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National broadband plan

In the National Broadband Plan (NBP) released March 16, the FCC proposes a “Mobile Future Auction,” which will permit existing spectrum licensees, particularly television broadcasters, to voluntarily relinquish spectrum in exchange for a share of auction proceeds.

According to the NBP, TV spectrum is not being used efficiently and would be better allocated to mobile broadband use. The proposed Mobile Future Auction would be the recommended way to encourage TV licensees to relinquish spectrum in return for at least some of the proceeds when their spectrum is auctioned.

The NBP calls for “freeing up” 500MHz of spectrum over the next decade, with 120MHz to come from broadcast TV. One way the FCC hopes to achieve that is to develop “market-based mechanisms” (i.e., special-feature auctions) that enable spectrum intended for the commercial marketplace to flow to the uses the market values most. Under the FCC plan, broadcasters would not only share in the proceeds of the resulting spectrum auctions, but also their participation in the scheme would be voluntary. How “voluntary” would this be with the FCC controlling the rules of a game where those rules are based on policy goals that cannot be fully achieved absent an end to free, over-the-air TV? It is unlikely broadcasters would volunteer to give up their spectrum without first receiving a guarantee that they would receive at least full value for their stations.

Precisely how such an auction would work has not been determined; indeed, there may be no need to spell out the details at this point. But it is apparent that the commission has thoroughly embraced the notion that television spectrum is a resource that can and should be repurposed for mobile broadband use.

In a February speech, FCC chairman Julius Genachowski said there is a “massive amount of unlocked value” in TV spectrum — maybe even $50 billion, according to “one study,” and that “a broad range of analysts, companies and trade associations” have shown the inefficiencies of the current allocation scheme. The study says, “Even in our very largest cities, at most only about 150MHz out of 300MHz [of TV spectrum] are used.”

Genachowski said,“the Mobile Future Auction is a win-win proposal: for broadcasters, who win more flexibility to pursue business models to serve their local communities; and for the public, which wins more innovation in mobile broadband services, continued free, over-the-air television, and the benefits of the proceeds of new and substantial auction revenues.”

What's next?

Publication of the NBP may not have any immediate or long-term effects on TV spectrum use. The statute requiring the NBP simply directs the FCC to do its due diligence to come up with a plan and then tell Congress about it. The FCC has no independent authority to implement the NBP without formal notice-and-comment rulemaking proceedings. Moreover, the FCC's statutory auction authority does not permit the agency to turn over auction proceeds to incumbent licensees or anyone else but the U.S. Treasury.

Also, members of Congress may be reluctant to let the FCC raid TV spectrum, particularly if broadcasters increase the introduction of multichannel video and data services on their own. Another key factor is, of course, the considerable political clout TV broadcasters have in their home markets in an election year.

Harry C. Martin is a member of Fletcher, Heald and Hildreth, PLC.

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