Repack To Take Longer As Well As Cost More

Moving to new channels in the repack of the TV band that will follow the incentive auction will cost broadcasters a lot more than the $1.75 billion the government is setting aside from auction proceeds for reimbursing them, the NAB says.

By its calculations, the mass migration of stations will cost anywhere from $2 billion to $2.6 billion.

But that ain’t the half of it.

It’s also going to take a lot longer than the FCC says, according to my discussions with broadcast engineers and vendors of transmission gear and services at the NAB Show this week.

How much longer, none can say, but certainly more than what the FCC is currently proposing — 39 months from the time broadcasters get their new channel assignments. (According to a timeline prepared by Wiley Rein’s Ari Meltzer for the Expanding Opportunities for Broadcasters Coalition, those assignments will come in the third quarter of 2016, assuming the auction gets rolling on time in the first quarter.)

The principal problem is one of capacity.

To move from one channel to another within the UHF band is a major undertaking. It requires a new broadcast antenna, a new transmitter and other transmission gear. It also involves precise engineering and highly skilled and specialized crews to mount the antenna and, in many cases, shoring up the tower. According to one consulting engineer, three-quarters of the towers need significant structural work.

In the repacking, 1,000 stations may have to move. But I’m told there are only two companies making antennas and other transmission gear, perhaps a half dozen able to do the engineering and tower work and just a just a dozen or so crews.

All the transmission and tower companies have downsized considerably since 2009 when they scrambled to upgrade stations from the analog-to-digital transition. Dielectric, the leading maker of TV antennas, had to be rescued from bankruptcy in 2013 by the Sinclair Broadcast Group.

The antenna and tower companies I spoke with at NAB are excited by financial prospects of the repacking, but they are reluctant to begin tooling and staffing up until the FCC actually makes the new post-auction channel assignments and the threat of delaying lawsuits has passed. Those suits could come from any of several directions.

At NAB, broadcasters weren’t close to signing any contracts, they said. “They were thinking about the repack, they were talking about it, but they weren’t pulling any triggers,” Gregg Fehrman, president of Stainless, a big tower company, told me.

Only when the orders start coming in will they feel confident making big investments in tools, people and parts. In fact, they can’t even start making antennas and until they get the orders. Antennas are built to work on specific channels.

The solution is to buy more time. Again, I don’t know how much more. A Dielectic white paper by Daniel Fallon concludes that the transition period should be stretched to five or six years, given the “case-by-case nature of upgrades and changes” to retransmission facilities.

“The realistic timetable is probably 60 months,” agreed Bill Harland of Electronics Research Inc., the other big antenna manufacturer.

Stretching the 39-month transition period won’t be easy. It’s derived from the law that says that broadcasters’ claims for repacking reimbursements have to be in within that period. Plus, any attempt would probably be met with considerable push-back from the wireless carriers. Once they spend their billions to buy spectrum, they won’t want to wait five years to take control of it and start putting it to work.

The industry’s parallel effort to introduce ATSC 3.0 may help.

From what I understand, the broadcasters who are gung ho about the next-generation broadcast standard are talking about community towers in each market — that is, co-locating their antennas on common towers.

Community towers, which already exist in some markets, are would cut capital costs and dovetail with plans to boost the coverage of next-gen signals with single frequency networks.

SFNs comprise multiple repeater stations operating, as the name suggest, on a single frequency. That the repeaters can broadcast on the same frequency without interfering with each other is one of the neat tricks of 3.0.

Strategically located around a market, the repeaters will insure that the 3.0 programming and data services reach all mobile devices as well as TVs with simple indoor antennas.

Here’s my point: The community antenna approach will lessen the pressure on the transmission and tower vendors. They would have to upgrade fewer towers and, in many cases, they could use broadband antennas capable to broadcasting multiple signals.

The SFN repeaters could be brought on line gradually after the repack and all the channel switching it entails has run its course.

It almost goes without saying now that the repack and the conversion to 3.0 has to be synced up. And I think it will be if the ATSC continues to make steady progress on the standard and adopts it next year, and the FCC promptly mandates it as the national standard. (It was a bit disappointing that FCC Chairman Tom Wheeler didn’t give 3.0 a plug in his NAB speech Wednesday as he did last year.)

So, 3.0 may mitigate the problem of repacking the band in 39 months, but it will not solve it.

Last week in an interview with TVNewsCheck, NAB President Gordon Smith said he had a plan to get more money out of the auction proceeds to reimburse broadcasters. Now, he needs a plan to get more time.

Addendum: Did you see the headline in the New York Times yesterday: “Jackpots for Local Stations in FCC Auction of Airwaves.”

It was straight-forward account of the incentive auction and FCC Chairman Tom Wheeler’s campaign to encourage broadcasters to sell. There was nothing in the story that broadcasters and wireless carriers auction don’t know.

But that headline was blunt and really did get to the nub of the matter. I wonder how long it will take before some lawmaker or citizen watchdog group starts raising hell about the sell-off of what still is technically public property and giving a large, but unknown share of the proceeds to the current users of the property — the broadcasters.

The way the auction has been set up, broadcasters that sell will receive more — perhaps many, many times more — than the spectrum is worth in the service of broadcasting, the service the seller had pledged to provide when it obtained the license to use the spectrum.

The FCC has a duty to put spectrum to work where it believes it will do the most good and the incentive auction is a mechanism for doing that. I can think of no better way to accommodate the interests of all the parties involved. It works for the policymakers eager to shift spectrum to broadband use, broadcasters eager to cash out and the wireless carriers hungry for more spectrum. And the U.S. Treasury gets a big (the biggest?) share of the proceeds.

So far, there have been no howls of protest. But they could come at any time between now and when the FCC starts awarding those “jackpots” to broadcaster for their spectrum. If they are loud enough, they could inject another large variable into the already complex incentive auction equation.

Just what the industry needs.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.