More on Auction Limits

[Commentary] The word out of the Federal Communications Commission is that we can expect a 600 MHz auction framework item in the May timeframe. This has set the auction restrictions drums beating (again).

Calls for large-carrier limitations and even strategic set asides are growing ever louder. In all the rhetoric, some fundamental facts are getting lost. So, let’s ground this debate.
Fact No. 1: It will take a lot of revenue for the incentive auction to be successful.
Fact No. 2: No one bidder can run a $30 billion table.
Fact No. 3: A set aside of any type will only exacerbate the $30 billion revenue challenge.
Fact No. 4: A low band cap will also exacerbate the $30 billion revenue challenge.
For this auction to succeed, the FCC must attract wide broadcaster participation in major markets. Period. No exceptions. And to do that, the FCC must be prepared to meet prevailing price expectations.

We are firmly convinced that scoring on any basis related to station value or revenue will undermine the very broadcaster participation that is essential to success. TV stations are selling spectrum -- not their broadcast businesses. And if broadcasters don’t show up, the question of whether the auction will raise the necessary revenue on the forward side will be moot.