Broadcasters, Wireless Missed Joint Victory

I had once expected to entitle this column “The Triumph of Blair Levin.”

Today, Congress adopted legislation authorizing the FCC to conduct a so-called incentive auction of TV spectrum for the purpose on getting some of it into the hands of wireless broadband carriers.

Levin was chief of staff to FCC Chairman Reed Hundt during the Clinton Administration and since then he has kept a hand in communications policymaking. The incentive auction is his baby.

In the summer of 2009, he and some others cooked up the idea and, heading a special FCC detail that fall and winter, he included it in the FCC’s “National Broadband Plan,” a massive policy statement on ways of meeting the rapidly rising demand for more and faster broadband in the U.S.

The incentive auction is a smart idea. Rather than trying to wrest spectrum from broadcasters, it induces them to give it up by cutting them in on the proceeds from auctioning it to the wireless carriers. It is a market-based solution for reallocating spectrum. No broadcaster is forced to participate.

Taking that idea and turning it into federal law in just two-and-a-half years is a pretty good trick.

So, why isn’t the passage a triumph for Levin? Because Levin says it isn’t — at least not an unqualified one.

According to Levin, his pristine idea was corrupted during the lawmaking process by provisions tacked on to protect or advance the interests of this or that group.

Taken together, he says, the provisions seriously diminish the chances of a successful auction that will reallocate great swatches of spectrum from TV to broadband — he had originally hoped for 120 MHz — and generate great gobs of cash for the federal treasury.

“The legislation ties the FCC’s hands in a variety of ways,” Levin said in a Jan. 5 TVNewsCheck story. “It opens it up to litigation risk, which then, in conjunction with the other handcuffs, makes it difficult to pull off a successful auction.”

One of the troublesome provisions was won by the NAB, whose controlling members decided early on they were not interested in giving up any spectrum, even for a payoff.

Let’s assume that a bunch of broadcasters decides to give up their spectrum and participate in the auction. Before the FCC could put it on the auction block, it would have to repack the TV band — that is, shuffle channel assignments so that entire channels or blocks of adjacent channels can be cleared for auction.

The NAB provision would require the FCC to “make all reasonable efforts” to preserve a station’s coverage area during the repacking process. Such language doesn’t sound onerous, but Levin feels it will inevitably lead to suits from broadcasters who believe that their new channel assignment is not quite as good as the old one.

So, if the passage of the authorizing legislation isn’t a triumph for Levin, who is it a triumph for?

NAB President Gordon Smith.

Even Levin thinks so. In that same Jan. 5 story, he congratulates Smith for doing the job he was hired to do. “I respect him for that.”

In addition to the key “reasonable efforts” provision, Smith and the NAB were able to attach two other safeguards to the legislation with the help of their Republican allies on the Hill.

One guarantees that broadcasters who have to change channels will either get reimbursed for the cost or a waiver that allows them to use some of their spectrum for non-broadcast purposes. The other bars the FCC from shifting any station into the digital abyss of the VHF band.

So, I would add my congratulations to those of Levin. Smith did a great job. He showed that he has a place at the table when issues of consequence to broadcasting are discussed on Capitol Hill.

But there was a missed opportunity here. There is much to like in the incentive auction, including the fact that it tacitly confers spectrum property rights on broadcasters.

If the FCC, broadcasters and broadband proponents could have found a way to work together, they could all have been winners. They could have encouraged a lot of marginal stations to give up their spectrum and participate in the auction.

The missing piece was something for the many broadcasters who had no interest in giving up spectrum themselves. What was in it for them? Nothing. What could have been in it for them was a share of the spectrum.

Not all of the recovered spectrum has to go to auction and the broadband carriers. Some of it could remain in the broadcast band so that the remaining stations could increase power. Nobody would complain about repacking if the result were improved service.

This is possible, yet it was never on the table.

Part of the reason may have been the lack of trust between the FCC and the broadcasters. It started with the National Broadband Plan, which in addition to the incentive auction proposed that the FCC squeeze 36 MHz out of the TV band simply by repacking the band (unrelated to the auction) and that Congress impose spectrum fees on broadcasters that would be used to fund public media.

The distrust was compounded by the failure of the FCC to produce models of what would happen to stations as a result of repacking, even after FCC Media Bureau Chief Bill Lake publicly promised them within a few months at the 2011 NAB convention.

Without the models, nobody has the foggiest idea of what impact the repacking would have on broadcasting.

I can think of only two reason why the FCC never released the models: 1) it couldn’t make its modeling algorithms work or 2) the models showed that broadcasters would be badly harmed under most repacking scenarios. Either is good reason for broadcasters to be wary.

FCC Chairman Julius Genachowski’s rhetoric was all wrong. Whenever he spoke of the National Broadband Plan he tended to scare broadcasters rather than comfort them. He kept making a case for why the plan was good for America, but never for why it was good for broadcasting. (Of course, broadcasters firmly believe that what is good for broadcasting is good for America.)

Finally, there is Levin himself. Unfairly or fairly, he is perceived by broadcasters as being part of a Reed Hundt cabal of the 1990s that was out to get broadcasters. Somebody else needed to front the effort.

I can’t predict what’s going to happen next. Nobody can. Once the incentive auction authority is signed into law, the FCC will crank up the bureaucracy and start the rulemakings to implement the law. The debates over repacking will start up all over again. The process will take years and probably, as Levin fears, wind up in the courts.

As I understand it, the legislation enables the FCC to conduct a spectrum auction, but it doesn’t mandate it. That means the next FCC chairman, especially if he or she is a Republican, may just shelve the whole thing.

But I still believe there is a win-win here. The incentive auction is a powerful tool. It can be used to improve broadcasting and broadband at the same time — if all the industries can sit down with the regulators and figure it out, if they could all learn to trust each other.

That would be a triumph for all.

Harry A. Jessell is editor of TVNewsCheck. You may contact him at 973-701-1067 or [email protected].