FCC Chairman Outlines Plans for Spectrum Auction
February 25, 2010
Although the FCC will officially present its National Broadband Plan in the March 16 Open Commission Meeting [PDF], we got a preview of what's coming in FCC Chairman Julius Genachowski's remarks [PDF] at the New America Foundation on Wednesday. TV broadcasters have been concerned that the plan might call for broadcasters to give up their spectrum, abandon over-the-air HDTV and Mobile DTV, and share spectrum for what might be called a limited "TV lifeline" for the remaining over-the-air viewers.
In his remarks, the Chairman said the "Mobile Future Auction" would allow broadcasters and other spectrum licensees to relinquish spectrum in exchange for a share of auction proceeds. However, fears that the FCC will unilaterally take away broadcast spectrum appear to be unfounded. After describing the auction, Genachowski said, "Now, I've mentioned broadcast spectrum—so let me be clear—the recommendation is for a voluntary program. Broadcasters would be able to continue to serve their communities with free over-the-air local news, information, and entertainment; and they would be able to experiment [with] mobile TV."
Genachowski said a broad range of analysts, companies and trade associations pointed to "a massive amount of unlocked value in that spectrum, which has characteristics that make it particularly suitable for mobile broadband..." He cited a study suggesting "that as much as $50 billion in value could be unlocked if we adopted policies to convert some of the broadcast spectrum to mobile broadband" and that "this suggests that there are inefficiencies in the current allocation."
Genachowski doesn't agree with MSTV [PDF] on how efficiently broadcasters are using their spectrum. "The highly valuable spectrum currently allocated for broadcast television is not being used efficiently—indeed it is not being used at all," he said. I think most broadcaster engineers that have tried to find an open channel in the crowded northeastern part of the U.S. or in southern California would disagree with his statement that "Even in our very largest cities, at most only 150 MHz out of 300 MHz are used" once adjacent markets, low power TV stations, Class A TV stations and two-way radio users are included. I showed how crowded the TV broadcast spectrum was in Los Angeles in a previous RF Report.
We don't know yet how the Mobile Future Auction would work, what percentage of the auction revenues current spectrum holders would receive and whether or not they would be able to retain some cable must-carry rights even after giving up their spectrum. That won't be known for sure until the National Broadband Plan makes its way through Congress and the FCC adopts an Order to implement it. Will an LPTV station with secondary status receive the same portion of auction proceeds as a Class A TV station with primary status? How will their portions compare with the portion a full power station would receive from giving up its spectrum?
Commenters in the National Broadband Proceeding have put some very high values on broadcast spectrum. Should these values turn out to be accurate, if Congress and the FCC adopt the Mobile Future Auction plan and return a significant amount of the auction proceeds to the existing license holder I would expect many struggling broadcasters without a strong local connection to their markets will give up their spectrum and use the cash to cover Internet streaming and pay for cable carriage. Some of the LPTV stations I see running nothing but infomercials will likely pocket the cash and shut down. We may even see network affiliates in some smaller markets shutting down over-the-air TV. However, with less demand for spectrum in those markets for all uses–broadband and broadcasting–the auction prices may not be high enough to convince broadcasters to give up their rural over-the-air viewers.
I expect more details on the plan to leak out before the March 16 FCC meeting. So far, it looks like the FCC will let the market decide whether or not it makes sense for a broadcaster to continue over-the-air broadcasting. As of now, it isn't clear how what value will be placed on the other benefits broadcasters provide their communities.