As a result of the uncertainity over the FCC's plans to auction and repack the TV spectrum, stations are putting off investments in transmission gear. The latest victim is Electronics Research Inc., which just laid off 22 employees.
FCC Auction Taking Toll On TV RF Vendors
Electronics Research Inc., a Chandler, Ind.-based manufacturer of RF components, waveguide and antennas, has laid off 22 employees, an apparent consequence of the FCC’s policy aimed at freeing up TV spectrum for the wireless industry. [Editor’s note: When this story was originally posted, it said that EMI had temporarily shut down its entire TV RF operation. As this corrected story now reflects, that is not the case.]
The laid off workers represent about 18% of the company’s 124-person workforce.
“As long as this incentive auction and [TV spectrum] repack is pending, there is really no capital investment being made by domestic television stations in transmission facilities,” said Bill Harland, ERI vice president of marketing.
Harland said the FCC’s April 2013 public freeze on both new construction permits and pending applications for modifications to existing facilities has been devastating to the small community of vendors supplying RF technology to U.S. TV broadcasters.
“When the commission put the freeze on last year the week before NAB, that stopped the business,” said Harland. “This freeze is very onerous. In the past, when the commission has put freezes on, they didn’t suspend the processing of applications. In this case, the commission stopped all activity.”
The moratorium was necessary to make it easier for the agency to assess the possible methodologies for the post-auction repacking of the TV band, the FCC said at the time. It said it needed “a stable database of full-power and Class A broadcast facilities” from which to work.
The situation worsened in January when FCC Chairman Tom Wheeler announced a one-year delay on the incentive auction, until 2015, to give the agency more time to get the process right, Harland said.
Jay Adrick, an independent consultant and former vice president at Harris Broadcast, said the ERI layoff may not be the only victim of the FCC policies. “I wouldn’t be a bit surprised to see some other companies fold their tents before this is all over,” he said.
“I think the industry needs to put more pressure on the commission and say: ‘You are damaging the resources you are going to heavily rely on, particularly if you have a time frame of three years to make all of this happen.’ “
The incentive auction, by which the FCC hopes to shift up to 120 MHz of TV spectrum to wireless broadband, is actually two auctions. In the first, the FCC would buy spectrum from broadcasters. In the second, it would sell the recovered spectrum to wireless carriers. After the auctions, the FCC would repack the TV band to aggregate all the recovered spectrum, a process that would likely force many stations to new channels.
Participation by broadcasters in the auction is voluntary.
David Zack, ERI’s TV sales manager who was among those who lost their job, saw firsthand how broadcasters pulled back on their RF spending plans as the government instituted its new plan for TV spectrum.
“A lot of broadcasters acknowledged they would be interested in putting up a new antenna,” he said. “A lot of people expressed an interest in putting up some vertical polarization to improve fixed and mobile reception. But they began holding back, saying, ‘Now is not the time to invest $300,000 or $400,000 in a new RF system that might have to come down in a few years.’”
Keith Pelletier, general manager of antenna and RF component manufacturer Dielectric, agreed that a dark cloud hangs over the RF business. “Right now, there is a lot of uncertainty among broadcasters about the future.”
The freeze is sapping the overall strength of the television RF sector that will needed when the FCC completes its auction and begins issuing new channel assignments as part of the repacking. “We’ve taken steps to put Dielectric on a solid foundation and are prepared to move forward when things open up, but, personally, I am worried about what the state of broadcasters and vendors will be when repacking begins.”
In April 2013, two weeks after the FCC released its freeze notice, the company’s former owner, SPX Corp., said it would shutter the antenna manufacturer. That move was prompted not so much by the moratorium as by what SPX saw as dim growth prospects, he said.
Ultimately, rather than closing the company, SPX sold Dielectric to Sinclair Broadcast Group in June 2013.
Rick Kaplan, NAB executive vice president, strategic planning, said the NAB has warned the FCC that the RF vendors are hurting. “We have told the FCC that this process is taking a toll on the very RF vendors that will be needed to make the repack a reality.”
ERI is still capable of making TV gear and expects to rev up the operation once there is a new table of allotments and the repack commences, Harland said. “We took an action to right size the company given the amount of business there is today.”
The hope is echoed by ERI’s former television sales manager. “I would sure like to stay in the broadcast business,” said Zach. “Once broadcasting is in your blood, it is tough to get it out. The story is not over yet. I would like to be around to see how it ends.”