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Levin: TV Spectrum Auctions Likely Doomed

The chief architect of the FCC's National Broadband Plan says the incentive auction of TV spectrum is unlikely to produce much spectrum for wireless broadband or money for the federal treasury. Why? NAB-backed provisions designed to protect broadcasters in the authorizing legislation will expose the auction to crippling litigation. "Congratulations to [NAB President] Gordon Smith," he says. "He did a great job. He did the job he was hired to do.... But let’s not kid ourselves: That’s not putting the United States first."

An FCC incentive auction of  broadcast TV spectrum will likely “fail” if, as expected, Congress adopts Republican House authorizing legislation, according to Blair Levin, the chief architect of the FCC’s 2010 National Broadband Plan that first proposed the auction.

The legislation, authored by House Communications Subcommittee Chairman Greg Walden (R-Ore.), would grant the FCC authority to conduct incentive auctions — auctions in which proceeds are shared with broadcasters who voluntarily give up their spectrum.

But it also contains provisions designed to protect broadcasters who hang on to their spectrum. And they are what has Levin worried.

“The legislation ties the FCC’s hands in a variety of ways,” said Levin, who left the FCC following release of the broadband plan and is now attached to the Aspen Institute. “It opens it up to litigation risk, which then, in conjunction with the other handcuffs, makes it difficult to pull off a successful auction.

“The nature of the bill dramatically increases the probability that there will be less spectrum recovered and less money for the [U.S.] Treasury.”

Levin and FCC Chairman Julius Genachowski have been pushing for the incentive auction authority since 2009, believing that much TV spectrum is underutilized and it would be best to auction it off to wireless broadband carriers.

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Congress returns later this month and is expected to adopt the Walden legislation as part of a “must-pass” legislative package to extend payroll tax cuts and unemployment benefits.

“I think it is entirely possible for spectrum to pass either at the end of January or in February,” says a broadcast industry lobbyist.

Although broadcasters would get a cut of incentive auction proceeds, the Walden bill intends for most of the revenue to go to the federal treasury and to help fund a nationwide communications network for first responders.

The Walden bill would also require the FCC to make “all reasonable efforts to preserve … the coverage area and population served’’ of broadcasters who eschew the incentive auction.

It prevents any forced relocation to an inferior channel assignment and makes clear that this is a one-time auction with a sunset on the FCC’s authority to repurpose broadcast spectrum.

And the measure would set aside $3 billion to compensate broadcasters for costs associated with “repacking” — the wholesale switching of channels that would occur after the FCC identifies the spectrum it will have to auction and consolidates it into large swatches that can be more easily auctioned.

Such provisions were championed by the National Association of Broadcasters, which from the start has been wary of incentive auctions and how they might impact the broadcasting business.

But Levin said that the protections undermine the intent of the original incentive auction proposal, which was to produce more spectrum for wireless broadband.

Levin is principally concerned about the “reasonable efforts” language, which, he said, “definitely makes the FCC more vulnerable to litigation. Nobody wants to go to an auction when there is the threat of a judge anywhere having the ability of holding it up. I believe a good lawyer could find a way to get the question of  whether the FCC took all reasonable efforts in front of a judge,” he said.

Moreover, Levin said he thinks some broadcasters will use the threat of litigation to their advantage. “If you are designing the auction and a big law firm shows up and says, ‘If you don’t take care of my single broadcaster, we are going to find a way to get to court.’ That’s a real threat.’’

Levin also said he believes the broadcaster compensation fund is too large and the limit on the number of auctions in unnecessary. “It may be that the FCC determines that it should be a one-time auction, but it should not be decided today by Congress,” he said.

The NAB was not interested in debating the merits of the bill with Levin.

“NAB wishes Blair a Happy New Year and respectfully declines comment,’’ said Dennis Wharton, NAB’s executive vice president for communications.

However, a GOP House Commerce Committee aide accepted the challenge. He said Levin’s concerns were overblown.

“We’ve worked with the FCC every step of the way,” the aide said. “They don’t seem too worried about these provisions.”

“And the CBO [Congressional Budget Office] doesn’t seem terribly worried about them,” the aide added. “They think we are going to net $16.5 billion from the auctions. Clearly they still believe that there’s going to be a successful auction.

“Everything the FCC does is subject to some challenge,” he said. “This language is no different than language in almost every piece of legislation. Every piece of legislation says the FCC has to make sure something is reasonable. It’s a balanced way of saying don’t go too far but do your due diligence.

“If anything, I think the broadcasters become more comfortable and less likely to fight this [in court] because they have reasonable expectations of being protected, that we aren’t just going to turn them off.”

If given his way, Levin would adopt a bill stating simply that “the FCC shall have the authority to share revenues with any licensee that contributes its spectrum to an auction. ’’

Levin’s suggestion mirrors spectrum language contained in a White House Jobs bill (S. 1660).

Acting under broad authority, the FCC would take steps on its own to protect broadcasting, Levin said. “You can get a good deal for the public and preserve broadcasting. I am not saying we should eliminate broadcasting.”

But broadcasters are not so sure about Levin’s interest in protecting broadcasters.

Said one TV industry source: “This is just Blair being Blair. Remember that by [former FCC Chairman] Reed Hundt’s own admission, he and Blair were plotting 20 years ago to replace broadcasting with broadband.

“Why should anyone be surprised that Blair now objects to a bill designed to protect hundreds of TV stations from being involuntarily forced off the air?”

Levin conceded that there is probably little that can be done to derail the Walden legislation with NAB-endorsed broadcaster protections.

“Congratulations to [NAB President] Gordon Smith,” he said. “He did a great job. He did the job he was hired to do. I respect him for that. 

“But let’s not kid ourselves: That’s not putting the United States first. That’s not putting getting spectrum into the bloodstream of our economy first.”


Comments (21)

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Peter Tannenwald says:

January 5, 2012 at 8:14 am

“NAB wishes Blair a Happy New Year and respectfully declines comment.” SNAP!

Matthew Castonguay says:

January 5, 2012 at 9:38 am

re; “A judge might question whether FCC took ‘reasonable actions'”. Given the way they’ve handled this whole issue from Day One, I’d say you can pretty much count on that. Blair/Genachowski are reaping what they sowed. Maybe if they had started with properly documenting the “crisis” instead of basically making assertions without backing them up, and proceeded in a truly collaborative way based on the empirical data, it might have turned out a little differently. In reality, while there was a big show of “consultation”, in the end the plan that emerged was exactly what they had pre-arranged at the start. And it apparently won’t, thankfully. I hope his current assessment is correct (and not some new smokescreen, maybe for a new attempt to accomplish the goals via executive fiat which seems to be the pattern with this administration).

    mike tomasino says:

    January 5, 2012 at 10:47 am

    “Blair/Genachowski are reaping what they sowed.” I have to agree. They showed broacasters and the American people zero respect while resorting to nothing but pure sophistry in accomplishing their goal. If a goal can’t be accomplished with well reasoned arguments and facts, if you must resort to fearmongering and outright lies then your goal isn’t worthy of success.

    Ellen Samrock says:

    January 5, 2012 at 3:22 pm

    It’s not for nothing that the National Broadband Plan is sometimes referred to as the Blair Witch Project.

    Christina Perez says:

    January 5, 2012 at 9:38 pm

    THIS is the impetus behind the “National Broadband Plan” — the cover story for an electromagnetic Virtual Auschwitz: http://nowpublic.com/world/u-s-silently-tortures-americans-cell-tower-microwave-weapon

Christina Perez says:

January 5, 2012 at 9:45 am

Blair seeks to put first the profits of his silent partners, the broadband industry for whom he does the bidding. The “first responders network” appears to be a subterfuge by which Pentagon-Homeland-intel seeks to expropriate and weaponize the public airwaves via the electromagnetic “multifunctional radio frequency directed energy weapon system” (U.S. Patent 7629918, Raytheon) deployed nationwide on cell tower masts everywhere, as first reported here: http://viclivingston.blogspot.com/2011/12/u.html

Craig Davenport says:

January 5, 2012 at 9:54 am

“There’s a broadband shortage…blah, blah, blah…” Hunt and Blair both need to be taken out to the woodshed and beaten to within a millimeter of the end of their consciosness and ethics…assuming they have any of the latter. I’m glad to see, in print, the real reason broadcasters are being taken, again, to the cleaners to fund some level of Governmental fuzziness that continues to creep into the picture over and over again. We see the socialistic tendencies everyday, the phrases parrotted by the brain-dead masses; “Think of the kids!” – “The world will (Insert fear-inducing calamity here) if we don’t spend money we don’t have to fix it!” – “Tax everyone except me and my buddies!” rhetoric in order to push through hair-ball straw-man legislation. Why don’t broadcasters grow a pair, harden ’em up and call a spade a spade anymore? PC-weenies are letting what was once the greatest nation on earth turn into a 3rd-world has-been. “The only thing necessary for the triumph of evil is for good men to do nothing” If broadcasters want to continue to survive in this century and beyond, and continue to broadcast what we trumpet as “Free, Over-the-Air Television/Radio” – then we need to get off our arses and take on EVERY LIE that’s pronounced in defense of the offensive and show the people that real patriots and Americans are led by free and truthful words…not sugar-coated soliloquies being trumpeted by the axecutioners, as the condemned shuffle down the dark hallways, silently, to their gallows. Because, once the ax falls, there will be no more patriots…only those that flourish in the dark…

Eric McCaffery says:

January 5, 2012 at 10:28 am

And as long as Dennis Wharton is sending out New Year’s Greetings, let’s not forget Genachowski’s “scholar in residence,” Stuart Benjamin. Happy New Year, Stu. Looks like your plan to heap regulations on broadcasting for the sole purpose of “mak[ing] [it] unprofitable [so as] to hasten its demise” still has a ways to go.

“unprofitable [so as] to hasten its demise”

Eric McCaffery says:

January 5, 2012 at 10:29 am

And as long as Dennis Wharton is sending out New Year’s Greetings, let’s not forget Genachowski’s “scholar in residence,” Stuart Benjamin. Happy New Year, Stu. Looks like your plan to heap regulations on broadcasting for the sole purpose of “mak[ing] [it] unprofitable [so as] to hasten its demise” still has a ways to go.

Matthew Craft & David K. Randall says:

January 5, 2012 at 10:32 am

Normally I ignore hyperbolic comments as typical political venting, but I’m compelled to speak up here. I’m a broadcasting veteran who also works in broadband and I mostly oppose forced spectrum auction. At while I disagree with many of Blair Levin’s arguments, I understand and respect them. What’s more, since Blair is a friend and a college classmate I know for a fact that he believes what he advocates. I’m not sure if Philly Phlash will hear this, since he’s apparently wearing a tinfoil hat to deflect the Pentagon’s Radio Death Rays, but it had to be said.

    Christina Perez says:

    January 5, 2012 at 11:29 am

    Arthur, tinfoil hats can’t stop the silent torture, impairment and slow-kill genocide of those Americans deemed by ideologues and hate-mongers within to be “dissidents” or “undesirables.” Better wake up to the New American Electromagnetic Holocaust before it hits YOUR family, too: http://viclivingston.blogspot.com/2011/12/u.html

    Ellen Samrock says:

    January 5, 2012 at 11:50 am

    Let’s face Arthur, the road of history is littered with the corpses of those who were sincere believers as well as their victims. Simply believing what one advocates is not enough to be right.

    Matthew Castonguay says:

    January 5, 2012 at 12:18 pm

    Amen!

    mike tomasino says:

    January 5, 2012 at 1:31 pm

    Ditto

John Stelzer says:

January 5, 2012 at 10:42 am

Levin’s lament suggests that the policy folks who led the OBI at the FCC knew all along that there was no way to reclaim 20 contiguous channels nationwide and fully preserve existing broadcast coverage areas, even in the most rosy scenario of licensees taking the money to abandon OTA delivery to consumers. Fortunately, Congress has not drunk the wireless industry Kool-Aid, at least not yet, and there are members from both sides of the aisle that want this done carefully.

Hope Yen and Charles Babington says:

January 5, 2012 at 10:49 am

“Not putting the United States first??” c’MON, Carl! Like your Uber Boss is putting ANYTHING first except his re-election? Gimme a break!

Ellen Samrock says:

January 5, 2012 at 11:45 am

Once again Levin conveniently ignores the 1500 MHz of government-owned spectrum that the GAO has identified which could be sold at auction (the proceeds of which would not have to be shared with anyone) but chooses to focus on the 120 MHz used by broadcasters, an amount so minuscule that it would do little to relieve the so-called “spectrum crunch.” The Walden legislation is totally in the interests of the US, if by that we mean the preservation of one of the few truly free services left for information and entertainment as well as the preservation of hundreds of small businesses, many of which are owned by women and minorities. What is un-American is the strong-arm confiscation of spectrum away from hundreds of businesses while handing it over to a government-priveledged few telcom conglomerates. It’s an action only Hugo Chavez could love and apparently Levin as well.

Craig Davenport says:

January 5, 2012 at 12:11 pm

You want to reduce “Spectrum Crunch” and the related minutia? Legislate every parent in the country to take the cellphones/iCrap/iPits/iSores away from everyone under the age of 18. WHAT??? YOU CAN’T DO THAT??? Hell, we’re legislating texting/driving issues as we speak…we have laws that restrict that in NY and other states…what’s the difference in relieving the “overburdened broadband” now with some common sense? The first thing out of the Wireless folks will be that there’s more than enough to handle that traffic…but what they won’t say is their afraid of lost revenue…and that is what’s been driving the whole debate from the industry side. From the political/conspiracy side? “Control the message, you control the masses.” Website attacks, DNS, you name it, server failures…anything is someone else’s fault. Hell, even broadcasters pull the same stunts themselves. Don’t like the guy at the podium? “Oopsie! The battery in the lav frapped out!” Or “We’re experiencing Technical Difficulties. Please stand by…” Five cameras/five networks? Everything is just fine…everyone has backups for backups…Plan “Z” in case 25 failures call for it. But…put all your eggs in one basket (Broadband) and throw in 4″ of snow in DC… I guess the guys WE elected and sent to DC are just that stupid. Even though they lived through it, they’ll still manage to legislate themselves into a corner just to show everyone they can do it. It’s all about the money. Well, paint me green and take me home. I’m happy. NOT.

    Christina Perez says:

    January 5, 2012 at 10:06 pm

    Your post makes me wonder about tonight’s CBS Evening News. Just as Scott Pelley was reporting on battery problems with the Chevy Cruze, the audio cut out just as he was explaining the reason for the recall. At the next commercial break, up pops a commercial for the Chevy Cruze. As Special Agent Gibbs says, I don’t believe in coincidences… And as I write this, the webform window suddenly expands. As I posting to a spoofed page under the ultimate control of a military contractor censorship regime?
    LOCKHEED MARTIN RUNS INTERNET CENSORSHIP REGIME UNDER USG CONTRACT: JOURNALIST
    http://nowpublic.com/world/u-s-govt-censors-internet-political-speech-fraud-deception

Martha McIntosh says:

January 6, 2012 at 11:32 am

PhillyPlash, I have been in the TV advertising business for 36 years. It was a cooincidence. I know this because Chevy will not likely have to pay for that ad given its position next to the news story. It’s a lose- lose that both the TV station (or network) and the advertiser want to avoid.

    Christina Perez says:

    January 6, 2012 at 12:29 pm

    Maybe the CBS tech mole did this one on “spec,” then…


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