The upshot is that once the auction is all over, the TV stations that have decided to sell their spectrum will either change channels, share channels with other TV stations, or go off the air entirely. This could disproportionately affect smaller or minority-owned stations that are struggling financially, because they have the least to lose from agreeing to participate. The bigger stations will need to balance commercial interests with the possibility of a one-time cash windfall. However it shakes out, this could mean a big interruption in your regularly scheduled programming.
CBS, NBC and a range of other TV operators have now officially filed to participate in the auction, which is being run by the Federal Communications Commission. Starting in March, TV stations belonging to those operators will begin selling off their spectrum rights to the government and eventually switching channels, partnering with other stations, or going off the air. Some stations in really important markets stand to make hundreds of millions of dollars by doing this, which is why the FCC has been heavily promoting the auction as an "extravaganza" and a once-in-a-lifetime opportunity for the broadcast industry.
We don't yet know how many stations have applied, or in which markets — that's information that in some cases could change how other TV stations behave. For instance, if I'm a station owner in San Francisco thinking about selling, that could change the business plans for my rivals in the region. And tipping my hand that way would be bad for me. Just because a network like NBC says it plans to sell off TV spectrum in some markets doesn't mean all of its stations will be doing so. Nor does signing up mean the stations will ultimately go through with the sale — participating stations have until late March to pull out of the auction.
That's why the FCC is leaning against releasing any data about the applicants. But some at the agency, such as Democratic commissioner Jessica Rosenworcel, want at least some information disclosed in order to give the public an idea of how big a deal this auction will be.
"What we'll be able to see from that," said Rosenworcel at the Consumer Electronics Show this month, "is that there's a lot of interest in this auction and this interest is the first step in having a successful auction."
Interest levels in the auction really do matter, because the more TV stations give up their spectrum, the more spectrum will be available for other companies to buy up and use. Yes, the auction is actually split into two parts, and this next bit is the whole reason the event exists: To put the TV spectrum into the hands of other companies.
Firms from a range of industries — tech, cellular, cable and satellite — are widely said to be interested in paying for access to the TV stations' spectrum. It'll be useful for upgrading 4G LTE networks, for instance, or enabling cable companies to start offering cell service of their own. Because the TV stations have a little over three years to actually relinquish their spectrum once the auction's complete, the whole process might not wrap up until 2020, but there's a great deal of attention being paid to the auction now because it's the start of something that could reshape how we interact with technology in the future.
So, in short: TV stations sell their spectrum to the government. The government turns around and re-sells that spectrum to other companies, making back what it pays out to the TV stations (and then some, it hopes). The result is a huge transfer of airwaves from one industry to potentially many industries, accelerating the development of future wireless technologies.
The catch is that to get there, you might lose your local TV station.