Updated 8/14/2015: We have learned that the initial application to participate in the reverse auction will NOT constitute a binding commitment. This post has been revised to reflect that new information.
One of the most common questions that we have received over the past several weeks is what exactly will happen on March 29, 2016. Several weeks ago, the FCC announced (through the title of the Auction Procedures Public Notice) that the Incentive Auction will “begin” on March 29, 2016. But it has remained a mystery what the Commission meant by “begin” – until now.
According to the Auction Procedures PN, March 29, 2016 “will be the deadline for reverse auction applicants to commit to an initial bid option.” An explanation of the registration process will help put this in context. The process of registering for the reverse auction will include several steps:
- At some date in the future, the FCC will publicly release opening bid prices for all auction-eligible stations. This date will be at least 60 days prior to the deadline to file an application to participate in the reverse auction.
- Step 1: Initial Application – Prior to the deadline, auction-eligible stations must submit an application identifying for each station that it wishes to enter into the auction “every relinquishment option for which it would consider bidding for that station.” The initial application does not constitute a binding commitment; a station will not be bound to any option until it specifies a preferred bidding option among those selected. We believe, however, that this will be the date at which the prohibition on certain auction-related communications will take effect.
- Step 2: Bid Commitment – Prior to March 29, 2016, each applicant must commit to one of the bid options specified in the initial application as the “preferred option” for each station. This is a binding commitment in that: (i) it will be the option considered by the FCC in the initial round of bidding; and (ii) the station can only select an option that is lower in the hierarchy for future rounds (the hierarchy proceeds as follows: (a) off-air, (b) move to low VHF, (c) move to high VHF, (d) exit). However, stations electing to move to move to VHF as their preferred option may elect a fallback option for use if a move to VHF is not feasible at that time.
- After the March 29, 2016 deadline, the FCC will process the initial bid commitments and send confidential letters to each bidder indicating that: (1) the station is qualified to participate in the clock phase of the reverse auction; (2) the station is not qualified because no initial commitment was made, and therefore, that station will be designated to be repacked in its pre-auction band; (3) the commitment(s) made by the applicant for the station could not be accommodated, and therefore, that station is not qualified and will be designated to be repacked in its pre-auction band, or (4) the auction system determined that the station is not needed, and therefore, the station is not qualified and will be designated to be repacked in its pre-auction band
Thus, the first active round of bidding will not commence until some unspecified date after March 29, 2016.
Additional details about the application process will be explained in a forthcoming public notice from the FCC’s Wireless Telecommunications Bureau.
The Auction Procedures PN did not set forth a schedule for bidding once the auction begins, so, for now, the timeline for the auction remains anyone’s guess.