[opendtv] Analysis: What Is Your TV Spectrum Really Worth?
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 5 Sep 2009 08:25:42 -0400
http://www.tvnewscheck.com/articles/2009/09/04/daily.2/
JESSELL AT LARGE
What Is Your TV Spectrum Really Worth?
By Harry A. Jessell
TVNewsCheck, Sep 4 2009, 12:40 PM ET
In a classic Far Side cartoon, a bear is caught in the crosshairs of
a rifle. Aware of the peril, the wide-eyed bear forces a smile as he
stares into the rifle scope and frantically points at a clueless
companion.
Broadcasters and a lot of other users of the electromagnetic spectrum
may be feeling (and perhaps acting) like the targeted bear after FCC
Broadband Czar Blair Levin gave a little talk this week at
Washington's Metropolitan Club.
In his prepared remarks, Levin spoke about his big push to come up
with a comprehensive policy that would make broadband Internet a
reality in every last home and coffee bar in this great land of ours.
And then he took aim.
"This is already clear from the record: A key input is spectrum and
everybody agrees there is not enough of it," he said in his prepared
remarks. "Moreover, demand curves from new uses by smart phones
suggest a massive increase in demand ahead for that input."
During the Q&A, a broadcaster asked whether he and his fellow
broadcasters should be worried losing spectrum to the broadband cause.
"I want you to be worried," Levin said, according to the broadcaster.
"Everyone should be worried."
Now, everybody is. And I bet they are all pointing fingers like that
bear. In fact, I spoke to one TV lobbyist yesterday who told me that
it's not broadcasters the FCC should be targeting, but those
good-for-nothing mobile satellite bandwidth hogs.
The FCC may not yet have broadcasters in its sights yet, but there is
a growing body of work by academics, policymakers, broadband
advocates and think tankers that argues that broadcasting is a gross
waste of spectrum and that its many megahertz should be auctioned
off, leased or reallocated to some better purpose like wireless
broadband.
Many of these people have the ear of Levin and his like-minded boss,
FCC Chairman Julius Genachowski.
One such spectrum wonk is Philip Weiser, a former law and telecom
professor at the University of Colorado and Obama transition team
member who is now working in the DoJ's Antitrust Division.
"The reality...is that the spectrum dedicated to UHF TV broadcasting
has less value as a medium for transmitting TV signals than it does
for an array of other uses," he writes in a July 2008 paper published
by Brookings Institution.
And much of the value TV stations do have derives not from their
dwindling over-the-air reach, he says, but their must-carry rights
that entitle them to carriage on cable systems.
Broadcasters' natural inclination at this point is to go on the
defensive and start hollering about how the spectrum-grubbing
broadband lobby wants to deprive the poor and elderly of their free
TV service.
But that would be a mistake.
Levin's real mission last week was not to scare everybody, but to
prompt broadcasters and other spectrum stakeholders to participate in
the FCC broadband inquiry, to bring their best ideas to the party.
Genachowski extended the same invitation in his interview with me
last week: "Broadcasters may have their own ideas on how that
spectrum can be part of the broadband solution. I very much encourage
broadcasters to participate in the broadband process and to think
very big and creatively about opportunities in that spectrum."
Broadcasters should accept the invitation. Opportunity may be lurking
in Levin's broadband exploration.
Let's face it: There is some truth in what Professor Weiser says.
There may be more value in using broadcast spectrum for broadband
access than in airing reruns of Three's Company and The Brady Bunch.
If this is so, wouldn't it be nice if the owners of the spectrum were
in a position to capture the extra value?
A lot of broadcasters, particularly in small markets, are in the same
predicament as the condos owners in Florida. They are underwater and
would like to sell, but they can't. The no longer have the cash flow
to get back what they paid. This could give them a way out.
What broadcasters want to be on guard against is not policies that
would allow them to monetize their spectrum in new ways, but policies
that would take away their spectrum and give it to somebody else
without compensation or squeeze more services in and around the TV
spectrum in a way that causes interference and devalues it. That's
what the FCC is doing in its white spaces proceeding.
I really don't think anybody is trying to take spectrum away from
broadcasters, by the way. There seems to be a recognition that most
broadcasters bought their spectrum on the open market and have some
kind of property rights, even though the airwaves still technically
belong to the public.
Some of the ideas for putting broadcast spectrum to better use are
intriguing. Weiser would encourage broadcasters to sell their
spectrum to non-broadcast users by allowing the broadcasters to hang
on their must-carry rights for a number of years.
The broadcasters' proceeds, however, he says, would be subject to a
tax -- "high enough to address the concern of unfair windfalls, but
not too high such that it renders unprofitable or undesirable sales
of ... spectrum licenses."
Weiser also proposes a voluntary program under which broadcasters
would turn their spectrum over to the government, which would pool
and auction it for them. To encourage participation, the government
would give broadcasters just one year to opt in. Again, stations
would retain their must-carry rights so they could continue in
business.
Another idea floating around Washington, purportedly cooked up by the
FCC, proposes that TV stations set aside for sale all of their
spectrum, except for a small slice, enough to broadcast a single
standard-definition channel.
The broadcasters could then auction the freed-up spectrum themselves
or turn it over the government, which would pool and auction it on
their behalf and kick back some of the proceeds to the broadcasters.
The SD channel survives to accommodate the millions who still rely on
over-the-air TV and who just invested in new converter boxes and
antennas. The only folks that would get screwed would be those who
bought new HD sets in the expectation of watching HD broadcasts.
For the record, I believe that Weiser and other big thinkers grossly
undervalue over-the-air TV. As I have said here before, broadcasters'
ability to reach every TV home and every TV in those homes gives them
a powerful marketplace advantage over all the cable networks. It's
the last true mass medium.
And from a public policy perspective, broadcasting still provides
service to millions who can't afford cable and satellite, let alone
broadband. It also provides a communications link to the public that
has proven time and time again absolutely vital during local
emergencies.
In any case, TV broadcasters should participate in the Levin inquiry,
consider in good faith the proposals of others and come up their own
ideas for exploiting the tremendous demand for spectrum. Broadcasters
are in a nice position. They have a lot of what everybody wants.
But broadcasters need to be careful. They should run from any
proposals that try to force their hand or diminish their property
rights. A lot of people, including members of Congress, believe that
broadcasters should be allowed to profit from spectrum they never
really owned.
Remember: That Far Side cartoon is just one panel. We never find out
which bear actually gets shot.
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