What the government’s broadband expansion effort needs is spectrum, and that’s the one thing that many experts agree there’s just too little of. That could be good news for broadcasters who are loaded with spectrum. But they must guard against policies that would take away their spectrum without compensation or devalue it by causing interference.
In a classic Far Side cartoon, a bear is caught in the crosshairs of a rifle. Aware of the peril, the wide-eyed bear forces a smile as he stares into the rifle scope and frantically points at a clueless companion.
Broadcasters and a lot of other users of the electromagnetic spectrum may be feeling (and perhaps acting) like the targeted bear after FCC Broadband Czar Blair Levin gave a little talk this week at Washington’s Metropolitan Club.
In his prepared remarks, Levin spoke about his big push to come up with a comprehensive policy that would make broadband Internet a reality in every last home and coffee bar in this great land of ours.
And then he took aim.
“This is already clear from the record: A key input is spectrum and everybody agrees there is not enough of it,” he said in his prepared remarks. “Moreover, demand curves from new uses by smart phones suggest a massive increase in demand ahead for that input.”
During the Q&A, a broadcaster asked whether he and his fellow broadcasters should be worried losing spectrum to the broadband cause.
“I want you to be worried,” Levin said, according to the broadcaster. “Everyone should be worried.”
Now, everybody is. And I bet they are all pointing fingers like that bear. In fact, I spoke to one TV lobbyist yesterday who told me that it’s not broadcasters the FCC should be targeting, but those good-for-nothing mobile satellite bandwidth hogs.
The FCC may not yet have broadcasters in its sights yet, but there is a growing body of work by academics, policymakers, broadband advocates and think tankers that argues that broadcasting is a gross waste of spectrum and that its many megahertz should be auctioned off, leased or reallocated to some better purpose like wireless broadband.
Many of these people have the ear of Levin and his like-minded boss, FCC Chairman Julius Genachowski.
One such spectrum wonk is Philip Weiser, a former law and telecom professor at the University of Colorado and Obama transition team member who is now working in the DoJ’s Antitrust Division.
“The reality…is that the spectrum dedicated to UHF TV broadcasting has less value as a medium for transmitting TV signals than it does for an array of other uses,” he writes in a July 2008 paper published by Brookings Institution.
And much of the value TV stations do have derives not from their dwindling over-the-air reach, he says, but their must-carry rights that entitle them to carriage on cable systems.
Broadcasters’ natural inclination at this point is to go on the defensive and start hollering about how the spectrum-grubbing broadband lobby wants to deprive the poor and elderly of their free TV service.
But that would be a mistake.
Levin’s real mission last week was not to scare everybody, but to prompt broadcasters and other spectrum stakeholders to participate in the FCC broadband inquiry, to bring their best ideas to the party.
Genachowski extended the same invitation in his interview with me last week: “Broadcasters may have their own ideas on how that spectrum can be part of the broadband solution. I very much encourage broadcasters to participate in the broadband process and to think very big and creatively about opportunities in that spectrum.”
Broadcasters should accept the invitation. Opportunity may be lurking in Levin’s broadband exploration.
Let’s face it: There is some truth in what Professor Weiser says. There may be more value in using broadcast spectrum for broadband access than in airing reruns of Three’s Company and The Brady Bunch. If this is so, wouldn’t it be nice if the owners of the spectrum were in a position to capture the extra value?
A lot of broadcasters, particularly in small markets, are in the same predicament as the condos owners in Florida. They are underwater and would like to sell, but they can’t. The no longer have the cash flow to get back what they paid. This could give them a way out.
What broadcasters want to be on guard against is not policies that would allow them to monetize their spectrum in new ways, but policies that would take away their spectrum and give it to somebody else without compensation or squeeze more services in and around the TV spectrum in a way that causes interference and devalues it. That’s what the FCC is doing in its white spaces proceeding.
I really don’t think anybody is trying to take spectrum away from broadcasters, by the way. There seems to be a recognition that most broadcasters bought their spectrum on the open market and have some kind of property rights, even though the airwaves still technically belong to the public.
Some of the ideas for putting broadcast spectrum to better use are intriguing. Weiser would encourage broadcasters to sell their spectrum to non-broadcast users by allowing the broadcasters to hang on their must-carry rights for a number of years.
The broadcasters’ proceeds, however, he says, would be subject to a tax — “high enough to address the concern of unfair windfalls, but not too high such that it renders unprofitable or undesirable sales of … spectrum licenses.”
Weiser also proposes a voluntary program under which broadcasters would turn their spectrum over to the government, which would pool and auction it for them. To encourage participation, the government would give broadcasters just one year to opt in. Again, stations would retain their must-carry rights so they could continue in business.
Another idea floating around Washington, purportedly cooked up by the FCC, proposes that TV stations set aside for sale all of their spectrum, except for a small slice, enough to broadcast a single standard-definition channel.
The broadcasters could then auction the freed-up spectrum themselves or turn it over the government, which would pool and auction it on their behalf and kick back some of the proceeds to the broadcasters.
The SD channel survives to accommodate the millions who still rely on over-the-air TV and who just invested in new converter boxes and antennas. The only folks that would get screwed would be those who bought new HD sets in the expectation of watching HD broadcasts.
For the record, I believe that Weiser and other big thinkers grossly undervalue over-the-air TV. As I have said here before, broadcasters’ ability to reach every TV home and every TV in those homes gives them a powerful marketplace advantage over all the cable networks. It’s the last true mass medium.
And from a public policy perspective, broadcasting still provides service to millions who can’t afford cable and satellite, let alone broadband. It also provides a communications link to the public that has proven time and time again absolutely vital during local emergencies.
In any case, TV broadcasters should participate in the Levin inquiry, consider in good faith the proposals of others and come up their own ideas for exploiting the tremendous demand for spectrum. Broadcasters are in a nice position. They have a lot of what everybody wants.
But broadcasters need to be careful. They should run from any proposals that try to force their hand or diminish their property rights. A lot of people, including members of Congress, believe that broadcasters should be allowed to profit from spectrum they never really owned.
Remember: That Far Side cartoon is just one panel. We never find out which bear actually gets shot.