VERY interesting, good post Craig! >-----Original Message----- >From: opendtv-bounce@xxxxxxxxxxxxx >[mailto:opendtv-bounce@xxxxxxxxxxxxx]On Behalf Of Craig Birkmaier >Sent: Tuesday, November 03, 2009 5:20 AM >To: OpenDTV Mail List >Subject: [opendtv] Commentary: Be Wary Of FCC's Cash-For-Spectrum Plan > > >WOW! > >This is a very well written commentary by a former broadcaster who >now specializes in spectrum allocation and reallocation proceedings. >There is a wealth of information and some honest assessment about the >plight broadcasters are in - brought on in part by their >unwillingness to "buy a new coat." You'll need to read the column to >understand this. > >I have highlighted a few of the most interesting paragraphs that say >volumes about the current situation and the reality of why >broadcasters chose poorly when they developed the ATSC standard. > >Regards >Craig > > > >http://www.tvnewscheck.com/articles/2009/11/02/daily.8/ > > >GUEST COMMENTARY BY JOHN HANE >Be Wary Of FCC's Cash-For-Spectrum Plan >By John Hane >TVNewsCheck, Nov 2 2009, 1:03 PM ET > >The FCC has created a big stir by proposing that broadcast spectrum >be re-purposed for mobile broadband and suggesting that broadcasters >might be compensated for vacating the spectrum. Just a few days after >Blair Levin floated the idea, the CEA released a study authored by >Coleman Bazelon -- a beautifully written document that must have been >begun long before Levin broached the subject -- offering a financial >calculus of the value of broadcast spectrum if auctioned for mobile >broadband. > >Reaction from broadcasters ranges from intrigue to outright rejection. > >Well, the toothpaste is out of the tube, so to speak, so broadcasters >need to come up with a framework for analyzing the situation and >responding to the opportunities and threats presented. > >The questions broadcasters are asking are the right ones. The answers >will be a long time in the making, but this primer offers some >starting points. The bottom line is that transition payments, if any, >will come many years from now and are unlikely to be substantial >compared to the enterprise value of most leading television stations. > >This came out of left field. Why, and why now? > >The superficial answer is that mobile data demand is growing faster >than anyone could have expected. That's true, but the real impetus is >the change in administrations. Almost every item on this FCC's top-10 >list starts with "broadband," and mobile broadband is a big part of >it. The FCC has the backing of the White House on this, so this >debate is here to stay. > >Is there really a shortage of spectrum for wireless broadband service? > >>No, in the short and intermediate terms. Yes, in the long term. >>Demand is growing faster than supply, but a lot of spectrum that has >>already been allocated, auctioned and licensed is undeveloped or >>underdeveloped. If the entire television band were vacated tomorrow >>it would take many years and hundreds of billions of dollars in >>capital to develop it fully for broadband use. The FCC's broadband >>task force is right to look ahead, because no spectrum incumbent is >>going to go away quietly, but at the moment there is more wireless >>broadband spectrum available than there is capital to develop it. > >>That said, wireless spectrum doesn't have an absolute amount of >>capacity. Carriers can add more towers, change spectrum re-use >>patterns, improve filters, update transmission standards and do any >>number of other things to push more traffic through a fixed amount >>of spectrum. So even if the swaths of spectrum allocated to wireless >>broadband remain fixed, there's a lot more room for growth in >>existing allocations. More spectrum can lower the cost of >>development, and ultimately it can provide for more capacity, but >>spectrum isn't the only path to capacity growth. > >Moreover, while allocations are made nationally, demand is highly >correlated to populated areas and major highways. Geographically >speaking, in most of the country, there is no shortage of spectrum >for wireless services today. Even if stations could "cash in" their >spectrum today with minimal hassle, there probably would not be many >takers. > > >Why the television spectrum? > >>It's obvious if you look at a spectrum chart. There are two places >>to find substantial amounts of spectrum that's good for mobile data: >>the government and broadcast television. Other spectrum blocks >>exist, but they are smaller and reclaiming them would amount to >>trench warfare. As hard as it is to reclaim government and >>television spectrum, if you succeed, there's a big payoff. > >How much could I get for my spectrum? > >That depends on a lot of factors that can't be predicted. In most >cases, both the amount of compensation and the timeframe for getting >it are likely to come as big disappointments to any broadcaster that >expects a windfall. > >The money available to compensate broadcasters will not be higher >than the likely proceeds of an auction of the unencumbered spectrum >and in all likelihood it will be far less, because the Treasury will >take most of the proceeds and the costs of whatever transition plan >is devised will consume most of the remainder. > >The CEA study floats a benchmark (based on the most recent 700 MHz >auction) of $1/MHz/pop, but that spectrum was, in effect, already >cleared out by the government-mandated DTV transition. Anybody buying >broadcast spectrum is going to have to pay, directly or indirectly, >the cost of transitioning existing broadcast stations to other >spectrum or some other delivery means, or pay the cost of simply >buying out existing broadcast operations and shutting them down. > >About two million people live in the Kansas City Metropolitan >Statistical Area. Assuming a Kansas City station is credited with >covering them all, auction of its 6 MHz channel at $1/MHz/pop would >yield $12 million. A lot of this would be spent on whatever >transition mechanism is used and the Treasury will keep a substantial >portion of the remainder. Perhaps $1 million to $3 million would be >available as an "incentive" payment to the station. > >Of course, when you're selling spectrum the underlying franchise >value isn't relevant, so a marginal noncommercial station would have >the same spectrum value as the leading network affiliate, even though >the business risk of the transaction would be much higher for the >more valuable station. Perhaps someone can devise a mechanism for >rationalizing payments depending on the value of the station for >broadcasting purposes as opposed to the raw spectrum calculation, but >that would entail a long, complicated battle that would extend the >timeframe for resolution and proportionally reduce the present value >of the transaction. > >How would a reclamation process work? How long would it take? > >There are many different ways to proceed, each with its own set of >challenges. They can be split roughly into two different categories, >depending on whether we assume that another round of re-packing will >occur. > >>Without belaboring the point, there's very little auction value in >>any individual license if the spectrum isn't re-packed. Viewed from >>the perspective of someone planning a terrestrial service, the >>current usage of the TV bands is wholly irrational. The usage today >>spreads across hundreds of MHz, but each 6 MHz block is only used >>here and there. Without repacking, a wireless carrier couldn't >>aggregate a coherent block of spectrum by purchasing broadcast >>license. Even if you buy every ch. 26 in the country (very >>unlikely), you still don't get full coverage, probably well under >>half the pops. > >Carriers don't want a hodgepodge of 6 MHz circles since current >technology doesn't allow a single tuner to tune across hundreds of >MHz. Something in the range of 20-30 MHz per band is more like it. >Carriers won't put discreet frequency bands into devices just for >occasional use. It's too expensive. They need to know what blocks >they have, and they need those blocks everywhere they can get them. > >Because the spectrum really needs to be re-packed to yield any >licenses useful for auction, it's unlikely that any quick exit >scenarios exist. That means broadcasters are unlikely to see any >dislocation payments for many years. The idea on the table seems to >be that some or all broadcasters would voluntarily commit to turn in >their existing licenses on a date certain. Those licensees would be >promised a share of the proceeds of any subsequent auction. > >Presumably the FCC would adopt some mechanism to modify the licenses >of stations that did not consent to the plan. The FCC would then draw >a new broadcast band using a far smaller swath of spectrum and >consolidate all television stations in that band, presumably using >shared 6 MHz ATSC facilities. > >There probably would be little or no room for high definition, mobile >or multicast, although if multiple ownership relief came as part of >the deal, some broadcasters may be able to consolidate enough shared >spectrum to provide differentiated services. There have been >suggestions that stations could provide high-definition feeds to >cable and satellite distributors, but (as explained below) any >spectrum reclamation would jeopardize must-carry rights. > >With the band plan final, the FCC would auction the spectrum and set >a transition date, and the process would proceed much like the one >just completed. Auction winners would likely be responsible for >paying transition costs and completing the transition. Either the >auction winner or the Treasury would make some sort of dislocation >payment to broadcasters. > >At present there is no mechanism to guarantee that broadcasters would >be paid anything or that any promised payments would actually >materialize. So at one level, this would be the digital equivalent of >giving Wimpy a hamburger today in exchange for payment on Tuesday. > >Is the broadcast spectrum really underutilized? Should it really be >reallocated and auctioned for wireless broadband? > >The answer is not as simple as some people contend. Although Coleman >Bazelon is an excellent economist, he's also an advocate with a job >to do, just like a lawyer or any other consultant. His study for the >CEA makes a lot of assumptions, many of them explicitly stated in the >text, that may not or simply will not hold true in practice. > >But let's assume we conclude that the broadcast spectrum is >underutilized. There's a big jump from that point to the conclusion >that the spectrum should be reclaimed and auctioned for wireless >broadband use. > >>We should first understand why it is underutilized and whether that >>is a temporary or a permanent condition. It's true that not many >>people directly receive television broadcasts today, but the reason >>is more likely to be archaic technical rules and ownership >>restrictions that simply don't allow broadcasters to fit into the >>way people want to consume video today. >> >>If today's mobile devices still looked like first-generation cell >>phones and if it were impossible to roam nationally there wouldn't >>be 270 million cell phones and we may well conclude that, by modern >>standards, the wireless service bands are underutilized. >> >>The FCC imposed the ATSC standard, which is (from a consumer's >>perspective) very, very hard to use. By contrast, the FCC does not >>mandate which standard wireless carriers use. Consumers want and >>expect their services and devices to be engineered for plug and play >>and they expect services that can only exist when a return path >>exists. ATSC does not fit the bill. Moreover, ownership limits >>prevent anyone from providing a consistent coast-to-coast service or >>introducing a game-changing service in any local market. If people >>find broadcast spectrum hard to use, Part 73 of the FCC's rules is >>the first place to look for some of the reasons. >> >>Broadcasters are working within the FCC-imposed constraints to >>improve utilization. Mobile and multicast services are being >>launched. The digital transition was completed just a few months >>ago, and over-the-air usage is actually up a bit by many measures. >>Equally important, television broadcasting does not actually "use" >>294 MHz of spectrum nationally. Depending on how one counts, much or >>even most of the television broadcast band is already open for >>unlicensed wireless broadband use. >> >>Auctioning reclaimed broadcast spectrum would require also >>reclaiming vast areas of spectrum now reserved for unlicensed use. >>The net effect would be to capture spectrum that now provides or >>soon will provide a wide range of free services to the public -- >>multichannel video, mobile video, and unlicensed wireless services >>-- and sell it to entities that operate subscription services. > >It is almost certainly true that the broadcast spectrum can be better >used than it is today, and starting from a clean slate, re-allocating >some of the band for licensed mobile service makes sense (especially >if those carriers were required to provide a return path for >remaining broadcast services). It would probably be a healthy thing >for the industry if some broadcasters sold out and signed off. But it >is logical fallacy to conclude, based on the success of the recent >700 MHz auction, that the great majority of the television broadcast >spectrum should be reallocated and auctioned for licensed mobile >services. > >>To make the right policy choices, we need to think about the best >>way to provide digital services to a mobile population, and free, >>advertising- or viewer-supported noncommercial services are >>undoubtedly part of the mix. Projections of exponential growth of >>wireless broadband demand are based in substantial part on growing >>demand for unicast video. Most of that demand can be met much more >>efficiently through broadcast services, especially five or 10 years >>from now, when any mobile device will have enough memory to store >>hundreds of hours of video. > >People consume services, not bandwidth, and not all bits have the >same value. Arguments that proceed from the premise that we have to >provide the greatest number of bits-per-Hertz to the exclusion of all >other considerations are far too reductionist. Just because the FCC >(with the support of several industries) made some poor choices about >the digital television standard, it does not follow that video >broadcasting services are no longer relevant. > >What else do broadcasters need to consider? > >Although most people don't get their TV over the air, many of the >legal constructs that help make television stations valuable -- >including must carry, compulsory copyright and even network >non-duplication and syndicated exclusivity -- are tied to the >spectrum one way or another, and if you take the spectrum away, those >legal constructs are more vulnerable to being dismantled by the FCC, >Congress or the courts. > >Must carry survived 5-4 in the Supreme Court last time around. If the >FCC pursues a protracted proceeding in which the basic premise is >that free over-the-air broadcasting is much less important to the >public than it used to be, it will be interesting to see how the >Supreme Court reacts the next time it chooses to review the issue. > >Is there anything good about this for broadcasters? > >>There's actually a lot to like. The FCC appears to think that >>broadcasting is undervalued as a service. If this motivates an open >>debate about how broadcasting can be improved then the FCC and >>perhaps even Congress may take a fresh look at archaic regulations >>that are binding broadcasting to a model defined by its overwhelming >>technical and market success in the last century. >> >>Thomas Jefferson observed, "We might as well require a man to wear >>still the coat which fitted him when a boy as civilized society to >>remain ever under the regimen of their barbarous ancestors." >>Television broadcasting is not in need of euthanasia, but it may be >>time to shop for a new coat. > >John Hane is counsel in Pillsbury's communications group. Formerly a >broadcaster and in-house counsel for NBC and a major television >broadcast group, Hane currently represents clients in complex >spectrum allocation and licensing proceedings. He holds three >patents, including one addressing DBS spectrum re-use and another >disclosing a method of asynchronous broadcast video distribution. He >can be reached at 202-663-8116 or john.hane@xxxxxxxxxxxxxxxxx > >Copyright 2009 NewsCheckMedia LLC. All rights reserved. > > >---------------------------------------------------------------------- >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. > ---------------------------------------------------------------------- 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.