FCC's Wheeler declares cord cutting to be an official thing, puts hard sell on spectrum auction

LAS VEGAS--Speaking to a packed Las Vegas Convention Center ballroom at the National Association of Broadcasters 2015 Conference here, FCC Chairman Tom Wheeler said the pay-TV industry is in decline, and broadcasters should take advantage of the emerging cord-cutting trend.

"We see a number of people cutting the cord and pairing an over-the-air antenna with some OTT services," Wheeler said, referencing the FCC's recently published 16th annual Video Competition Report.

"For the first time, we saw a full-year decline in the number of pay-TV subscribers, with most all of those losses coming from cable," he added. "Why is this happening? Broadband is bringing in new services like Hulu and Amazon Prime. And with the high prices of pay-TV bundles, consumers are pursuing alternatives."

While Wheeler officially recognized the cord-cutting trend as "on," he virtually ignored lawsuits filed earlier this week by cable interest groups the ACA and NCTA, and the wireless industry's CTIA,  seeking to repeal the FCC's recently passed rules mandating Title II regulation over internet service providers.

Wheeler merely referenced "the elephant in the room," and said he hopes the court throws those suits out soon "so we can move forward."

He also urged NAB constituents to support the FCC's new net neutrality rules.

"The Open Internet safeguards are increasingly important distribution channels for your most important products, local news and information," Wheeler said. "It frees you from the risk of discrimination or holdup by a gatekeeper."

Wheeler saved the most impassioned portions of his dialog to sell broadcasters on the upcoming spectrum auction, which he said will occur sometime in early 2016, with applications being accepted later this year.

Calling the event "a once-in-a-lifetime opportunity to expand your business model on somebody else's dime" for station owners, Wheeler said the recently completed AWS-3 auction, which netted nearly $45 billion, is proof that there is strong demand for more spectrum for wireless broadband.

"We're repacking the [600 Mhz band] spectrum and selling it to the wireless industry in a manner that increases the value of the spectrum above what could be achieved from you going out and selling it yourself," Wheeler added.

He said the FCC will soon publish auction rules and procedures, which have been designed to "make broadcaster participation more accommodating."

Offering a sneak peak at what that means, he said station owners can enter the auction "risk-free," with the option of dropping out after any round if they don't like how things are going. He also said that channel sharing, which will allows broadcaster participants to sell their spectrum yet remain on the air, is still an option—one that will also be available even to broadcasters not entering the auction.

"We've already met with hundreds of interested broadcasters, and we still have more than 20 markets to visit," Wheeler said.

Finally, answering critics who said the major spectrum purchasers might be too tapped out by the AWS-3, Wheeler responded, "Those beliefs are belied by facts. AT&T, T-Mobile and Dish Network have all said they'll participate in the auction."

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