Beachfront Property Values Drop: Analog Spectrum Now Pegged at $10B
October 7, 2005
If budget reconciliation is any indication, the government will have to pay someone to take the analog broadcast spectrum in 10 years.
The Senate Commerce Committee has put the auction value of the spectrum at $10 billion for the current budget reconciliation cycle. In the Balanced Budget Act of 1997, the value was codified at $26 billion. Between then and now, estimates spiked as high as $70 billion, sparking charges that broadcasters were "squatting" on "beachfront spectrum."
The $10 billion estimate was related by Committee Chairman Ted Stevens at the 19th Annual MSTV Television Conference held in Washington, D.C. Wednesday. Stevens delivered the keynote at the conference, where one broadcaster later wondered how such valuations are calculated. In this case, Stevens' committee must come up with $4.8 billion for budget reconciliation, and since those funds are contingent on shutting down the nation's analog broadcast TV infrastructure, Stevens and co. must also come up with money to mitigate the impact. Thus, $4.8 billion plus something for set-top converter subsidies, public education and various paraphernalia for emergency responders... and voila! $10 billion.
The senior senator from Alaska said the $10 billion figure would only apply "if a hard date is where it should be," chiefly, 2009. He didn't specify when in 2009, but several Hill watchers say they're hearing July rather than New Year's Day. They say lawmakers would prefer to be in session in the event of an analog shutdown so that statements of blame can be issued immediately.
A procedural rule--the Byrd rule--prohibits including non revenue or spending items in a budget reconciliation bill, so Stevens said a "companion bill" would be introduced to deal with multicast and dual must-carry, and downconverting.
Details of the Senate's DTV legislation are sketchy because no draft bill had circulated, or even leaked at press time, although some form of it was expected to be released this week. Stevens said he and ranking Democrat Sen. Daniel Inouye have shown their bill "to no one." Stevens did say, however, that establishing an earlier shutdown date for broadcasters in the 700 MHz public safety spectrum would be "too confusing" for consumers.
A DTV draft bill circulated earlier this year in the House contained a hard date of Jan. 1, 2009, but an updated version of that bill has yet to appear. Sources in the House have indicated that it will contain a set-top subsidy of less than $1 billion (Democrats pushed for $2.5 billion) and no provision for multicast must-carry.
On the Senate side, Stevens said he'd like to reach bipartisan agreement on DTV legislation, but predicted it would be a hard slog.
"There's a lot of difference of opinion on this," he said. "I think we'll be here until Christmas."
The one thing Stevens said he feared the most was seeing the spectrum auction proceeds funneled into disaster recovery.
"The 2009 hard date money should be used in this system and not in other areas of recovery," he said.