeport, CT), WNJN (Montclair, NJ), KLCS (Los Angeles, CA), KOCE (Orange County, CA), and WTTW (Chicago, IL). As mentioned below in section 3.2.5.1, Widelity noted that some stations, such as those whose facilities are on Sutro Tower in San Francisco, on Willis Tower in Chicago, and on 4 Times Square in New York City, will face a complicated channel relocation process. Further, stations that operate on channels lower than 39 with facilities in these locations may be affected by the modification or replacement of other station’s facilities at those locations.

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repacked will have to cease operating on their old channels. In such circumstances, if a station’s new facilities are not ready, the station will have to go off the air – at least temporarily.

In the report and catalog of potential expenses and estimated costs that Widelity Inc. provided to the FCC, it concluded that the repacking process “will pose significant challenges to the

industry” and that “a number of potential bottlenecks in the post-repacking transition process . . . may potentially extend the amount of time a station needs to complete construction of its new facilities.”76

3.3.5.1 Disruption

There is significant concern in the broadcasting industry about the timely availability of new transmission equipment, alternative tower sites, and tower crews needed to make changes both to towers and equipment installed on towers, given that many stations around the country will be acquiring new equipment and having to make tower changes at the same time. In addition, there may be additional, unrelated demands from both the broadcasting and wireless industries for these same scarce resources.

Thus, the repacking process has the potential to cause over-the-air service interruptions, which, may be for extended periods of time, even where a station has not successfully participated in the auction.

Widelity estimated that, while certain modifications might be completed in less than a year, a

complicated modification, such as one involving broadcasters transmitting from Sutro Tower in San Francisco, would take approximately 41 months assuming there were no problems. The Widelity report raises serious questions about whether the post-auction transition can be

completed in 36 months (the statutory deadline for reimbursement of relocation costs and the time frame specified by the FCC for repacked stations to leave their old channels).

If there are extended service interruptions in multiple markets where many households rely on over-the-air television for their news and information or cable and satellite providers relying on over-the-air reception of broadcast signals at their headends, it could have a negative effect on the larger public media programming economy.

3.3.5.2 Expense

In addition to identifying, generally, what is involved in changing a station’s channel, Widelity considered the costs that stations might face in the repacking process. Notably, the repacking expenses ranged from $588,000 to $2.7 million per station.77

Should the FCC clear its original stated goal of 120 MHz of spectrum, the $1.75 billion repacking fund may not be sufficient to cover the cost of repacking the full-power stations

76_{SeeWidelity, Inc., Response to the Federal Communications Commission for the Broadcaster Transition Study}

Solicitation – FCC13R0003, December 30, 2013 (“Widelity Report”).

77 _{The sudden increase in demand for new transmission equipment and tower crews following the spectrum auction} could translate into rapidly escalating costs for licensees needing to make changes both to towers and equipment installed on towers within a fixed 39-month period.

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affected, and would result in repacked broadcasters having to pay part of the repacking process out of their own funds.

In addition, the FCC has established a process that apparently contemplates that some amount of funding ($1 billion) may be available in advance for stations to pay repacking costs, but at this point it is not clear whether stations may have to “front” some portion of the expense out of their own funds even if they ultimately are reimbursed for all their costs.

Further, as noted above, the repacking process could affect up to 40 percent of the 565 CPB- recognized public television translator stations, and the process established by Congress and the FCC does not provide for any financial assistance for translators that need to change channel in the repacking process.

Forcing public television stations to “front” or ultimately bear repacking expenses out of their own funds is particularly unfair to those that did not participate in the spectrum incentive auction and did not receive substantial compensation in exchange for their spectrum. It now appears that, to some extent, some public television stations could be harmed by the spectrum incentive auction and repacking process – contrary to the intent of Congress, which specifically provided that broadcaster participation in the auction was to be voluntary.

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4 Conclusion

Five years ago, the public media system – national organizations and stations – set out a vision for the future of public media in the digital age, emphasizing that broadband and broadcast are complementary.

Today, public media is a “best case” example of television channels being used efficiently and effectively, deploying multicast capabilities and relying on unimpeded coverage areas to reach diverse communities with content and services that address the policy challenges we face locally and nationally.

The value of the spectrum held by public media stations, on behalf of the communities they serve, that the FCC would repurpose goes well beyond the market prices they could well

command in this auction. Narrow financial calculations cannot measure the value of serving the educational needs of the nation’s children, providing trusted news, reliably delivering emergency alerts, presenting diverse viewpoints that would not otherwise be heard, and numerous other benefits provided today and in the future by the nation’s public media stations through over-the- air broadcasting.

Unfortunately, while the spectrum incentive auction and repacking process would address one problem (the need for more spectrum for wireless broadband), it would likely do so at the expense of public media’s ability to meet the mandates of the Public Broadcasting Act – undermining communities’ ability to address the policy dilemmas they face as well as the nation’s need for universal service and local content and diversity of programming in an increasingly consolidated media environment.

Given the irreplaceability of spectrum to deliver programming to serve their communities, and the potential challenges and opportunities that lie ahead in terms of Ultra High Definition service, a transition to a new broadcast standard, and a possibly greater role in public alerting, CPB believes that public media licensees should carefully assess their participation in the incentive auction process and consider the benefits of flexibility so they will not be locked into technology that will prevent them from remaining relevant and competitive in a converging media and telecommunications world.

Finally, as public media stations continue to work to meet the challenges of tomorrow’s media and the needs of our audiences, CPB believes the FCC should not be urging broadcasters to abandon broadcasting in favor of broadband distribution. As they have been demonstrating for the past five years, public media stations can, and should, do both.

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5 Facing the Incentive Auction and Repacking Process

The following section is intended to help public broadcasting licensees who are committed to their mission of serving the public interest, but who do not know if the FCC’s spectrum incentive auction will affect their stations78, and want to be able to evaluate the risks and opportunities presented by spectrum auction through options such as channel sharing or a move to VHF. In addition, many licensees will need to understand the repacking and the TV Broadcaster

Relocation Fund (which will reimburse broadcasters for at least some repacking-related costs).79