FCC’s LP Spectrum Grab Is A Study In Ugly

When the FCC puts beachfront UHF spectrum up for auction to wireless companies, it will, in part, be selling bandwidth that was offered voluntarily and acquired legally when it attempts to kick-off the reverse auction on March 29, 2016.

But it will also be selling bandwidth it will have simply usurped from entrepreneurs, local communities and even churches that use it to provide free over-the-air local low-low power TV without any form of compensation.

Moreover, it will be grabbing spectrum in a way that violates the FCC’s longstanding mission required by law to promote diversity, competition and localism, violates standards of common decency and, I believe, violates not only the law but also the Fifth Amendment of the United States Constitution.

Some Are More Equal Than Others

To get an idea of what’s going on, imagine the government decides to clear commercial retail and local community land already in use to resell for expanding a privately-owned power plant.

Under the FCC method, the nearby Walmart, Home Depot, Exxon and McDonald’s will be given the option of selling out for a hefty price, or will be allowed to move to adjacent space on the government’s tab.

Meanwhile, Mom’s General Store, a couple of community churches, Maria’s Cantina, and Joe’s Filling Station and will be kicked off their land in exchange for nothing whatsoever.

The little people will be allowed to move nearby in the community — on their own dime — if, and only if, they can find some available space, even though it is well known today that for many, there will be no available space.

This is because the process is designed so that the big guys like Walmart get to relocate first, and all else will be handed over to the power plant. Only then as a finishing step will the government look for ways to squeeze in all the rest of the smaller groups serving the local community, in a cynical regulatory boa constrictor-like seizing.

This is exactly what is happening in the incentive auction — only it’s even worse.

On simple human terms, the pure bald-faced cynicism of taking care of the bigger businesses while trampling roughshod over the smaller ones and local community groups is breath-taking. It is an affront to the very concepts of decency and equality upon which this nation is founded.

At its face, without even factoring in local low-power TV, the repurposed spectrum is going to be transferred from a large number of independent operators to just a handful of oligopoly wireless companies, instantly diminishing diversity of ownership and access to truly free TV.

The lack of protection for the small stations will cut ownership diversity by many magnitudes, eliminating all types of niche programming formats, including religious, ethnic and public/government programming, thereby concentrating precious spectrum forevermore into fewer hands.

Let’s put a sour cherry on top of this — the US citizens bearing the brunt of the damage will be those who cannot afford pricy cable, satellite, or over the top TV services – a segment of the population numbering in the many tens of millions, and inordinately comprised of elderly and ethnic individuals.

(As an aside, imagine what will happen when six LPTVs seek to move to a single available vacant channel — what will the FCC do? Will it hold a comparative hearing pitting the Methodists, the Native Americans, a local ethnic conclave and three others against one another? Will there be an existential auction to avoid extermination? Will the right to avoid annihilation be reduced to a drawing from a hat? One thing is for sure — whatever the choice, this macabre potential regulatory circus will be exceedingly ugly.)

The Facts Are These, Your Honor

It doesn’t have to be this way. There is still time to modify the auction’s crushing tactics in a way that fairly accounts for the rights of free, local low-power TV stations and their many viewers.

If this is not to be, however, court action that is already underway in the United States Court of Appeals for the District of Columbia Circuit has strong potential to stop the auction in its tracks until the wrongs are righted. That is a result that should be the desire for all fans of competition, localism, diversity, equity and simple justice.

Legal representatives for the low-power television community believe they have ample legal firepower based on the FCC’s alleged violation of both the Spectrum Act of 2012 and the Regulatory Flexibility Act of 1980.

But for now, let’s also look at the Constitutional complaint. It’s well-tested when it comes to real estate; not so well-tested when it comes to spectrum real estate. But there is ample reason to believe that low-power TV interests can prevail on this count.

The Fifth Amendment, as any fan of crime drama knows, most famously protects an individual from forced self-incrimination. But it also includes this clause: “… nor shall private property be taken for public use, without just compensation.”

Are broadcast licenses equivalent to real estate? In the publication Federal Telecommunications Law, renowned telecom appeals court lawyers Peter W. Huber, Michael K. Kellogg, and John Thorne say likely they are.

Listen: “While technically provisional, these licenses are, for all practical purposes, permanent. Spectrum has been privatized — de facto property rights have been created — without anyone ever using such politically delicate terms.”

And: “The takings clause of the Fifth Amendment may impose a third set of constraints on any Commission action that zones or revokes a license. To be sure, the Commission continues to insist that the original granting of a license creates no property rights. This was quite clear to the Supreme Court, too — in 1940. But as noted in section 10.3.1 above, the ‘renewal expectancy’ creates de facto property rights. When one adds to the renewal expectancy the fact that today’s licensees pay billions of dollars to acquire their licenses at auction, it seems safe to predict that a takings case will be prosecuted successfully, sooner or later.”

For more than 30 years, LPTV licensees have had a solid expectation of renewal and have likewise invested hundreds of millions of dollars in broadcast transmission equipment and TV programming content and operational expenses. The de facto argument for LPTV is just as ironclad as it is for LPTV’s full-power cousins who are deemed to deserve compensation. The Supreme Court has also ruled a “regulatory taking” has indeed occurred when new rules crush existing investments and the ability for a business to operate.

Now I’m no lawyer, but on the plain face of it, it seems clear to me that LPTV has Bill of Rights author James Madison squarely in its corner.

In Closing

So, do you think the low-power TV community has a case?

I think the answers is yes, low-power has a very strong case.

Do you think the reverse auction for some broadcasters to sell out will start on March 29, 2016?

Maybe not.

Given the strength of LPTV’s case, I believe the court will delay the reverse auction until LPTV’s rights are sorted out.

The question the big broadcasters have to ask themselves before they ever enter an auction room is this: Are wireless companies prepared to tie up capital for an indefinite period of time; and are television stations prepared to potentially risk the health of their stations on public display during a state of uncertainty and turmoil?

That’s several tens of billions of dollars’ worth of food for thought, ladies and gentlemen.

Dave Seyler has been a managing editor for broadcast publications for more than 30 years, and is the immediate past editor-in-chief of  RBR-TVBR. He is currently doing media consulting for LPTV interests.