Genachowski: Biz faces 'severe' costs if auctions stall

FCC chairman Julius Genachowski on Tuesday warned broadcasters that delaying action on the FCC’s spectrum reallocation initiative will have “severe” costs down the road. In his address at the National Assn. of Broadcasters confab, the FCC topper sought to counter skepticism in biz circles that there is a looming crisis in the availability of spectrum to support cutting-edge wireless and broadband services.Citing the dramatic increase in demand in mobile devices, Genachowski is pitching a plan of voluntary incentive auctions, in which broadcasters would give up some of their allotted space on the public airwaves and share in the proceeds of the sale to wireless firms.

“I do want to be clear of my strong belief that costs now of delaying voluntary incentive auctions would be severe, not only because mobile demand is growing so fast and delay will lead to consumer frustration with service and higher prices, but also because we are now in a different global competitive landscape,” Genachowski said during his breakfast speech.

Genachowski said demand has led to a “crunch” in the availability of spectrum that could hobble the nation’s ability to compete with other countries developing more sophisticated broadband service.

The auction idea stands to reshape the channel lineup, and in some cases struggling stations would choose to sign off altogether. Many broadcasters have greeted the plan coolly, and that was reflected in the mere polite applause that Genachowski received.

Among the worries is that broadcasters who do not choose to give up their spectrum will be realigned onto other channels with weaker reach. Many also see the move as an effort by mobile companies to obtain their prized spectrum rather than make their current space work more efficiently.

Genachowski, however, said, “Consumers and businesses are already frustrated by dropped calls and spectrum congestion. And we’re still in the early innings of mobile broadband innovation and adoption.

“This growing demand is not going away,” he said.

There are several bills pending in Congress that would give the FCC the authority to hold incentive auctions, and Genachowski said “strong momentum is building behind the proposal.” A House subcommittee Tuesday held a hearing on the issue with the rather optimistic title Using Spectrum to Advance Public Safety, Promote Broadband, Create Jobs and Reduce the Deficit.

The auctions “will increase the value of the spectrum for all stakeholders — including broadcasters — by ensuring the spectrum is released in a way that maximizes its marketability and reduces transaction costs and other inefficiencies,” Genachowski said.

Although the broadcast lobby says it is supportive of auctions that are “truly voluntary,” NAB CEO Gordon Smith is calling for an extensive inventory of spectrum space, perhaps conducted by the Government Accountability Office.

But Genachowski suggested that such a move would only mean further delay, and said the FCC already has done studies that showed there are “only a few major opportunities to unleash spectrum, and that there is no big swath of unused spectrum that we’ve missed.”

Pledging cooperation and willingness to accept input, he said stations that do not decide to give up their space will be “fully compensated” for any costs if their channels are changed. Any moves from the UHF to the VHF band would be voluntary, he said.

As much as he stressed that the auctions would be voluntary, however, he said broadcasters should not be given “a new and unprecedented right to keep their exact channel location.”

“This would not only be unprecedented, it would give any one broadcaster veto power over the success of the auction — and be neither good policy for the country nor fair to the other participants.”

The FCC chief also addressed another issue that has caused a stir among broadcasters: the fees that broadcasters receive from cable operators to carry their signals. It’s proven a potent revenue stream for stations and networks.

Retransmission consent negotiations have led to some high- profile stalemates between media congloms and cable providers, including the standoff between News Corp. and Cablevision last fall that led to Fox pulling its New York station signals from the cable operators at the start of baseball’s World Series.

Genachowski noted that he has resisted calls for the FCC to intervene and instead “encouraged private, market-driven agreements.”

But the commission is reviewing its rules, and while the FCC chief gave little indication of what changes may be in store, he noted that one of the questions that has been posed to the commission has been: “What is the impact on consumers of retrans fees for ‘free’ broadcast TV?”

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