[opendtv] Viewpoint: The Buried Treasure in Your TV Dial
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 28 Feb 2010 06:29:41 -0500
http://www.nytimes.com/2010/02/28/business/economy/28view.html?th=&adxnnl=1&emc=th&adxnnlx=1267355946-Q1n18NJnyMF4UAOvRXfITg
ECONOMIC VIEW
The Buried Treasure in Your TV Dial
By RICHARD H. THALER
Published: February 27, 2010
HERE'S a list of national domestic priorities, in no particular
order: Stimulate the economy, improve health care, offer fast
Internet connections to all of our schools, foster development of
advanced technology. Oh, and let's not forget, we'd better do
something about the budget deficit.
Now, suppose that there were a way to deal effectively with all of
those things at once, without hurting anyone. And suppose that it
would make everyone's smartphone work better, too. (I'll explain that
benefit shortly.)
I know that this sounds like the second coming of voodoo economics,
but bear with me. This proposal involves no magical thinking, just
good common sense: By simply reallocating the way we use the radio
spectrum now devoted to over-the-air television broadcasting, we can
create a bonanza for the government, stimulate the economy and
advance all of the other goals listed above. Really.
The reason for this golden opportunity may be in your purse or
pocket: that smartphone to which you could well be addicted. The
iPhone, the BlackBerry and competing devices are already amazing
technologies. But precisely because of the nifty features they offer,
like the ability to text photos, stream video and provide GPS
directions, the radio spectrum is looking as crowded as Times Square
on New Year's Eve. Demand for spectrum is growing rapidly - a trend
that will surely continue.
The problem is that the usable radio spectrum is limited and used
inefficiently. Think of it as a 100-lane highway with various lanes
set aside for particular uses, including AM and FM radio, TV and
wireless computer technology. The government - specifically, the
Federal Communications Commission - is in charge of deciding which
devices use which lanes.
Because we can't create additional spectrum, we must make better use
of the existing space. And the target that looks most promising in
this regard is the spectrum used for over-the-air television
broadcasts.
These frequencies are very attractive on technological grounds.
People in the industry refer to them as "beachfront property" because
these low-frequency radio waves have desirable properties: they
travel long distances and permeate walls. We have already allocated
parts of this spectrum for mobile wireless, and the F.C.C. recently
auctioned other parts for $19 billion. That has left 49 channels for
over-the-air television.
Why is the current use of this spectrum so inefficient? First,
because of the need to prevent interference among stations, only 17
percent of it is actually allocated by the F.C.C. for full-power
television stations. (The so-called white space among stations is
used for some limited short-range applications like wireless
microphones.)
Second, over-the-air broadcasts are becoming a nearly obsolete
technology. Already, 91 percent of American households get their
television via cable or satellite. So we are using all of this
beachfront property to serve a small and shrinking segment of the
population.
Suppose we put this spectrum up for sale. (The local stations do not
"own" this spectrum. They have licenses granted by the Federal
Communications Commission.) Although the details of how to conduct
this auction are important, they don't make compelling reading on a
Sunday morning. Interested readers should examine a detailed proposal
made to the F.C.C. by Thomas W. Hazlett, a professor at the George
Mason University School of Law who was formerly the F.C.C.'s chief
economist.
Professor Hazlett estimates that selling off this spectrum could
raise at least $100 billion for the government and, more important,
create roughly $1 trillion worth of value to users of the resulting
services. Those services would include ultrahigh-speed wireless
Internet access (including access for schools, of course) much
improved cellphone coverage and fewer ugly cell towers. And they
would include other new things we can't imagine any more than we
could have imagined an iPhone just 10 years ago.
But some compelling technology that could use these frequencies
already exists, like wireless health monitoring - to check diabetics'
blood sugar regularly, for example - and remote robotic surgery that
can give a patient in Idaho a treatment like that available in New
York or Chicago.
Who would oppose this plan? Local broadcasters are likely to contend
that they are providing a vital community service in return for free
use of the spectrum that was put in their hands decades ago. Whether
the local news or other programs are vital services is up for debate,
but their value isn't the issue, because they can be made available
via cable, satellite and other technologies, including improved
broadband.
Say there are 10 million households that still get their television
over the air, including those that can't afford cable or satellite
and some that generally just don't care for what's on TV. (Yes, there
are people who don't like "American Idol.") But about 99 percent of
these households have cable running near their homes, and virtually
all the others, in rural areas, could be reached by satellite
services. The F.C.C. could require cable and satellite providers to
offer a low-cost service that carries only local channels, and to
give vouchers for connecting to that service to any households that
haven't subscribed to cable or satellite for, say, two years.
Professor Hazlett estimates that $300 per household should do it:
that amounts to $3 billion at most. Compared with the gains from
selling off the spectrum, it's a drop in the bucket. Or, as an
interim step, we could reduce the number of channels available in a
community from 49 to, say, 5.
I KNOW that this proposal sounds too good to be true, but I think the
opportunity is real. And unlike some gimmicks from state and local
governments, like selling off proceeds from the state lottery to a
private company, this doesn't solve current problems simply by
borrowing from future generations. Instead, by allowing scarce
resources to be devoted to more productive uses, we can create real
value for the economy.
Economists are fond of saying that there is no such thing as a free
lunch. Here we have an idea that is even better than a free lunch:
being paid to eat lunch. More paid-lunch ideas will be coming in
future columns.
Richard H. Thaler is a professor of economics and behavioral science
at the Booth School of Business at the University of Chicago.
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