Let's Make a Deal: Broadcaster Spectrum for Sale?

Broadcasters spent billions of dollars on the digital transition, promising viewers who still rely on over-the-air reception multiple channels, HD programming and mobile video. An FCC proposal would limit that to a single standard definition channel. Why? More spectrum for mobile broadband.

The Federal Communications Commission opened a new line of inquiry Dec. 2 seeking public comment on how to obtain more spectrum for mobile broadband purposes, including a controversial proposal for broadcasters to return much of their spectrum back to the government.

Under the proposal, first floated by the FCC's Blair Levin in October, broadcasters would return the spectrum in exchange for a portion of the proceeds of a new spectrum auction. Although broadcasters spent billions of dollars on the digital transition, promising viewers who still rely on over-the-air reception multiple channels, HD programming and mobile video, many television stations have yet to implement their promises.

At the same time, according to the Progress and Freedom Foundation's Adam Thierer and Barbara Esbin: "Traditional television broadcasters are facing unprecedented marketplace competition and serious financial turmoil that threatens their long-term viability. ... Traditional over-the-air broadcasters are losing viewers, advertisers, shareholders and money at a steady pace."

According to Levin, who is heading up the FCC's broadband inquiry, it's time to make a deal with broadcasters. Levin and other experts in the field are convinced the nation is facing a spectrum shortage as more and more Americans turn to mobile devices. The problem facing the FCC is that the high propagation spectrum needed for mobile broadband can only be found in two places, the television bands and from the military. The Pentagon is unwilling to give up any of its spectrum.

"It's about the needs of the public. The amount of people not using over-the-air television is down 56 percent over the last few years," Levin said Dec. 1 at a PFF debate over the proposal.

As part of its new inquiry, the FCC wants to know, "What would be the impact to the U.S. economy and public welfare if the coverage of free over-the-air broadcast television was diminished to accommodate a repacking of stations to recover spectrum?" Under the proposal, broadcasters would be reduced to offering a single standard definition signal in their markets.

Not surprisingly, broadcasters have given the FCC a frosty reception to the proposal.

"Broadband deployment to unserved areas is a worthy goal, and broadcasters believe we can help the FCC accomplish its mission without stifling growth opportunities of free and local TV stations and the millions of viewers that we serve," NAB Executive Vice President Dennis Wharton said in a Dec. 2 statement. "We would hope policymakers would remember that after spending $15 billion upgrading to the next generation of television, broadcasters just returned to the government more than a quarter of the spectrum used for free and local TV service."

Also to no one's surprise, the wireless association CTIA rushed to endorse the proposal.

"CTIA is pleased the FCC has issued a Public Notice on uses of spectrum to gather the facts and to ensure the U.S. wireless industry remains the world's most competitive and innovative," the association said in a statement. "We think this is a logical outgrowth of our recent filings suggesting that the Commission should consider reallocation of broadcaster spectrum."

The CTIA claims its members need at least another 800MHz within the next six years to meet the increasing consumer demand for mobile Internet, mobile health devices and networks, and smart grids.

A study by the Consumer Electronics Association estimated that the value of broadcaster spectrum, if made available for mobile broadband, would be approximately $62 billion.