A new study commissioned and submitted to the FCC by the Consumer Electronics Association says that the 300 Mhz of spectrum now allocated to TV broadcasting is worth about $12 billion. But if were put up for auction, wireless service providers would pay more than $60 billion for it and would yield consumer benefits of between $500 billion and $1.2 trillion.
A Consumer Electronics Association-commissioned study concludes that TV broadcasting spectrum would be five times more valuable if it were reallocated and used for wireless broadband services than if it continues to be used for broadcasting.
“It’s clear that reallocating the spectrum would be creating benefits for society and be a good, efficient [spectrum-use] policy,” said Coleman Bazelon, of The Brattle Group, the author of the study, in an interview with TVNewsCheck.
The “highest value use” is broadband, he said.
According the study, the 300 Mhz of spectrum now allocated to broadcasting is worth about $12 billion. But if were put up for auction, wireless service providers would pay more than $60 billion for it.
What’s more, the cost of making the spectrum available for broadband would cost between $9 billion and $12 billion, but would yield consumer benefits of between $500 billion and $1.2 trillion.
CEA submitted the study to the FCC last Friday attached to a six-page filing that decries the scarcity of wireless broadband spectrum and calls on the agency to reallocate spectrum to it from other services.
In the filing, CEA does not say that the FCC should take away any of TV broadcasting’s spectrum, but it comes close.
In looking for new spectrum for wireless broadband, CEA says, “the primary focus should be on spectrum not acquired at auction, i.e., spectrum used by the federal government or spectrum used by non-federal entities that was not acquired by auctions.”
Broadcasting falls into the second category.
Even though it paid for the Bazelon study, CEA says it “does not necessarily endorse” it. The study, it says, is intended as a model for analyzing whether spectrum is being used efficiently.
The CEA says the scarcity of wireless broadband spectrum is a “crisis” that threatens the country’s technological leadership. “Unless significant amounts of new spectrum are allocated to wireless broadband, the next iPhone, the next YouTube, the next telemedicine applications won’t be developed in the United States.”
According to the CEA, businesses and consumers are increasingly relying on wireless broadband for accessing the Web, sending e-mails, watching videos, playing games and other personal and business activities.
“Urgent action is required now in order to keep up with the spiraling consumer demand, and to ensure that our nation’s broadband platforms are sufficiently robust to allow for the development of increasingly bandwidth-intensive applications, content and services in the years ahead.”
CEA makes two recommendations in its filing.
First, the FCC should form a “blue ribbon” advisory committee charged with finding more spectrum for wireless broadband.
“Many options should be explored, including the possible creation of incentives for incumbents to relinquish their spectrum or to operate more efficiently using less spectrum, thereby freeing up spectrum for other important uses.”
Second, the FCC should team with the National Telecommunications and Information Administration to conduct a “rigorous inventory of the nation’s spectrum and assess where it is being utilized inefficiently.”
Congress is considering legislation mandating a spectrum inventory, it says. “But we need not wait for these bills to become law.”
The Bazelon study estimates the market value of the broadcasters’ spectrum if it were made available for wireless broadband at about $60 billion. By contrast, the study says, the current market value of TV broadcasting spectrum is just $12 billion.
The study fixes the value of the TV broadcasting business (excluding tangible assets) at $62 billion. But, it says, only $12 billion of that value is derived from the station’s “over-the-air broadcasts” because only 10 million or 9 percent of the 114 million TV homes continue to receive broadcast service off air. Ninety-one percent receive it via cable or satellite.
The study acknowledges that shifting the spectrum from broadcast to broadband would, as a practical matter, involve some costs — $12 billion to broadcasters to compensate them for their loss of over-the-air viewers or $9.3 billion to migrate the remaining 10 million broadcast-only viewers to cable.
That $9.3 billion is the cost of buying lifetime cable subscriptions to a broadcast-only tier for the 10 million homes over-the-air only homes. The study assumes that the tier would cost $10 a month with a $50 installation charge.
The study does not give broadcasters any credit for mobile video, multicasting or any other new digital services they may come up with.
Bazelon said he is not alone. “It is fair to say that I am giving them the same credit for that as the financial markets are.
“Even if you thought mobile TV was going to be reasonably successful, I can’t image the value of it is going to be anywhere near $40 billion, and it’s going to take $40 billion or $50 billion to reverse the conclusion of this.”