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Sunday, May 8, 2005

The Art of the DTV Deal: Continued
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In response to my DTV Art of the Deal post, PFF Adjunct Fellow Joe Kraemer e-mailed the following thoughts, which I reprint here by permission:

1. In order for a [DTV deal] to emerge, there must be uncertainty on the part of all parties that a legislatively-mandated transition date in 2008 or 2009 will be enforced. In other words, the broadcasters must believe that there is a material probability that the date will be enforced while those organizations that want to use the vacated spectrum must believe that Congress may lack the will to enforce the date. Therefore, a legislatively mandated date creates the opportunity because it will paradoxically increase uncertainty [particularly with a presidential race in 2008].

2. The basis for paying the broadcasters an incentive would be the present value of accelerating the transition so that the alternative users would have access two or three years earlier than they otherwise would. The value of the incentive is not the absolute value of the spectrum.

3. The broadcasters would receive funds to cover transition costs, as well as an acceleration premium. There may be a need to set up some type of Transition Administrator that is outside the FCC and would authorize incentive payments based on actual progress towards vacating the spectrum.

I think Joe's comments both recognize the conditions and the outlines of a deal. For anyone else who has brainstormed about how to get this spectrum into use, please forward or link your comments. This should be public policy priority number one for both the FCC and Congress.

posted by Ray Gifford @ 5:15 PM | Broadband , Capitol Hill , Digital TV , Spectrum , The FCC , Wireless

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