NAB EVP Wharton weighs in on spectrum squatting


National Association of Broadcasters EVP/Communications Dennis Wharton thinks that telecommunications executives would have a much easier time denying that they are squatting on unused spectrum if they would just stop running around telling investors that they are cleverly squatting on unused spectrum.

We’ll let Wharton make his own case, which he did in a blog post entitled “Verbatim Quotes are Stubborn Things.”

“It’s been said by cynics that the only real gaffe committed inside the Beltway is when someone actually tells the truth. That’s why we’ve gotten a chuckle out of the overheated protestations from our friends in the wireless industry after NAB submitted evidence from two top telecommunications industry executives suggesting that ‘Heck yes, we’re warehousing spectrum. So what?’

“Let’s review the bidding: Dish Network CEO Charlie Ergen recently told investment analysts that his company made a speculative investment in spectrum because spectrum ‘has value, just as an asset.’

“That’s not new verbiage from Mr. Ergen. Indeed, on a November 2010 earnings call, the Dish CEO said that his company bought spectrum 700 MHz from broadcasters ‘as a building block…a pretty good inflation hedge, and they’re not making any more of that spectrum. If we’re not able to strategically do something with that spectrum, there’s probably other people who are able to do that.’

“According to the must read publication Communications Daily, Mr. Ergen elaborated on his investment: ‘I think one of the better things we did was that we resisted the temptation to go out and try to build it out and spend more money on the buildout for it without really knowing where we want to go…. I don’t know whether our timing’s right or not on 700MHz. At some point, that will be a valuable spectrum to somebody. And if we can figure out a way to use it, that’s good. If we can’t then somebody else will own it,’ said Ergen.

“Dish Network apparently isn’t alone in its desire to squat on valuable airwaves. Communications Daily reported on Jan. 28 that Time Warner Cable has no plans to deploy recently acquired spectrum. Paraphrasing recent remarks on an analyst call from Time Warner Cable Chief Operating Officer Rob Marcus, respected Communications Daily reporter Josh Wein wrote that the company ‘has no plans to sell, lease or use its AWS spectrum licenses. … The recent AT&T acuisition of Qualcomm’s MediaFLO spectrum bodes well for the value of the cable operator’s spectrum holdings.’

“So there you have it: two massive telecom companies candidly admitting that they are in the business of sitting on valuable spectrum.

“When NAB pointed out these obviously newsworthy and noteworthy comments, spin doctors at both Time Warner Cable and Dish Network circled the wagons. Predictably, this strategy of denial was embraced by other telecom companies and trade associations who are apoplectic over the possibility of a serious unbiased spectrum inventory. God forbid there would be a serious and thorough review of whether companies that were given or bought spectrum are actually following through on timetables and promises to deploy it. After all, that would not fit into their neat little “spectrum crisis” tale that they’re foisting on Congress.

“The tap dancing of the telecom giants and their enablers brings to mind a famous scene in ‘The Wizard of Oz’ where Toto pulls back the curtain and exposes the fact that Oz has — in fact — no magical powers.

“In the movie, Dorothy and the Scarecrow were asked to ‘Pay no attention to the man behind the curtain’ — just like America is expected to pay no attention to verbatim spectrum hoarding admissions from Time Warner Cable and Dish Network.”

RBR-TVBR observation: As Judge Judy always says, you don’t have to have a good memory if you tell the truth. In this case, when the same story plays as well with investors as it does with regulators and the media, you can just tell it whenever you want. It must be tough tailoring a message for a specific audience, only to have it googled and shared with the wrong audience.

The broadcast story is remarkably consistent. Broadcasting is a primary source of local news and information, and is just about the only reliable source for critical local emergency information. Telecom and cable companies have little or no local programming presence, and need broadcast content to effectively sell their program lineups – and should expect to pay a fair price for that value. The broadcast one-to-many distribution model is also far more efficient than the one-to-one telco model, and the broadcast model should be actively developed and exploited to head off the coming spectrum crunch. Meanwhile, telcos that are slavering over broadcast spectrum should use what they have before trying to grab more.

There – that simple story can be told no matter who is in the audience.