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Charter Communications Unlikely to Participate in FCC’s Broadcast Spectrum Auction

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The FCC’s broadcast spectrum auction

On February 4, 2016, Charter Communications (CHTR) announced its 4Q15 and fiscal 2015 earnings and indicated that its participation in the FCC’s (Federal Communications Commission) broadcast spectrum auction was unlikely.

Thomas M. Rutledge, Charter’s President, CEO (Chief Executive Officer), and Director, stated in the company’s 4Q15 and fiscal 2015 earnings call that “with regard to the auction, we’re not in exactly the same place as Comcast because we have this pending transaction,” adding that the company “can’t be assured of what our footprint is. And so, it’s difficult for us to participate in the auction without regulatory clarity.”

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The company also stated in its 4Q15 and fiscal 2015 earnings call that it has not yet “seen” the MVNO (mobile virtual network operator) agreement regarding its acquisition of Time Warner Cable (TWC) and Bright House Networks. As a result, regulatory requirements may make it difficult for the company to participate in the auction.

What is the FCC’s broadcast spectrum auction?

This auction is set to be held on March 29, 2016, and will consist of two parts: a forward auction and a reverse auction.

In the forward auction, mobile broadband providers will bid for flexible usage of wireless spectrum licenses. In the reverse auction, television broadcasters will give up their usage rights for the 600 Mhz spectrum.

Comcast intends to participate

Comcast (CMCSA), by contrast, stated at the UBS (UBS) Global Media and Communications Conference held in December 2015 that it intends to participate in the 600 Mhz (megahertz) wireless incentive auction of broadcast television spectrum in 2016.

Comcast’s decision to sell spectrum usage rights for its NBCUniversal broadcast television network will depend on whether it gets a good price for giving up its spectrum.

Charter accounts for 0.41% of the PowerShares QQQ Trust Series 1 ETF (QQQ). For investors interested in exposure to the Television sector, QQQ has 4.5% exposure to the television space.

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