The money trough

The stage is set for a seismic battle between the over-the-air (OTA) broadcast industry and the most powerful political animals in the world: a Congress hungry for both money and control. FCC Chairman Julius Genachowski has just given these ambitious animals the scent of both.

Broadcasters are open-minded about technological changes. After spending billions, these professionals have completed the move to digital, most have implemented HD, and some are even now broadcasting mobile video. These business people are not stubborn about implementing new technology and solutions when it benefits their audiences — and bottom line. However, the latest round of government proposals has even the most optimistic TV station owner feeling a bit nervous about the future.

A month ago, the FCC released its long-awaited National Broadband Plan (NBP). This plan promises a financial nirvana while simultaneously predicting data catastrophe if it is not implemented. In the 25 years I've been following FCC activities, the commission has never executed such a carefully orchestrated public relations campaign for anything. In fact, the NBP was being assembled long before Genachowski was approved as FCC chairman. Only later did we discover that the FCC's 300-page tome cost U.S. taxpayers $20 million. That works out to $50,000 per page, or $50,000 per day, however you choose to calculate it. Even so, if the NBP were to be implemented as written, the document's $20-million cost would represent but a tiny part of a trillion-dollar government expansion program and forever change the broadcast industry and how Americans receive TV.

The justification for change isn't so much in question as how it's going to happen. If offered money, some broadcasters are going to take it. From a capitalistic viewpoint, that could be seen as just one less competitor. If broadcasters operated in a free marketplace, fewer competitors might be good. The problem is that OTA broadcasting is no longer a free-market business. Congress and the FCC increasingly have seen it fit to micromanage broadcasters and their business, often while giving some competitors a free ride.

A spectrum auction represents a threefold dilemma for broadcasters. First, many will argue that broadcasters should not be paid a penny because it is the “public's spectrum.” That alone will make it difficult for politicians to justify using auction money to compensate a local OTA broadcaster for its loss.

Second, the NBP promises trillions of dollars in benefits. What politician will argue against receiving billions of dollars in auction fees and the claimed trillions of dollars in benefits? After all, this has been called a crisis, and Congress' solution to any crisis is more money — spending, taxing or both.

Finally, if the “incentive auction,” called the carrot approach by some, doesn't work, there is the stick approach. That ultimate FCC tool was insinuated by Democrat Commissioner Michael Copps. When it was suggested broadcasters might not agree to an incentive auction, he responded, “I've always been a believer in use it or lose it, [and] licenses all expire.” Let me interpret what he said. Either you cooperate and do what the commission wants, or the FCC may take your license. The battle lines are drawn.

Unfortunately, our industry's representative organization, the NAB, has lost the last several rounds with the FCC. Let's hope its new guy is better trained in political guerilla warfare than the last one. Our future depends on it.

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