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FCC Reveals Potential Auction Compensation for Broadcasters

Posted in Corporate/Business, Spectrum, Transactions

Auction BlockFull-power TV stations in Los Angeles could receive as much as $570 million for participating in the incentive auction and relinquishing their spectrum, according to a report prepared by an investment firm and released by the FCC today.  The report provides estimated compensation on a market-by-market basis, including the maximum and median compensation for full-power and Class A stations.  According to the report, the top-five markets based on the highest potential payouts to full-power stations are: Los Angeles (DMA rank No. 2), New York (DMA rank No. 1, $490M), Philadelphia (DMA rank No. 4, $400M), Hartford-New Haven (DMA rank No. 30, $280M), and San Diego (DMA rank No. 28, $250M).

The report used a “top-down” methodology that first estimated the revenues in the forward auction based upon a clearing target of 126 MHz, with 100 MHz auctioned for wireless use at an average price of $1.50 per MHz-pop.  The report then derived a station’s potential compensation from its “value in the nationwide repacking process,” which is based upon the number of stations with which a station’s contour interferes (aka the station’s “interference volume”), the total coverage population of these constrained stations, and “spectrum scarcity” in the station’s market (i.e. channels available for the repack).

In short, the report, which qualifies its estimate based on “auction methodology currently under development,” suggests that the more difficult it is for the Commission to repack a station, the more valuable the station will be in the auction.   For instance, Houston market (DMA 9) has the same maximum value — $52M – as the Lafayette, IN market (DMA 189).  In addition, several DMAs outside the top 50 but adjacent to densely packed markets, including Providence, RI-New Bedford, MA (DMA 53), Wilkes Barre-Scranton, PA (DMA 54), Flint-Saginaw-Bay City, MI (DMA 68), Toledo, OH (DMA 76), Springfield-Holyoke, MA (DMA 114), Santa Barbara-Santa Maria-San Luis Obispo, CA (DMA 123), and Palm Springs, CA (DMA 148), all have maximum payouts of at least $100M.

However, the report comes with several caveats, and as Chairman Wheeler cautions, “the numbers are not the exact amounts you can expect to be paid in the auction.”  First, the report assumes a clearing target of 126 MHz, which may not be achievable in certain markets.  Second, the report does not account for any scoring methodology, which will be the subject of a forthcoming Auction Comment Public Notice.  Third, the report does not account for dynamic reserve pricing, a concept introduced in the Report and Order that would allow prices to continue descending until a certain interference threshold is reached.  The report also assumes that the FCC will need to reserve $5 billion of forward auction revenues to pay for FirstNet, while noting the Commission’s statements that it is “optimistic that the proceeds from the H Block and AWS-3 auctions will be sufficient to fully fund amounts for FirstNet.”

The report urges broadcasters interested in participating in the auction to “determine the current value of their spectrum usage rights and establish an internal ‘walk away’ price at which they would not elect to participate.”

In addition to providing pricing information, the FCC also released a letter from the Internal Revenue Service providing guidance on the potential tax consequences of both revenues received for license relinquishment and reimbursement for relocation costs.

Does FCC Repeal of Sports Blackout Rules Flag Trouble Ahead For Retrans Policy?

Posted in Broadcast Regulation, Copyright, MVPD Regulation

The FCC has retired its sports blackout rules.  At its September 30, 2014 meeting, the FCC unanimously adopted an Order repealing the rules, which prohibit cable and satellite providers from carrying a sports event that is blacked out on a local broadcast station.  The rules are most often associated with the National Football League, which precludes a broadcast station in a home team’s market from broadcasting a game if ticket sales do not reach a certain percentage of available seats at least 72 hours prior to kickoff.  Although very few NFL games are actually blacked out, the league narrowly avoided having to blackout three playoff games in January when corporate sponsors purchased the remaining unsold seats.

The Order acknowledges that elimination of the sports blackout rules does not necessarily alter business as usual for local broadcasters “because the NFL and other sports leagues may choose to continue their private blackout policies,” which are the subject of broadcast rights agreements.  Where the FCC rules historically have come in is to clearly prohibit cable and satellite providers from importing a distant broadcast station carrying a locally blacked out sporting event.  In describing today’s action, Commissioner Jessica Rosenworcel stated that the agency “should not support policies that prevent fans from watching their hometown teams on television.”  Commissioner Ajit Pai added, “With this decision, the FCC is officially out of the sports blackout business.”  In the absence of an FCC rule, however, cable and satellite providers still would need to obtain the necessary rights to import a sporting event from an alternate source.

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FCC Launches First Phase of New E-Filing System for Radio and TV Broadcasters

Posted in Broadcast Regulation, Broadcast Technology

“The 396-A is on file so I’ll go ahead and push the button on the 314.  Then I’ll draft the 323.”[1]  Was a finer sentence ever uttered by a broadcast attorney?  Probably, but such roll-off-the tongue eloquence will soon be a thing of the past as the FCC embraces the brave new world of the LMS filing system and Form 2100.

On September 29, 2014, the FCC announced the availability of the first phase of its new e-filing system, the Licensing and Management System (LMS).  LMS will eventually replace CDBS as the e-filing system for all radio and TV broadcasters.  Those familiar with the FCC’s Universal Licensing System (ULS) will notice similarities between the two systems.  Both require an FCC Registration Number (FRN) and FRN password to log-in and use one common form with different tabs or schedules to complete depending upon the type of application/authorization requested.

The initial phase of the LMS roll-out applies only to full-power TV stations seeking to file applications for construction permits or a license to cover a construction permit.  Both of these applications (formerly Form 301 and 302-DT, respectively) will now be part of a new single form – Form 2100.  The new form will consist of two sections.  The “main portion” of the form will ask for general information common to all broadcast applications. Information specific to particular applications will be completed on associated schedules for each type of authorization being requested.  Schedule A will need to be completed by those broadcasters seeking to obtain a construction permit for a full power TV station.  Schedule B will be required for a license to cover.  Additional schedules will be released in the future.

As of October 2, 2014, existing full power TV station permittees and licensees will be required to use the LMS system to file applications for construction permits and licenses and any amendments to pending construction permit and license applications using Form 2100 Schedule A or Schedule B.  Form 2100 is available here, and the LMS system can be found here.


[1] Translation: “The Model Equal Employment Opportunity form has been filed, so I’ll go ahead and submit the Assignment Application.  Then I’ll draft the Post-Consummation Ownership Report.”

FCC Announces New Wireless Microphone Proceeding

Posted in Broadcast Regulation, Broadcast Technology, Spectrum

The FCC announced today a new rulemaking proceeding designed to address the long-term needs of wireless microphone users.  The new NPRM comes on the heels of the Incentive Auction Order, where the Commission decided to eliminate the current two reserved channels for wireless microphones.  In a news release, the FCC acknowledges that “following the incentive auction . . . there will be fewer frequencies in the UHF band available for use by” wireless mics.

According to the Incentive Auction Order, broadcasters and cable programming networks will be permitted to operate licensed wireless microphones in a portion of the duplex gap.  In addition, any user will be permitted to operate wireless microphones in the guard bands on an unlicensed basis.  Wireless microphone users also will be able to operate on unused television channels and to register through the TV bands database registration system for protection from unlicensed TV White Space devices.  As reported in a previous WileyonMedia blog post, the Radio Television News Directors Association and Sennheiser Electronic Corporation filed petitions for reconsideration of the Order on the basis of its treatment of wireless microphones.

The NPRM seeks a comprehensive review of the licensed and unlicensed wireless mic user needs and the “different technologies that can address them, including digital technologies.” The NPRM will seek comment on rule revisions in existing spectrum bands where wireless mics operate as well as authorizing wireless mic operation in additional spectrum.  According to the news release, “the Commission intends to enable the development of a suite of wireless microphone devices and applications over the long term that can meet users’ needs efficiently and effectively.”

 

FCC Seeks Comment on Draft TV Broadcaster Relocation Fund Reimbursement Form

Posted in Broadcast Regulation, Broadcast Technology, Spectrum

Auction BlockThe FCC’s Media Bureau issued a Public Notice today seeking comment on a draft TV Broadcaster Relocation Fund Reimbursement Form (“Reimbursement Form”), which broadcasters and MVPDs will use to submit information necessary to get reimbursed for their expenses incurred during the post-auction repacking process.  Comments on the Reimbursement Form are due October 27, 2014.

Congress allocated $1.75 billion to the TV Broadcaster Relocation Fund (the “Fund”) to reimburse eligible television stations (i.e., full power and Class A stations) that incur expenses associated with moving to post-auction channel reassignments and MVPDs that incur expenses associated with continuing to carry the signal of relocated broadcasters.  Congress also directed the FCC to make all reimbursements within three years after completion of the incentive auction.  As set forth in the Commission’s initial Report and Order providing the framework for the auction process, broadcasters and MVPDs must file the Reimbursement Form no later than three months following the FCC’s release of a post-auction public notice (the “Channel Reassignment Public Notice”) which will identify the new channel assignments for full power and Class A television stations that have been reassigned to different channels.

Although the release of the Channel Reassignment Public Notice is still many months away, today’s Public Notice notes that in order to ensure the “fairness, efficiency and transparency” of the reimbursement process, the Commission is anxious to give all stakeholders an opportunity to comment on the process well in advance of the commencement of the incentive auction.  In this regard, the agency hopes to use this advance input to refine the Reimbursement Form before submitting it to the Office of Management and Budget, after which the public will have an additional opportunity to comment on the form.

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UAS Takes Flight for Film Companies

Posted in Broadcast Technology, First Amendment, Privacy

Today, the Federal Aviation Administration (“FAA”) granted exemptions for six aerial photo and video production companies working in the movie and television industries to operate commercial unmanned aircraft systems (“UAS”) under specific conditions.  Under the current law, civil operation of UAS in U.S. airspace is banned unless the FAA grants an exemption under Section 333 of the FAA Modernization and Reform Act of 2012 and issues a Certificate of Waiver or Authorization (“COA”) for a commercial entity to operate a UAS.

Today, the FAA determined that the operations proposed by the six production companies involved did not pose hazards to public safety, and it worked closely with the companies to develop operating conditions to ensure safety.  The FAA’s grant specifically mentioned the following points:

  • UAS operations will be conducted in a controlled, closed-set filming environment.
  • The UAS must weigh less than 55 pounds including energy source(s) and equipment.
  • Flights must be operated at an altitude of no more than 400 feet above ground level.
  • The UAS must be operated within visual line of sight of the Pilot in Command (“PIC”) at all times. The Pilot in Command must possess at least a private pilot certificate and at least a current third-class medical certificate.  In addition, all operations must utilize a Visual Observer.
  • The UAS must yield the right of way to all other manned operations and activities at all times.
  • UAS operations may not be conducted at night.
  • The UAS has the capability to operate safely after experiencing certain in-flight failures.  The UAS can respond to a lost-link event with a pre-coordinated, predictable, automated flight maneuver.
  • Based on the limited size, weight, operating conditions, design safety features, and imposed conditions and limitations, the petitioners demonstrated that UAS operation would not adversely affect safety compared to similar operations conducted with manned aircraft;

The full text of the grants is available here.

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FCC Declines to Expand Mattoon Waiver

Posted in Broadcast Regulation

Back in November 2012, Way Media, Inc. filed a minor change application with the FCC to move its FM translator W218CR from Central City, Kentucky to Tell City, Indiana.  Once located in Tell City, the translator would re-broadcast AM station WTCJ.  The application sought to change the station’s output channel from channel 218 to non-adjacent channel 279 and involved a move outside the existing station’s 60 dBu contour.  Section 74.1233(a) of the Commission’s rules would classify both the output channel and geographic moves as major changes.  Because applicants must wait for a designated filing window to open before seeking a major modification of their facilities, Way Media’s application was filed as a minor change and accompanied by a waiver request.  On September 19, 2014, however, the FCC denied the request.

Way Media’s waiver request essentially asked the Media Bureau to expand the Mattoon waiver standard.  Under the FCC’s current rules, a minor change is defined as one in which the 60 dBu contour of the existing and proposed FM translator facilities overlap.  The Mattoon waiver treats applications that would normally be classified as major changes under the FCC’s rules as minor changes so long as the current and proposed facilities are mutually exclusive, i.e., so long as the interfering contour of the translator’s licensed facilities overlaps with the protected contour specified by the application for new facilities.[1]  Interfering contours are larger than protected contours, and therefore the Mattoon waiver allows applicants to move a greater distance in one “hop” than would otherwise be allowed under a strict reading of the rule.   The waiver request filed by Way Media sought to expand the geographic area in which a translator could hop even more by removing the requirement that the current and proposed facilities  have overlapping interfering and protected contours.  Instead, Way Media proposed that its new translator be located within the larger 0.025 mV/m interference contour of the primary AM station. Continue Reading

Yelp Settlement With FTC Over Alleged Children’s Online Privacy Protection Act Violations Highlights Possible Pitfalls of Age-Gating

Posted in Privacy

Recently, the Federal Trade Commission (FTC) announced that Yelp, Inc., the online review service, has agreed to pay a civil penalty of $450,000 for failing to comply with the Children’s Online Privacy Protection Act (COPPA).  COPPA requires companies that collect information from children under 13 online to follow a number of steps to ensure that the children’s information is protected, including seeking verifiable parental consent before collecting any information from a child.  COPPA applies to companies that run websites targeted at children, as well as those deemed to have “actual knowledge” that their websites collect information from children under 13.  According to the FTC’s complaint, even though Yelp is intended for general audiences and its website expressly states it is not directed at children under 13, Yelp fell into the latter category.

Yelp (among other things) allows users to review restaurants and other businesses via both its website and mobile apps.  The website and apps each require a user to provide his or her date of birth in order to register for the service, a mechanism commonly referred to as “age-gating.”  According to the complaint, however, Yelp failed to implement a functional age gate in its apps, despite having an effective age-gating mechanism on its website.  As a result, several thousand users were able to register for the service despite providing a date of birth showing that they were under 13 years old.  Yelp then collected information from those apparently under-age users, including their names, e-mail addresses, locations, and information that they posted on Yelp.  Because Yelp collected information from users who provided birthdays indicating that they were under 13, the FTC alleged that the company had “actual knowledge” that it was collecting information from children in violation of COPPA.

In addition to the $450,000 civil penalty, the terms of Yelp’s settlement with the FTC require it to delete information it collected from consumers who stated they were under 13 years of age at the time they registered for the service.  The settlement will also require the company to comply with COPPA requirements in the future, to submit a compliance report to the FTC, and to adopt recordkeeping and compliance monitoring measures.

The lesson for companies that collect personal information online and use age gates to restrict access by children is simple – immediately destroy and delete any information inadvertently collected from children under the age of 13.  You should also take steps to ensure that your age gate works properly by testing it regularly.

What to Expect From President Obama’s Executive Order on “Drone” Privacy

Posted in Broadcast Regulation, Broadcast Technology, First Amendment, Privacy

Last week, U.S. Supreme Court Justice Sonia Sotomayor suggested Americans should be more concerned about their privacy being invaded by the spread of drones, stating that “frightening” changes in surveillance technology should encourage citizens to take a more active role in the privacy debate.  She said she’s particularly troubled by the potential for commercial and government drones to compromise personal privacy.  According to reports, Sotomayor opined, “there are drones flying over the air randomly that are recording everything that’s happening on what we consider our private property. That type of technology has to stimulate us to think about what is it that we cherish in privacy and how far we want to protect it and from whom.”

While the Federal Aviation Administration (FAA) considers what we’ll call the safety issues attendant to the operation of commercial unmanned aerial systems (UAS) in U.S. airspace,  President Obama reportedly intends to issue an Executive Order addressing the privacy concerns.  Although the details of the Executive Order are not yet clear, we understand that it will in part task the National Telecommunications and Information Administration (NTIA) with convening a multi-stakeholder process to develop privacy guidelines, likely either in the form of best practices or a voluntary code of conduct, for commercial UAS.  With the help of our partners, Nancy Victory and Anna Gomez, former head and deputy head of NTIA, respectively, below we answer the most pressing questions about what to expect from the NTIA process and the much-anticipated Executive Order.

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