Some U.S. television stations could make tens, or even hundreds, of millions of dollars by giving up their spectrum so that the U.S. Federal Communications Commission can sell it in an upcoming mobile broadband auction.
Full-power, over-the-air TV stations in New York City, Los Angeles and Philadelphia could clear more than US$400 million in the FCC's so-called incentive auction, projected to happen in mid-2015, the FCC said Wednesday in a report to broadcasters. Full-power TV stations in Chicago, the San Francisco area, Boston and Washington, D.C., could receive $130 million or more by voluntarily giving up their spectrum holdings, the FCC said.
Low-power TV stations would get less money under the FCC projections, with spectrum value based on interference with neighboring spectrum. Still, low-power TV stations in Los Angeles and New York could profit to the tune of more than $350 million, while low-power stations in San Francisco and Washington, D.C., could clear more than $90 million, according to the estimates.
The auction, which will rely on voluntary participation by TV stations, will offer "potentially significant financial benefits" for broadcasters, but not just in the largest U.S. markets, FCC Chairman Tom Wheeler wrote in a letter to broadcasters. Some smaller TV stations, particularly those in markets just outside major metropolitan areas, could also see major windfalls, FCC officials said. Demand for more mobile broadband spectrum is highest near large cities.
For example, full-power stations in Providence, Rhode Island, and Wilkes Barre, Pennsylvania, could see $150 million from a spectrum sale, and a station in Palm Springs, California, could earn $180 million, according to the FCC estimates. Full-power stations in the West Palm Beach, Florida, market and the Flint, Michigan, area could receive $100 million, the agency said.
TV stations that sell spectrum in the auction have a handful of options, including going off the air, moving from a UHF to a VHF channel, or sharing a channel with another broadcaster. Stations that participate in the auction can pull out if bidding doesn't match their target sale prices, FCC officials said.
The FCC will begin sending information packages on the auction to TV stations Wednesday, and FCC staff will tour the country to talk to stations in the coming weeks, agency officials said at a press briefing.
The FCC letter to broadcasters explains their bidding options in the auction as well as the tax implications of a spectrum sale.
Some broadcasters and trade group the National Association of Broadcasters have been slow to embrace the FCC incentive auction, which was authorized by the Congress in 2012. The FCC's goal for the auction is to open up more spectrum for mobile broadband use as U.S. customers flock to data-enabled smartphones and tablets.
Mobile providers and other tech companies have been warning for years of an upcoming spectrum crunch.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is [email protected]