At 8:55 AM -0400 5/26/05, Tom Barry wrote: >But I'm not sure the spectrum would be considered worth as much if >you didn't get to be a permanent gatekeeper. (mixed blessing) There's an excellent chance that it could be worth more. If a company buys spectrum at an auction they need to recoup that investment, which essentially becomes a tax on consumers. In theory, when the auction term ends, the company that has been using the spectrum has a major advantage in that they have already amortized their infrastructure costs - this can make it less appealing for competitors to bid for that spectrum, allowing the incumbent to re-up at a better price. If a real marketplace existed for using the spectrum, I believe that competition for this resource would cause the revenues to be maximized, especially during off peak periods. Today there is little incentive for broadcasters to offer access to their spectrum for applications that might compete with them. For example, a service that used overnight capacity to download programming to PVRs might be considered to be a competitive threat to broadcasters, as these programs might be viewed during the time periods when the station has maximum revenue potential. Stations tend to fill these off-peak periods with "easy money" that is not a competitive threat, such as infomercials. And then there is the reality that broadcasters pay practically NOTHING for using the spectrum today. The major costs are the license and administration fees they pay to the FCC, which are typically less than $100,000/yr., even in the largest markets. In recent years, network compensation to affiliates has been reduced and in some cases eliminated. The networks are in essence getting a free ride, based on their leverage over affiliates. Contrast this with a system in which the content owner or local content aggregator would be required to bid for use of the spectrum against other broadcasters AND new competitors who might have the incentive to challenge the entrenched incumbents. No entity could sit on their spectrum and use it at less than market rates, as is the case today. To be completely accurate, any fees paid to a spectrum utility would have three components. 1. Capital considerations - today a broadcasters must pay capital costs to build the transmission infrastructure. These costs would move to the spectrum utility, freeing up capital for other uses. 2. Operational considerations - one of the largest ongoing expenses for broadcasters is the power bill for the transmitters. To this one must also add ongoing operational and maintenance costs, including personnel. This money would be available to pay the spectrum utility for access to the spectrum. 3. Opportunity costs - With competition, the cost for access would presumably increase during those time periods when demand is highest. And, if different classes of service were offered, there would be multiple peak periods based on each class of service (e.g. prime time for fixed receivers and drive time for mobile receivers). This is the component of the system that would potentially drive up revenues for the utility. Thus, there is already a large pot of money that would be available to the spectrum utility, even if we assume that broadcasters would pay no more than they do today for the first two items above. Any new users of the spectrum would provide incremental monies to drive the system. Thus I assume that a market driven system would more efficiently allocate the scarce spectrum resources and that the spectrum utility could operate profitably, while providing the government with a healthy amount of annual revenue for use of the spectrum resource. Regards Craig ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.