MAA - I was thinking about the sorry state of affairs, read this piece, and was relieved to know that there are more than just a few of us thinking about how to save our industry! :-)
Point-Counterpoint: Peter Tannenwald
Responds To The Chairman
Another view on the FCC’s efforts to repurpose broadcast spectrum for broadband-only use
FCC Chairman Julius Genachowski’s Op-Ed piece in the Washington Post shows his exceptionally energetic devotion to making broadband available to all Americans. But his perceptions of the need for broadband and how to meet it are both misguided and backward-looking.
No one disputes the importance and value of broadband in education, health care, and economic growth or the Chairman’s devotion to improving broadband access. But it does not follow that all broadband must be wireless or that TV services must be curtailed, stifling innovations like HD, multiple program channels, and 3D. On the contrary, if it will be possible at all to satisfy the seemingly insatiable public appetite for wireless services within a finite amount of spectrum, the best, if not the only, way to do it will be by marrying broadcasting and broadband into a combined service.
That means promptly unleashing broadcasters from today’s TV technical standards, which the FCC can do on its own, with no Congressional action. Freeing broadcasters from technical constraints will produce a much faster and more effective broadband result than the Chairman’s spectrum “repurposing” plan. In other words, the question is not whether spectrum should be used for broadband OR broadcasting, but whether and when the FCC will allow it to be used for broadband AND broadcasting.
The FCC must plan for spectrum use based on the technology of the second decade of the 21st century, not the first decade. Let’s leave aside for now the question of whether most of the escalating demand for wireless capacity is driven by socially useful needs or by entertainment and gaming. Few would dispute that if the demand curve continues rising rapidly, and we stay with today’s technology, there is not enough spectrum to go around, even if we use all the spectrum in the universe for broadband. Wireless companies know this. They are building wi-fi into their new smartphones to drive as much traffic as possible off their cellular networks. Verizon has indicated that it will introduce a television broadcast component into its future LTE system, knowing that it cannot meet video programming demand on an individual session basis.
The principal cause of the shortage problem is the architecture of first-decade technology, where each user’s request for content generates a separate digital stream in response. One way to solve the capacity problem is to drive more traffic to wired systems, a seemingly unpopular option with the unwired generation. Another is to deliver frequently used content only a few times instead of every time viewing is requested. That is exactly what broadcasting does: it efficiently distributes content over a stream that occupies the same amount of spectrum no matter how many people use it. The only thing that is different about today’s demand for video content is the desire for time-shifting, which is becoming easy to accomplish, without using more spectrum, by storing and replaying content in the user’s device. That is what DVRs and advanced set-top boxes do today, with cellphones and portable tablets not far behind.
Each TV station has 19.4 megabits of digital capacity, which can be used to provide both broadcast and non-broadcast services under today’s FCC rules. Moreover, broadcasters must pay the government 5% of their non-broadcast digital revenues, providing the public with an ongoing perpetual financial benefit instead of one-time auction revenue, which is a flash-in-the-pan. Some tens of billions of auction revenue dollars may make the government budget look nice for a year, but it will be worthless to future taxpayers and will mean that you and I will have to pay for the bids through higher priced wireless services. Even a competitive marketplace does not sell services below cost for long.
It turns out, though, that today’s ATSC digital TV standard is a poor choice for maximizing the use of digital capacity and is unsuitable for the two-way communication that broadband users expect to have available. Other technical systems, well known to engineers today, can do the job much better and will allow multiple TV broadcast channels streams to be offered for everyone to view along with broadband services that fill content requests from individual users. Up-to-date digital standards will not render today’s digital consumer TV sets obsolete, the way the final DTV transition in 2009 rendered analog sets obsolete. When you start and end with digital content, translating one format into another is much easier and cheaper than translating a digital signal into something an analog set can use.
A favorite mantra of government regulators when they do not want to do something is that they must be careful to avoid “unintended consequences.” For all the good things broadband does, it also has been an enormous engine for pornography, fraud, privacy invasion, and many varieties of cyber-crime, to say nothing of turning our children into keyboard punchers who are not learning critical face-to-face interpersonal relationship skills. But leaving aside whether the FCC should take responsibility for the sociological consequences of its actions, there are also important industry structural dangers in the FCC’s relentless drive to truncate television spectrum.
The FCC has emphasized the benefits of broadband on the consumer side, but it has neglected the supplier side – participation in the provision of services rather than just using them. If some TV stations are shut down, the stations most likely to fall first will be small businesses, minority owners, and stations which program to other than the lowest common denominator mass audience. They may drop out because of the temptation of money from an incentive auction or because the FCC tightens the squeeze with new regulatory fees and other regulatory burdens and drives them out of business. Broadcast ownership will become more concentrated, notwithstanding concerns repeatedly voiced by FCC Commissioners about lack of diversity in today’s media marketplace.
With over-the-air viewing options reduced, TV will become more and more an all-pay commodity, and everyone will have to pay the ever-increasing cost of cable or satellite services, including renting or buying set-top boxes for not just one but for every receiver in the home. Moreover, auctions will drive spectrum into the hands of the largest wireless companies, because they are the wealthiest, though they have already accelerated wireless ownership concentration during the past decade and have generated complaints from rural areas about poor service and lack of access to the newest handsets.
In other words, although there is much professed concern about today’s ownership concentration levels, the real long-term legacy of the current FCC’s plan will be the greatest increase in concentration of ownership in both the media and wireless industries that the nation has ever seen.
Only the Chairman and the other Commissioners can provide the leadership needed to produce results that will truly increase spectrum efficiency. They should unleash free market forces and let you and me vote with our purchases to decide how and when spectrum will be repurposed instead of doing it by government fiat. Unfortunately, access to the ears of the Commissioners is dominated by the largest companies like Google, Microsoft, Comcast, Dell, Verizon, and AT&T. Those names appear almost every day on FCC-published lists of ex parte presentations. Their financial resources enable them to out-lobby potential market entrants with new ideas by 10 to 1 if not 100 to 1. That makes it very difficult for new start-up voices to be heard at the top level of the agency.
The current FCC has said over and over again that it wants its decisions to be data-driven; yet the government’s spin machine is in full swing, through articles, speeches, and panel discussions with carefully chosen participants. The goal is clearly to persuade the public that TV spectrum reallocation is the only hope for the future of our society. This premature announcement of the regulators’ conclusions, before a formal rulemaking has even been started, has already scared capital away from the development of new and better ways to use spectrum for both broadcasting and broadband at the same time. Once again, our future is being turned over to the largest corporations, vastly reducing the likelihood of competitive innovation by newcomers who might have the best chance of really unleashing the potential of radio spectrum.
It has always been difficult for the FCC to lead the way to truly new technology rather than adjusting regulations to accommodate what has already been developed. Today’s FCC shows no signs of breaking free from that history. It has already taken action that forced one innovative spectrum developer to suspend operations and seems determined to freeze the status quo and keep others out until its preconceived program can be implemented.
The way to accelerate the availability of wireless broad service to the public, without the need for a long political process, is not to “unleash” inanimate spectrum as much as to unleash the companies that are now using spectrum by removing technological straightjackets. These diverse companies, including small and locally-owned businesses, are more likely to start broadband service sooner and provide more new jobs and new ideas than the FCC’s plan to allow the largest and wealthiest corporations to concentrate control over the spectrum resource that is supposed to belong to the American people.