The FCC has provided little guidance on how it would take back half the usable TV spectrum, other than voluntary incentive auctions that would be used to entice TV broadcasters to give up their allocations. The Broadcast Spectrum Incentive Auctions White Paper from the Wireless Association (CTIA) and the Consumer Electronics Association (CEA) describes how auctions would work, how much money would be needed to convince broadcasters to give up spectrum or move to new channels, and how much revenue the auctions would produce.
If you accept the white paper's analysis, the maximum aggregate broadcaster value of 120 MHz of UHF television is calculated at slightly more than $2 billion. The gross value of this 120 MHz, in auction, is calculated to be $36.3 billion. CTIA and CEA calculated the cost of repacking TV stations into Channels 7 through 30 to be only $565 million. (They wisely excluded low-band VHF spectrum from their analysis.)
I'll leave it to others to challenge this financial analysis.
The NAB response includes this comment from NAB's Dennis Wharton:
"It's hard to take seriously an analysis of broadcast spectrum values done by parties with a vested interest in forcing scores of broadcasters out of business," Wharton said. "It's noteworthy that CTIA and CEA cavalierly suggest eliminating 'smaller stations in larger markets,' which translates into fewer niche broadcast stations that serve important immigrant communities and religious audiences. NAB does not oppose spectrum auctions that are truly voluntary, and we look forward to an informed dialogue in coming months on the enduring value of free and local television for all Americans."
I see problems with the grossly oversimplified technical assumptions in the study. The analysis paints a rosy picture for markets outside of the top 30, noting that some stations would need to move away from Channels 31 through 51, but that spectrum would be available to accommodate them. However, the white paper also states that within the top 30 markets, "the number of swaps is calculated in a similar fashion, however, some percentage of the broadcasters above the channel 30 will choose to exit, share, or move to low [band] VHF [channels]."
The analysis ignores that fact that in these markets many of the top four network outlets are above Channel 30 and it seems unlikely they would be able to find operating assignments within the limited amount of remaining spectrum.
Would they be forced to shut down, share or move to low-band VHF under the CTIA/CEA plan?
The white paper doesn't offer many options for stations such as NBC's outlet in Washington, D.C. (48), CBS's in New York City (33), and the NBC and CBS channels in Los Angeles (36 and 43 respectively), to name a few.
In case you're wondering how channel availability was determined, the report states that "the calculations assumed channel occupancy by broadcasters of only one out of every two channels. In other words, 13 channels were generally deemed available in a market, with four in the upper VHF band and nine in the UHF band."
This applies to both large and small markets.
Although the analysis subtracted channels allocated for Public Safety/Land Mobile sharing, it assumed stations would be able to operate on channels adjacent to allocations for these services. As one who struggled to find a DTV channel slot for a Philadelphia station prior to the transition, the simple assumption of 13 channels being available in a given market doesn't always work. Due to terrain and market density, a station on one channel can cause unacceptable interference to stations in adjacent markets. Of course, the interference rules could be modified, but that would hurt reception for the people in rural areas who are most dependent on off-air television delivery.
The study included Class A stations, but because the stations the white paper assumed would give up their spectrum, or share spectrum, were ranked by revenue, it's logical to assume that at least in the larger markets they would be bought out, as would the lower revenue full power stations. LPTV stations, which operate on a secondary basis, were not even considered. They'd lose their spectrum—no payment, end of story.
The paper dismisses the impact on viewers with the following:
"Since the DTV transition, a station's public channel and its RF channel have been separate. From a consumer standpoint, a change in a station's RF channel should have no real impact, other than the need to cause the television or receiver to perform a one-time channel re-scan at a set cut-over date."
Any station that moved from a UHF DTV channel to a VHF DTV channel during the DTV transition in 2009 knows it's not that simple.
That brings me to the last item I'll challengeZ—the cost of restacking TV stations into Channels 7 through 30, minus Public Safety/Land Mobile channels.
The study gives the average installation cost for swapping out an antenna and installing a new transmitter at $70,000. I don't have much experience with this in small markets, but at many of the transmitter sites (mountaintops, tall building rooftops) in the top 30 markets you'd be lucky to get the old antenna off the tower for that much, let alone install new transmission line, a new transmitter and perhaps a new tower and transmitter building, if you don't want to go off the air for a few months while changing channels. While the transmitter costs seem reasonable, they stop at 10 kW for VHF. For a station to stand a chance of success on a high-band VHF channel they will need circular polarization and much more power than that. The estimated antenna costs may be in the ballpark for a simple side-mount antenna, but if you have to go with a custom pattern and elliptical polarization, along with a high power handling capability, then the maximum $375,000 stated in the analysis won't cover it.
The whole relocation cost analysis is flawed, not only due to unrealistically low equipment and installation cost estimates, but because major items are simply ignored. I already noted that it doesn't include the cost of staying on the air on the current channel while building out a facility on a new channel. It doesn't include the cost of transmission line or the cost of tower modifications that may be required to accommodate a different antenna.
Unfortunately, if you accept the financial analysis in the white paper, it doesn't matter. Even if the restacking costs three times as much as the paper suggests, that $1.7 billion cost still pales in comparison with the assumed $36.3 billion value of 120 MHz of spectrum. This is even after adding in the maximum $2.3 billion value of the spectrum to broadcasters.
Of course, if the $36.3 billion value of the spectrum is not correct, these extra costs become significant. New ways are being found to wring more data bandwidth out of existing spectrum that could cut into the demand for new spectrum. (See my article this week on how vorticity transmission could provide up to a nine times improvement in efficiency on existing spectrum.) LTE Advanced is likely to be approved this week; if it hasn't been approved already. It improves efficiency through more complex MIMO (multiple input /multiple output) technology. It doesn't make sense to drive TV stations that serve significant number of ethnic minorities off the air and force the remaining stations to compromise coverage in order to reclaim spectrum that may not even be needed as technology advances.
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