WASHINGTON: The latest salvo in the intensifying battle over spectrum is a research paper that asserts broadband is a more cost-effective use than broadcasting. The conclusion of the Coleman Bazelon of The Brattle Group is that the radio frequencies used for broadcast would be the easiest to reallocate for broadband, and bring about $62 billion at auction. The research was commissioned by the Consumer Electronics Association.
“Spectrum below about 3 GHz is most valuable for mobile communications...,” Bazelon wrote. “About 22 percent of all frequencies below 3 GHz are allocated as licensed and available for mobile broadband uses. That implies that there are likely significant opportunities for additional allocations of licensed radio spectrum for broadband uses.”
Broadcast television is in sub-3 GHz territory, along with mobile satellite, radio location, aviation navigation, ham operation, maritime communications and a host of government uses. Bazelon argues that broadcasting would be the easiest spectrum to reallocate. E.g., taking Channel 37, which is now dedicated to astronomy, “would require valuing the benefits from the science that relies on those frequencies--a truly courageous exercise.”
“If it were possible to continue to do science using those frequencies by placing radio astronomy equipment on the dark side of the moon, then one measure of the opportunity cost of using those frequencies on earth would be the cost of such facilities. That cost would likely be prohibitively expensive for the benefit of freeing 6 MHz of spectrum. Other bands would be less expensive to free up,” he writes.
Reallocating frequencies used by the government would require knowing precisely what they’re used for. “Unfortunately, there is no good accounting of those frequencies,” he said, though legislation calling for a thorough spectrum inventory is circulating on Capitol Hill.
Ideally, the cost of freeing up all the spectrum should be analyzed for anyreallocations, but Bazelon said that was “beyond the scope” of his research, which focused instead on broadcast. “These frequencies may or may not be the least expensive to free up,” he said.
Using a formula that assigns a per-household value to each TV channel, then subtracts cable and satellite carriage, Bazelon comes up with a market value of $12 billion for over-the-air broadcasting. That amount would presumably be reimbursed to broadcasters from the projected $62 billion in auction proceeds under a reallocation scheme. Another option would be to port all over-the-air households over to a pay service at an estimated cost of around $9 billion. Bazelon does not mention household willingness to continue paying a monthly fee for TV.
He does, however, mention the socioeconomic benefits of broadband on production and employment--300,000 jobs for every 1 percent increase in broadband penetration. He also cites an environmental impact study that links broadband penetration with the reduction of greenhouse gases. He also said that demand for mobile data is expected to grow 125 percent annually “over the next few years, and at rates 100 times greater than voice traffic will grow over the next decade.”
In conclusion, Bazelon says the $62 billion broadband valuation versus $12 billion for broadcast is evidence that “radio spectrum is currently inefficiently allocated.” The said another $50 million would be gained from commerce applications, and consumers would benefit to the tune of between $500 billion and $1.2 trillion from “cost savings and increased usage... for existing services and new services that can only be developed and offered in a more spectrum abundant marketplace.”
Bazelon’s paper comes hot on the heels of an FCC trail balloon gauging interest in the broadcast industry with regard to trading in licenses for cash. Commission advisor Blair Levin reportedly floated the idea to several broadcasters in recent weeks, to a somewhat cool response. Broadcasters just finished the multi-billion dollar task of transitioning to digital transmissions, and are now in full-fledged mobile DTV deployment mode.
The commission is under a presidential mandate to create nationwide broadband, for which spectrum must be allocated. Sen. John Kerry (D-Mass.), who is sponsoring a spectrum inventory bill, told The Hill newspaper that broadcasters should spectrum reallocation seriously.
“They should be worried, and everyone else should be worried,” he said.
FCC chief Julius Genachowski intends to present a nationwide broadband plan by February.
(Image by T.W. Collins)
Additional resources:
The FCCradio frequency allocation chart.
The commission’s “Online Table of Frequency Allocations.”
Bazelon’s paper, “The Need for Additional Spectrum for Wireless Broadband: The Economic Benefits and Costs of Reallocation.”
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