The Broadcast Spectrum Auction Paradox


The Government seems to know better. Where have we heard that before? Now the FCC wants to have a spectrum auction claiming that broadcasters are not using their spectrum for its highest and best use. On the face of it, that means that existing wireless broadband companies, those who are most likely to purchase spectrum in an auction, are the panacea for spectrum use. Really? Why does it not make more sense to allow existing licensees of broadcast spectrum to at least have an opportunity to reinvent themselves before having a “Government taking”?

An auction might take years to actually take place. Legislation, which would be required for an auction, by its very nature, moves slowly and onerously. Add to that, the much needed comprehensive inventory of spectrum, which should include utilization statistics from the current purveyors of the existing technologies and the process of redistributing spectrum through an auction will, take even longer. When all totaled up, there could not be a spectrum auction prior to 2015.

So, if there is a current “spectrum crisis”, what do we do in the meantime? How long after the auction will it be until the new technologies are built out and turned on? What is the track record of the companies that have hoarded spectrum for years? Would this rollout take place in rural America where there are fewer people and a larger need to acquire the new technology of the 21st century?

Probably not! That is why the Government had to develop “rural electric cooperatives” in the early 20th century and spend untold tax dollars to electrify the rural United States. No private company or group of private companies would take on such a task.

Now the FCC has proclaimed that their assumption is that broadcasters who are having a difficult time making money under their current business models, would most likely participate in a “voluntary auction”. The reality of that statement, while appearing to make sense on the surface, is that in the years it would take to make the auction happen, these business people will not be standing idly by waiting for Government action. The market place will change! Technology will change, as it seems to do on a weekly or monthly basis. Forget about waiting years. That is not realistic. Effectively, the assumptions about how many stations would participate in an auction, if based on today’s economics, are only accurate if those stations were allowed to sell that spectrum today or this year. Those broadcasters would have to have a full realization of the percentage for the proceeds they would receive for their participation in said auction. Since some broadcasters might not be able to last the years it takes to do the inventory, pass the legislation and conduct the auction, why not allow them to pledge their spectrum now and allow them to shut their stations down now without fines or penalties?

The current FCC plan assumes that major network affiliates will not participate in the auction. On the contrary, even non-affiliated stations may opt out. Currently there is a revitalization of over the air (OTA) services. This is evidenced by a large increase in the sales of antenna systems for OTA television. This renaissance might be further enhanced by deployment of viable mobile television services by incumbent broadcasters. In short, a healthy broadcast industry might be just a few clicks away. It is also critical to consider the potential impact of allowing incumbent license holders to deploy new technologies themselves. Such services could provide both clear-to-air/free-to-air television services, as well as fixed and mobile broadband services.

Existing broadcast licensees including the thousands of Class A, LPTV and TV Translators stations across the country, many of whom have been hit hardest by the economic downturn, would jump at the chance to evolve their business models to include much needed and desired broadband services in the communities they serve. Activating this pool of small business owners, through the authorization of new technology platforms on their spectrum, would provide them with immediate access to capital; could resolve the burdensome challenge
of regulatory uncertainty, under which they currently labor; and would immediately begin to create thousands of new jobs and essential competition for fixed and mobile broadband services in both urban and rural markets.

Therein lies The Broadcast Spectrum Auction Paradox!

Enable existing broadcasters to facilitate the aspirations of the National Broadband Plan immediately. Or wait years, if not a decade for the same spectrum to be reprocessed through an auction and handed over to only the largest and wealthiest companies in America.

–Greg Herman, President,
469-644-4683 [email protected]