JESSELL AT LARGE

Broadcasters, Wireless Missed Joint Victory

With the passage of legislation authorizing incentive auctions of TV spectrum for wireless broadband use, broadcasters scored a victory in getting numerous safeguards included. Good job. But if the FCC, broadcasters and broadband proponents could have found a way to work together, they could all have been winners. They could have found a plan that produces the extra spectrum that's needed for broadband and improves rather than degrades broadcasting service.

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.

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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].


Comments (6)

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Blair Faulstich says:

February 17, 2012 at 4:16 pm

Great column Harry. Because of the remaining uncertainty regarding spectrum repacking/reclamation I’m sure there are a number of small broadcasters that would entertain selling rights to spectrum, if for no other reason than the uncertainty prevents any kind of long-term business plan. But the real question is this; isn’t it quicker, better, cheaper to allow deregulation to take the place of auctions, for auctions will surely be a long, drawn-out process. Deregulation allows broadcasters to experiment with different modulation schemes, schemes that can be designed to work seamlessly with existing wireless modulation. If the government wants to extract its pound of flesh, allow the following; 1) B’casters pay a 5% ancillary revenue fee (already in place) for anything beyond basic broadcasting, such as spectrum leasing to wireless carriers 2) allow for a one-time fee to be paid to the government when a station’s spectrum usage rights are purchased by a wireless carrier, 3) maybe even increase ancillary revenue fee to 7-10% when spectrum is leased to a wireless carrier. A plan of this sort would enable spectrum availability for wireless carriers while still maintaining a free OTA TV service. If a wireless carrier came to me and said that it wanted to lease my excess spectrum I would jump at the opportunity; the wireless carrier gets its much-needed spectrum and I am able to subsidize my OTA TV station…sounds like a winner to me. The problem though is one of architecture…Wireless as it is currently configured is a one-to-one delivery, as opposed to broadcasting which is a one-to-many delivery. A lot of the network congestion would go away if wireless carriers implemented a one-to-many overlay with their current architecture, which is what they could do today if so inclined and what they will surely do with auction spectrum. But why go through a protracted battle–broadcasters would be willing to work with wireless carriers on a broadcast overlay plan and have offered to do so repeatedly. Another thing is that ancillary revenues bring in many more billions over a twenty year period than a one time auction (auction proceeds remain nebulous, probably no more than $6B to the Treasury). You have to ask this; what happens after an auction and the wireless carriers don’t have any more spectrum to go after? What they will do is become more efficient, which is what they could do today…people really need to start asking the right questions.

    Matthew Castonguay says:

    February 17, 2012 at 5:14 pm

    re; Combining one-to-one and one-to-many. This can/hopefully will still happen. Carriers can call MCV and work out a deal to put Dyle ATSC-M/H chips in handsets, and market them aggressively. Get a piece of the action. Maybe not as lucrative as charging consumers for “over-use” of data… carriers not eager to share the space with broadcasters, but maybe these developments bring them to the table?

    Christina Perez says:

    February 22, 2012 at 11:41 am

    Let this former editor of major TV industry trade journals set the record straight: there is no “spectrum crunch,” no spectrum shortage. Huge swaths of available spectrum remained unused. The migration of broadcast TV stations from the VHF to UHF band, which occurred with the advent of digital TV, has freed up much of the lower VHF band for broadband use. Broadband interests would like to see free TV go away — a major reason why the FCC tried to force broadcasters to submit to mandatory auction of assigned spectrum. Another key subtext: the electromagnetic spectrum has been weaponized. U.S. homeland, military and intelligence agencies are advancing the “spectrum scarcity” boogeyman as a pretext under which to capture broadcast spectrum for military and domestic “homeland security” applications — including an offensive “directed energy” weapon system deployed on cell towers nationwide and aimed at the American public, as revealed here: http://viclivingston.blogspot.com/2011/12/u.html

Meagan Zickuhr says:

February 17, 2012 at 4:45 pm

Jessell said, “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.” Ummmm, that would have been the http://www.SpectrumEvolution.org plan that we have been promoting for more than 2 years now! Take a look and refresh your memory Jessell! We tried to get you to print some of our stories and ideas but you ALWAYS wanted exclusives…..

Ellen Samrock says:

February 17, 2012 at 5:01 pm

Lack of trust is exactly what happened. By characterizing broadcasters as dinosaurs, inefficient users of spectrum and even threatening to use FCC authority to confiscate spectrum from license holders, Genachowski proved to be the worst person to sell incentive auctions to broadcasters. Couple this with the incendiary rhetoric from CEA’s Shapiro and the NTIA and any talk of giving up spectrum was DOA as far as the broadcast TV industry was concerned. If Blair Levin is crying in his beer over the compromises in this legislation then he and his friends have only themselves to blame. And, yes, Gordon Smith did a masterful job getting broadcaster safeguards incorporated into this bill. It needed a Beltway insider to pull it off. I highly doubt David Rehr would have been nearly as successful.

Jimmy Jimenez says:

February 21, 2012 at 5:29 pm

There’s no mistaking the destructive agenda of the FCC-CEA-NTIA towards broadcasters; the political money has poured in from Silicon Valley + the major telcos and that’s were the loyalties lie. It’ll take a lot of good defense to manage the manipulation of the FCC on the ambiguity of these new rules, and a second round of “not enough are selling – now we have to re-pack for consumer benefit” is looming. Frankly, broadcasters have no room for trust – – of either political party; they don’t have a fraction of the money in this tough coalition wanting TV spectrum.


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