A Careful Look at the FCC Spectrum Sharing Report and Order
May 3, 2012
Close reading of the Report and Order (FCC 12-45) adopted last Friday revealed some aspects of sharing that could have some interesting consequences. The Report and Order (R&O) allows full power and Class A TV stations to volunteer to sell their spectrum in an incentive auction, but also to continue as an independent TV station with all the rights and responsibilities associated with their current license (except for coverage and data rate) by entering into a business arrangement with another station to share part of their digital bandwidth.
The good news for broadcasters is that a station that wants to share spectrum will be able to decide what station they want to share with and the details of the sharing (transmitter maintenance, amount of bandwidth, lease payment or sharing of auction proceeds, and the like) as long as they are able to cover their community of license and each station transmits at least one standard definition (equivalent to NTSC analog quality) signal at no direct charge to the public.
In rejecting some commenters requests that low power TV stations and TV translators be able to participate in channel sharing, the FCC made it clear that these secondary channels will be displaced if necessary to repack Class A and full power stations.
The Report and Order states, "Further, because we license low power television stations and TV translators on a secondary interference basis, they create no impediment to repacking as we need not protect these facilities in our repacking plan. For that reason, relinquishment of spectrum by these licensees through channel sharing arrangements will not aid the band clearing or relocation process—our immediate goal in this proceeding."
This does not mean LPTV stations will go away. Because the Spectrum Act requires the FCC to use all reasonable efforts to preserve stations' coverage in a repacking, interference may prevent some channels from being used where full service stations would cause interference to adjacent markets. If there aren't enough channels available for all the LPTV stations that want to remain on the air in a market, those lucky enough to keep their channel or find a displacement channel may be able to rent capacity to the unfortunate stations, although at this time the displaced low power or TV translator station would not be able to maintain its license by airing programs on another station.
An item in the R&O that you may have missed is that other than covering their community of license, there are no limits as to which stations can share spectrum. A Class A LPTV operation could negotiate sharing with a full service station and greatly expand its coverage while still retaining its Class A license. Alternatively, a full service station that wasn't concerned about its off-air coverage could sell its spectrum and share operations with a Class A TV station. Due to the somewhat limited coverage of Class A TV stations, I would expect their spectrum to be less valuable in an auction. One potential downside of cross-service sharing is that the cable carriage rules remain the same as if the station had its own license.
The FCC raises this issue in the Report and Order: "We caution that, in order to ensure carriage, broadcasters must continue to meet the eligibility requirements in our rules after implementing the channel sharing arrangement. In particular, in the Notice we pointed out that carriage rights extend only to those local commercial stations that provide a 'good quality signal' of at least -61 dBm to the cable satellite provider. Thus, channel sharing stations must provide this signal level in order to qualify for carriage from the shared location."
The R&O noted also that a channel-sharing Class A television station must not be located more than 35 miles from a cable system's headend to qualify for "must carry" status, even if that station wee to shares channels with a full power station that was not subject to the 35 mile requirement.
Some of the interesting consequences of the flexible approach to spectrum sharing outlined in the R&O include the possibility that multiple stations could join together to auction their spectrum and keep one channel with many standard-definition programs from each of the stations in the group. The group could set aside some bandwidth for a time-shared HD program stream. Another option is a station struggling to survive could sell its full power channel and share with a Class A station, as long as the Class A station had at least one SD-quality program stream and provided a sufficient signal to cable headends. This would likely be a best case for the FCC as they would get back a full service channel and likely be able to repack the Class A station onto a channel currently used by a low power TV or TV translator station.
Of course, sharing channels brings risks since it appears that the rights of stations giving up their spectrum to share with another station will be limited by the business arrangements they make with the other station. Stations sharing spectrum may also find it more difficult to adopt new technology such as mobile DTV and, depending on the sharing arrangement, find it impossible to add HDTV programming. The adoption of a new transmission standard, as it being discussed by the Future of Broadcast Terrestrial Television Initiative and in ATSC under ATSC 3.0 could eventually ease, but not completely resolve, some of the compromises inherent in spectrum sharing. Unless the next generation transition happens or is clearly defined before the sharing agreements have to be signed, it will certainly make negotiating those agreements more difficult!
Look for more information at the May 22 FCC Channel Sharing Workshop announced Tuesday.