PFF has just released the transcript of an excellent panel discussion I moderated last week entitled, "Let's Make a Deal: Broadcasters, Mobile Broadband, and a Market in Spectrum." As I've mentioned here before, one of the hottest issues in DC right now is the question of broadcast TV spectrum reallocation. Blair Levin, who serves as the Executive Director of the Omnibus Broadband Initiative at the Federal Communications Commission, recently raised the possibility of reallocating a portion of broadcast television spectrum for alternative purposes, namely, mobile broadband. Such a "cash-for-spectrum" swap would give mobile broadband providers to spectrum they need to roll out next generation wireless broadband networks while making sure broadcaster receive compensation for any spectrum they hand over. The FCC just recently released a public notice on "Data Sought on Users of Spectrum," (NBP Public Notice # 26) that looks into the matter. "This inquiry," the agency says," takes into account the value that the United States puts on free, over-the-air television, while also exploring market-based mechanisms for television broadcasters to contribute to the broadband effort any spectrum in excess of that which they need to meet their public interest obligations and remain financially viable." Meanwhile, the House Energy and Commerce Communications Subcommittee is set to hold a hearing on the issue next Tuesday.
Blair Levin, Executive Director of the FCC's Omnibus Broadband Initiative, began the discussion by describing how additional spectrum will be needed to expand wireless broadband and why spectrum currently held by broadcasters would be a good option. In addition to identifying spectrum that has the technical qualities to support broadband, he explained, "You also would look at things like where there's an economic gap between the current use and potential wireless use. You would want to look at bands where maybe there are regulations which constrain the market mechanism. You also might want to look at bands where you can have a meaningful reallocation of spectrum while, nonetheless, preserving current uses."
Coleman Bazelon, Principal at The Brattle Group, presented findings from his recent paper on the value of spectrum currently held by broadcasters if it was reallocated to commercial mobile or wireless broadband uses. "This analysis shows that there are significant gains from reallocating the broadcast band, and I think the takeaway should be that there are significant gains, not that its $42 billion or $51 billion, but that its tens and tens of billions of dollars," Bazelon stated.
David Donovan, President of the Association for Maximum Service Television, Inc., questioned the estimates of the additional value of broadcast spectrum that could be gained if it was auctioned for other uses. "If you are valuing over the air television broadcasting and its importance to the American public, using a snapshot based on an auction valuation at a particular point in time is really highly inappropriate," he stated. "The business model of broadcasting is heavily regulated. ... and that defines, of course, the value, just like heavy zoning defines the price of land."
Kostas Liopiros, Principal of The Sun Fire Group, discussed the technical feasibility of using various blocks of spectrum for wireless broadband use. "Only additional spectrum can produce the required gains of capacity in the future, but if the gains capacities are oriented towards wireless broadband, for national wireless broadband capability, you need to focus on the right type of spectrum," he explained.
John Hane, Counsel in the Communications Practice Group of Pillsbury Winthrop Shaw Pittman LLP, warned of the legal difficulties of modifying broadcast licenses. "Extinguishing licenses requires a hearing, potentially hundreds of them, each one affecting one or more Congressional districts." Although the FCC is able to modify a license without the licensee's consent, he continued, "that is a very long and complicated process with an uncertain time frame. If there really is a spectrum crisis, the stick approach ...is not going to solve it very fast."
Paul Gallant, Senior Vice President of Concept Capital, discussed the possible effects of Congress involvement in auction of broadcast spectrum. If broadcasters are reluctant to modifying their business model, Gallant explained, it might be beneficial for them to have Congress involved in such a deal. However, he warned that Congressional involvement could also result in uncertainty for the broadcasters. "It is not clear, if Congress does pass a bill, whether broadcasters come out better or worse than they would if they had worked something out with the FCC. The main reason is there is tremendous budget pressure in Congress today. They are looking for new sources of revenue," Gallant explained.
Andrew Jay Schwartzman, President and CEO of Media Access Project, expressed that he was resistant to the idea of auctioning spectrum. "It isn't property," He stated. "They favor incumbents. They're rigged. They don't generate the revenues that OMB and Congress seem to think they will." He also warned of the possible impact of auctions on innovation. "Auctions lock in existing technology and near-term foreseeable technology. The people who are able and willing to bid are basing it on technology that they know they can generate and that does not allow the spectrum to be used in better ways coming down the road."