[opendtv] Opinion: Putting A Price Tag On TV Spectrum
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 26 Nov 2009 09:57:04 -0500
http://www.tvnewscheck.com/mobile/newsletter/article.php?id=37599&type=pm&date=20091125
Putting A Price Tag On TV Spectrum
By Tom Hazlett
Nov 25, 2009, 3:42 PM ET
Hi, broadcasters. I'm an economist. Happy Thanksgiving. Let's talk turkey.
People say you're sitting on some very valuable radio spectrum. Like
about $107 billion worth at March 2008 prices. And "sitting" is the
inoperative word because the FCC's broadcast TV license has you
frozen on those 49 channels.That's the 294 MHz of rich, fertile
bandwidth that iPhone users (and the network engineers they bug most)
dream about morning, noon and night. You're just running up a
wretched electricity bill while the world has moved on. There's no
app for that.
Indeed, if you had it to do over again, you wouldn't even use
terrestrial broadcast. I know because some of you have done it over
with ESPN and CNBC and FX and scores of other cable networks. That
Travel Channel deal valued the network at $1 billion.
You folks could have a broadcast travel channel of your own and
broadcast it on one of your digital subchannels to all 114 million TV
homes. But no one is watching your off-air-only channels. Not even
Aunt Minnie in Peoria, the one who was supposed to go bonkers when
analog went dark last June.
That's fine. You've still got good shows. I don't need forensic
experts from CSI: Hollywood to know that. You're not 100 percent of
the TV market, like you were when the FCC stepped in to limit upstart
cable TV systems 40 years ago on the grounds that cable would
"siphon" viewers, but would never be a real competitor. (Boy, did the
Washington bureaucrats blow that one) But you've still got the Super
Bowl and Dancing With the Stars, and haul in $40 billion in ads every
year -- or you did until recently.
You don't need the TV band for that. Others like mobile broadband,
smart phones and e-readers and M2M networks do. It's the coming
wireless bandwidth tsunami. The carriers are starved for airspace,
and you're way long in the stuff. Time for a deal.
You know that. I know that. Even the new crew at the FCC knows that.
But they think that you're imbued with the "public interest" and have
a spiritual attachment to terrestrial radio transmissions. I follow
the money. Your greatest desire as a broadcaster is to secure cable
and satellite carriage.
That's business, not religion. You bought your stations from a
broadcaster who also had a deep, metaphysical investment in the
"public interest" and followed that shining light right all the way
through escrow.
A fierce commitment to the TV allocation table of 1952 is your
opening bid. You won't budge until you know three things. First, how
much will you be paid to do your part? Second, how will your life
change? And, third, how can you be sure that you won't get whacked by
the opportunists in Congress -- the ones you've been scaring all
these years about any competitive threat to "free, universal,
over-the-air TV" -- when they catch a clue that you're prepared to
sell out?
The first two questions are answered by seeing what the FCC should
do. It should split the TV band into seven overlay licenses of 42 MHz
each. Then auction all seven.
At the same time, it should provide a mechanism to supply the 10
million households not having a cable or satellite subscription with
free broadcast video service for five or 10 years. This can be done
by vouchers, as with the DTV set-top box subsidies or via a
procurement auction. It won't cost more than $3 billion ($300 times
10 million), a small fraction of the spectrum auction receipts.
The overlay licenses will embed encumbrances -- you. Existing
stations would have the right to continue broadcasting, to relocate
to another channel assignment or to go off off-air. No worries about
coverage. The new spectrum owners will pay cable and satellite
operators to guarantee carriage. If not, you won't vacate.
So "free" TV service remains, but the delivery platform will be
technology-neutral. And you'll be part of the solution, for which you
will be compensated. How does something like $30 billion spread
across 1,750 full-power TV stations sound to you?
That figure simply derives from the prices paid in last year's 700
MHz auction. At $1.28 per MHz per capita, a station in New York might
clear $200 million. A station in Spokane, Wash., about $8 million.
Again, these are estimates. Real prices may vary.
That gets us down to your greatest fear: you lose your "public
interest" veneer when you start quoting sell prices. So, don't. Just
sit there. Let the FCC move forward with a smart plan like this. It's
actually in the public interest to unleash new bandwidth for the
services consumers most desire. And it makes the U.S. more
competitive in the Global Broadband Race.
Here's the blunt end of the stick: Losing your special place is no
longer much of a problem. There's just not much left in your business
model. What can "public trusteeship" deliver that matches $30
billion? Or a tenth of that?
Thomas Hazlett is professor of law and economics at George Mason
University. He formerly was chief economist of the FCC.
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