12/20/2011 8:00 PM
Deborah McAdams is the Executive Editor of TV Technology.
It's hard not to admire Verizon's strategy to own the airwaves. Take a lesson, AT&T. Forget trying to swallow another carrier. Just line up your cable pals to buy up spectrum and sit on it while you squawk about a shortage until Congress legislates the licenses right out from under broadcasters. It might be dirty pool, but there's finesse in that there English.
Verizon paid $3.6 billion to Comcast, Time Warner Cable and Bright House last month for around 20 MHz of spectrum they'd been sitting on since 2006, yielding a 60-percent return for the cable operators.
While the maneuver calls into question the validity of a "looming spectrum shortage,"—the justification for giving television spectrum to Verizon and AT&T—that no longer matters. Not a single member of Congress opposed authorizing the FCC to auction off TV licenses because of the debt crisis. Verizon's check to the cable companies rings in their ears like a cash register.
An independent TV station owner might be similarly disposed, especially one facing mandates to regulate loudness; close-caption everything; keep electronic records of every word uttered on the station feed; incorporate new emergency-alert equipment; and pay off the debt incurred for recently installing a 1,500-pound digital antenna. A piece of spectrum-auction proceeds begins to look pretty darn shiny.
Verizon also got more than just a parking space for that 60-percent premium. The cable companies will sell Verizon wireless service to their 37 million subscribers, and Verizon will offer their video programming to its 94 million subscribers, capturing the mobile video market in one fell swoop while broadcasters are repacked into 40 percent less spectrum and cut out of retrans by Comcast, I mean the networks.
And while AT&T fights to acquire T-Mobile, Verizon will sashay through regulatory approval spinning a cane and tipping its top hat.