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Could 'Voluntary' Surrender of Spectrum Clear Channels 31-51?


The comments from Evan Kwerel, acting FCC Wireless Bureau Chief Economist about 24 minutes into the FCC Broadcast Engineering Forum (available at Reboot.FCC.gov/video-archives) to ABC's Andy Setos provide a brief glimpse into what the FCC (and, by extension, President Obama) may mean when they say any surrender of broadcast spectrum will be voluntary.

In responding to Setos' comment on winners and losers if two stations try to stat-mux (statistically multiplex two signals so one can use bandwidth the priority channel doesn't need), Kwerel said, "Well, if you had a voluntary mechanism, that could be through contract. You're absolutely right if there was kind of mandatory approach, how will we pick the winner and loser? If we had a voluntary arrangement, the loser would presumably pay considerably less. There must be some price, some discount, for being a loser, and someone would be willing to accept it."

Look at that statement carefully. If the loser is paying less, it assumes the winner is paying more. The last statement should send a chill down the spine of any broadcaster. It implies a mechanism where the cost of keeping a station on the air with high quality HD would be set high enough that someone (some station) would be willing to accept low quality just to stay on the air. How do you get 120 MHz back from broadcasters? Keep increasing the cost of that spectrum until enough stations give up their channels.

Another comment from Evan Kwerel tends to support my hypothesis. Talking about the compression panel's statement that you cannot combine two HD programs on one channel without sacrificing quality, multicast and mobile DTV, Krewel said, "All of your discussion seems to be thinking about networks and what the networks are doing. Networks aren't going anywhere. What we're thinking about is the fourth-tier station."

It seems odd to me that a policymaker in the current FCC, which has promoted openness and inclusion, would imply that it's fine for stations that provide unique special interest programming to low income communities but don't generate a lot of revenue be forced to pay up or lose their spectrum in order to provide more spectrum to wireless carriers like AT&T and Verizon or their competitors. They will use it when it is in their economic interest to do so, to allow consumers to pay per gigabyte fee to download the same program over a wireless Internet connection that used to be free over-the-air. Who wins? Not the station—they lose viewers that don't have broadband or a computer. Not the consumer—they have to subscribe to another service to get programming they used to get free. Who wins? The wireless carriers, that get paid by the consumer for data services and, before too long, the amount of bandwidth used. Cable companies win, if the channel has enough viewers for them to put it on their system and collect subscription fees for it. The Federal Government wins from the auction revenues.

What is a "fourth-tier station"? Is it a religious station? Is it the channel that broadcasts Japanese Korean, or Indian programming? Is it the only Class A TV station providing local news to a community ignored by the big stations in the big city next door? Is it the second or third rated station offering Spanish language programming? Is it the PBS station that depends on viewers to cover operating expenses? Is it a station you watch?

If anyone reading this happens to be associated with or cares for one of those lower tier stations, it might be worth asking the station owners how much they will be willing to pay to stay on the air.

In some ways, I have to agree with Evan Kwerel, with one addition. Money is part of the equation. I would add grass-roots support and political power. If stations don't have the money and they and their supporters can't convince their representatives in Congress they have a right to this valuable spectrum, do they deserve to keep it?

In short, "voluntary" is likely to mean stations agree to voluntarily forgo rewards (how much remains to be seen) from giving up spectrum and voluntarily accept the new and higher cost of holding onto that spectrum. With the right combination of numbers and the acceptance by the large wireless companies to pay the price for the spectrum, the FCC should be able to "voluntarily" reclaim however much spectrum those wireless carriers want from broadcasters. Cellularization, repacking, and channel sharing are ultimately irrelevant if the big wireless carriers are willing to pay enough for the spectrum.