Are cell providers 'spectrum squatters'?

If wireless is the future, it’ll surely mean a jump in demand for that most insubstantial yet precious of commodities: spectrum.

Everyone wants in on the invisible electromagnetic waves that carry all forms of audio and video media. The problem is that the electromagnetic spectrum is finite. As a result, mobile operators are engaged in a tussle with TV broadcasters over who gets what.

And in Washington the idea of a spectrum crunch or crisis has morphed into a complex debate over whether current holders of spectrum are squandering it or squatting on it (and there actually is a difference).

At issue is a plan championed by the FCC to wrest as much as 120 MHz of spectrum from broadcasters, who would voluntarily give up portions of their airspace. The government would then put it up for auction, with the broadcasters sharing in the proceeds from the sale.

Broadcasters — miffed at the idea that their turf is being encroached upon and ceded to broadband — are skeptical that such transactions will be truly voluntary. With many predicting that broadband will be the communications future, with mobile tech driving its growth, TV stations have wasted little time suggesting that a mad rush to wireless would jeopardize TV as we know it, including localism, public-interest standards, even the quality of the signal.

While wireless firms have warned of America losing its competitiveness as a spectrum crunch worsens, the broadcast lobby has raised the idea that the problem isn’t scarcity but hoarding.

“Clearly, the FCC would know now who has the spectrum,” Gordon Smith, CEO of the National Assn. of Broadcasters, said in a recent interview. “What they obviously don’t know, and should know, is how it is being used. They talk about build-out requirements. They (the wireless industry) don’t have build-out requirements like we do. And verbatim quotes are stubborn things when you have industry leaders who say to their financial folks that we’re warehousing it.”

What he’s referring to is a remark reportedly made by Dish Network CEO Charlie Ergen on a November 2010 investor call in which he said that he’s bought spectrum “as a building block” and a “pretty good inflation hedge.” The NAB has cited that and other comments as evidence that companies are “hoarding” spectrum.

The rhetoric has stirred up station owners, some of whom think the FCC is being hoodwinked into a plan. At the recent NAB confab in Las Vegas, station CEO Charles Glover angrily lashed out at FCC official William Lake, among the members of a panel on the proposed auctions, warning, “You are about to start a train wreck you are not going to be able to come back from.”

There’s also been a dose of sarcasm, as when the NAB’s Dennis Wharton accused telcos and trade associations of being “apoplectic over the possibility of a serious unbiased spectrum inventory.”

“God forbid there would be a serious and thorough review of whether companies that were given or bought spectrum are actually following through on timetables and promises to deploy it,” he wrote in a blog post. “After all, that would not fit into their neat little ‘spectrum crisis’ tale that they’re foisting on Congress.”

The powerful broadcast lobby, however, faces the formidable and growing strength of telcos, who are also willing to pull out all the stops. Several weeks ago 112 economists sent a letter to President Obama in support of the auction plan, characterizing the current spectrum allocations as outdated and inefficient. Others see the NAB as disingenuous,

Steve Largent, the former pro-football star and now CEO of CTIA-The Wireless Assn., called the broadcasters’ claims a Hail Mary pass “trying to do and say whatever they can to keep unused or underused spectrum to themselves,” adding that those who oppose the auctions are searching “for any hint of outlier instances” where spectrum “allegedly is not being put to productive use.”

“If we are forced to wait because some groups don’t want to be paid for their unused spectrum, then we’ll deprive American consumers of the fast-paced and cutting-edge innovation they have come to expect and love from our industry,” Largent wrote in a blog post.

Fred Campbell, CEO of Wireless Communications Assn. Intl., says there are ample examples of telcos, like T Mobile, Verizon and AT&T, building out their spectrum. “Ultimately, this should be a win-win-win” across the industry, he says.

While broadcasters say they need spectrum to develop their own mobile services, Campbell says they have been talking about such innovation plans for years, while telecoms are already headed to 4G technology. “They’ve been too tied to an old business model,” says Campbell, formerly the wireless bureau chief for the FCC.

While the federal government also holds spectrum that could be reallocated, Campbell said that the process of determining what can be given up and what cannot will be “extraordinarily time consuming,” and that it is “impractical to wait” until that is done. In fact, the FCC’s National Broadband Plan all but depends on broadcasters’ participation in the auctions. While the plans may mean realignment of channels, they have vowed to pay the cost and that no broadcaster would be forced to move from the VHF band to the UHF band, the latter of which is some of the most prized real estate for wireless firms.

Several auction bills are pending before Congress, but it doesn’t look like there will be immediate action. It still seems iffy that a bill will pass this year or even in 2012. Rep. Greg Walden (R-Ore.), chairman of the House Subcommittee on Communications and Technology, held one hearing on the issue earlier this month and plans to hold more. Walden, a former broadcaster, sees the demand but says that the broadcast incentive auction “is by no means the only option.”

As demand for spectrum increases, it also stands to reason that so too will the industry’s leverage. Sources on the telco side grouse that it will allow stations to extract better terms in the incentive auctions.

Broadcasters, however, say it pays to wait if their future is at stake. “We are sincere when we say, ‘We support voluntary,'” Smith insists. “And if people volunteer to go out of business, that is called freedom. But for the nonvolunteers, we demand that they be held harmless. Held harmless financially. Held harmless in terms of their signal strength and reach. Held harmless in terms of their opportunity to innovate and provide technological offerings of the future like mobile, multicasting and 3D.”

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