McAdams On: Locking Down TV Spectrum

LOS ANGELES: The move to hand broadcast spectrum over to wireless providers is a Treasury play, pure and simple. There are products pouring into this country even now that are endangering citizens whose elected officials have borrowed away all power to regulate the gray market. Chinese gangstas in dark glasses are standing on the steps of the Capitol smoking menthols.

Free over-the-air TV service is this Administration’s last concern. It needs money, and it needs it now.

Remember that Congress has twice “balanced” the budget on projected proceeds from TV spectrum auctions. The first deadline for getting digital TV on the air was May 1, 2002, the year after Congress passed a balanced budget bill that calculated $26.3 billion from spectrum auction proceeds. When a majority of stations missed the deadline for lack of funds, proper technology and tower capacity, Sen. John McCain (R-Ariz.), who at one time seemed to hate broadcast with an intense passion, excoriated the industry:

“I say again, when we gave away $70 billion to the broadcasters, I knew at the time they would never meet this time schedule,” he said in a May 1, 2002 speech on the Senate floor. I.e., lawmakers set a deadline they knew the industry could not meet, and placed a ridiculously inflated value on spectrum. A couple of years later, phantom proceeds were pegged at $50 billion to balance a budget. The spectrum would actually bring $19.6 billion from cell phone service providers in 2008, when the economy was still smokin’.

Because, lads and lasses, there just aren’t that many outfits that have several billion dollars lying about.

There are, in the meantime, market forces. More and more people are ditching landlines and relying exclusively on mobile phones. I’m one. I have two cell phones, one of which can’t hold onto a call from across the room. Not because AT&T lacks the spectrum, but because AT&T hasn’t yet uprooted every last tree L.A. and replaced them with the fake Christmas tree towers. And more UHF TV spectrum won’t help them, because they’re not about to sell handsets with antennas the size of a small pony.

And more and more people are buying TV antennas. St. Louis, Mo.’s Antennas Direct is on target to more than double its revenues this year compared to last. People are figuring out that over-the-air TV looks pretty good, and that “free” means it doesn’t cost anything. Not costing anything does not make Wall Street happy. Incremental revenue--the type attached to subscription models--does.

Investors and observers alike are wondering if broadcasters can really pull off mobile DTV, and actually generate incremental revenue out of it. That’s something the big wireless providers could never substantially nail down. If broadcasters get to the market with mobile DTV before 4G phones are everywhere, they could dominate the platform.

But it’s hard to focus on constructing a house when the government comes along and insists that it needs your lumber for some other guy’s barn. If broadcasters lose another 120 MHz to wireless in addition to the 108 MHz they gave up in the digital transition, they may as well throw in the towel.

So the U.S. Treasury needs money and broadcasters need their spectrum. Instead of a wholesale reorganization of the airwaves, broadcasters should be allowed to bid on their own spectrum licenses to lock ’em down. It doesn’t make sense for just one industry to be allowed to bid on those frequencies. It seems like incumbents ought to have the chance as well, otherwise, isn’t the government kind of stepping all over the Fifth Amendment with filthy shoes?

Let broadcasters bid; let anyone bid, for that matter. But let broadcasters bid, and like wireless companies, hold them completely harmless for indecency, children’s programming requirements, record-keeping, news-source identifications, public-interest obligations and all regulatory constraints in general.

And let AT&T build antenna hats.
~ Deborah D. McAdams

See . . .
U.S. Households Increasingly Cut the Phone Cord and Go Pure Mobile from RCR Wireless.

Fake Chips from China Sold to U.S. Defense Contractors from Reuters

October 20, 2004:“Barton Buffaloes Broadcasters”
Since Barton became committee chairman last March, he's made it clear that he favors the original 2006 deadline set forth in the Balanced Budget Act for the recovery of analog broadcast spectrum. “The primary reason we're going to do this is dollars,” he said.

August 14, 2002:The Revolution That Wasn’t
Tauzin is miffed because a timely DTV transition was necessary for holding scheduled spectrum auctions, which were imperative to achieving a balanced budget bill that he signed. Never mind that he also offered legislation that would allow those auctions to be canceled should the transition stall.