Broadcast spectrum has long been a scarce and precious resource. In recent years, though, with the explosive growth in the number of users of cellular phones, smartphones and wireless broadband cards, it’s come to resemble Manhattan real estate: in huge demand, with pressure to develop any parcel that seems underutilized.
Those pressures are sure to increase under the National Broadband Plan unveiled last week by the FCC.
The plan says little directly about showbiz issues, perhaps because any obvious favors to “liberal Hollywood” are sure to stir up political opposition, but there are some carrots for the entertainment industry, including a couple that have the movie studios salivating. Chief among them are the plan’s goal of increasing consumer adoption of broadband Internet and providing super-fast, affordable broadband access for at least 100 million homes within 10 years — giving much of the country ample bandwidth for video-on-demand, massively multiplayer gaming and 3D streaming.
But broadcasters have found the dark cloud around this silver lining — the necessary sell-off of spectrum to develop all that bandwidth. The plan calls for making a 500 Mhz chunk of the spectrum available for broadband by 2020, with 300 Mhz of that coming within five years — and 40% of that from TV broadcasters.
In order to make that happen, the plan asks Congress to give the FCC authority to impose spectrum fees on license holders and urges the agency to “promote access to unused and underutilized spectrum.”
Appearing on CNBC earlier this week, FCC chairman Julius Genachowski said that “unleashing spectrum” was a top priority, if not the top priority.
“There are no easy pickings on the spectrum chart,” he said. “This will take a lot of work.”
The Broadband Plan notes that data on AT&T’s network has increased 50-fold in three years, thanks to the popularity of the iPhone. Right now, it says, on the four biggest mobile networks, only one third of mobile phones are smartphones. But as smartphones proliferate, 4G networks make their debut and new devices such as wireless-enabled cameras hit the market, demands on those networks will soar.
And, the plan authors warn that “the cost of not securing enough spectrum may be higher prices, poorer service, lost productivity, loss of competitive advantage and untapped innovation.”
TV spectrum may not be easy pickings, but for mobile services it’s tasty fruit. For all intents and purposes, the plan identifies broadband as the primary means of communication in 2020, and sees wireless as a big driver of it. That’s probably why the broadcast lobby, in raising red flags about the plan, identified their business as the “original wireless technology.”
The government plan acknowledges that TV performs vital public services, and marks it for preservation, but notes that “over-the-air broadcast television … faces challenging long-term trends.”
The plan notes that TV channels necessarily use only a fraction of their spectrum for broadcasting, to avoid interference, and proposes incentives such as letting broadcasters share auction revenue for spectrum they give up voluntarily.
If those measures don’t entice broadcasters to repurpose bandwidth, it ponders extensive changes for broadcast TV, including plans to let two or more stations share a single 6 Mhz channel or a new architecture for sending out TV signals, including many low-power cellular TV stations beaming signals to smaller neighborhoods rather than a single high-power station transmitting to a wider area.
On CNBC, Genachowski defended the plan as allowing broadcasters “voluntarily to decide, ‘Hey we have a way to keep on broadcasting, cut our operating costs in half or more,’ or to give their spectrum back if they think they can reach consumers and viewers in another way. We need to take these issues seriously if we are to lead the world in mobile.”
Yet it is telling that the unveiling of the plan earned mixed reviews from some of Genachowski’s colleagues. FCC commissioner Mignon Clyburn, who like Genachowski was appointed by President Obama, called the plan “an impressive piece of work” and worthy of action but worries that without further study, a spectrum sell-off would diminish the ranks of smaller stations owned by women and minorities.
And she is concerned that broadcast news outlets would be aced out of the migration to mobile. “It is unclear at this point whether the Internet can currently replace these trusted sources,” she said.
As vast in scope as the plan is — the detail in the spectrum section alone can make neophytes’ heads spin — there are significant questions left unanswered.
For instance, it’s unclear just how or if the FCC will determine which spectrum is “underutilized.” Naturally, broadcasters favor a voluntary approach of handing back spectrum, but they worry just how “voluntary” the effort would be.
The Broadband Plan spells out a system for “incentive auctions,” including methods where station owners could share in the proceeds from the government. But it also proposes fees on spectrum for some license holders, on the theory that companies holding a specific-use license aren’t under market pressure to repurpose the spectrum they control according to consumer demand.
Vincent Sadusky, president and CEO of LIN TV Corp., which has 27 stations across the country, says the market could offer the best way for allocation, letting demand for broadcast offerings like high-definition television, mobile TV and multicasting play out among consumers, along with services offered by cable and telecom companies.
Contrast that to a plan where the government plays a stronger hand in who gets — and who gives up — spectrum. “We think that is challenging, because whenever you take from one industry and provide it to another, it is going to be a long fight,” Sadusky says.