CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

Sure enough, that fin de siècle panacea is going to be the go-to device again in the 21st Century.  As described by the Chairman, the NBP will propose a “Mobile Future Auction” – unclear whether the “mobile” there modifies “future” or “auction” – which will “permit[ ] existing spectrum licensees, such as television broadcasters in spectrum-starved markets, to voluntarily relinquish spectrum in exchange for a share of auction proceeds”. 

Precisely how such an auction would work has yet to be disclosed – indeed, it may not even have been determined yet.  But it is apparent that the Commission has thoroughly embraced the notion that television spectrum is a resource that can and should be re-purposed for mobile broadband use.  While Genachowski’s speech shed no light on the anticipated auction mechanism, it did offer something in the nature of a rationale as to why TV spectrum is being singled out.

For openers, there is a “massive amount of unlocked value” in TV spectrum – maybe even $50 billion, according to “one study” – and from this, the Commission has ineluctably concluded that there are “inefficiencies in the current allocation”.  Who says there’s $50B, give or take, in “unlocked value” there?  Why, “a broad range of analysts, companies and trade associations participating” in the FCC’s nearly infinite range of broadband-related inquiries.  Which analysts, companies and associations?  Well, the Chairman didn’t say.  How might the inherent “value” get “unlocked” (and how did it get “locked” in the first place)?  That’s another explanation which is left for a later day.

Another reason for grabbing TV spectrum: according to the Chairman, TV “spectrum is not being used efficiently – indeed, much is not being used at all”.  In support of this claim Genachowski cited some vague and general claims along the lines of “Even in our very largest cities, at most only about 150 megahertz out of 300 megahertz [of TV spectrum] are used.”

While a speech is probably not the forum in which to lay all one’s cards out on the table, the Chairman might still have offered just a tad more support for the decision to go after TV spectrum.  After all, estimates of “unlocked value” are not really something you can take to the bank, particularly if those estimates were propounded by folks who might be in a position to rake in some of that “unlocked value” if things go the right way.  And it’s difficult to credit claims of efficiency of spectrum use when the TV industry, and the viewing public, are less than nine months into the DTV era.  Certainly there may be substantial spectrum potential yet to be tapped, but why must we assume that the best (maybe even the only) way to tap it is through mobile broadband services to be provided by somebody other than broadcasters? (In fact, FHH has a client who has a technology that will allow TV stations to use any digital bits they don’t need for television programming to provide broadband – something they can do today under present rules and so can do a lot faster than navigating through the political reallocation and auction thickets.)

Perhaps recognizing that his rationale was not all that compelling, Genachowski shifted gears into huckster mode:  “the Mobile Future Auction is a win-win proposal: for broadcasters, who win more flexibility to pursue business models to serve their local communities; and for the public, which wins more innovation in mobile broadband services, continued free, over-the-air television, and the benefits of the proceeds of new and substantial auction revenues.”  Often when you hear the term “win-win”, it’s a safe bet that somebody’s trying to sell you something that you might neither want nor need. In this case, for example, we don’t know what “flexibility” broadcasters might gain that they don’t have now.

The Chairman did emphasize that the “Mobile Future Auction” is currently envisioned as a voluntary program. Voluntary?  Perhaps, but maybe only in the same way that a businessman “voluntarily” decides to buy insurance from the guy who says “nice little business you got here – it’d be a shame if something happened to it.”

In any event, while we may not know all the details, we at least know the direction in which the Commission’s heading.  Ideally more details will be available on March 16, the day on which the NBP is currently set to be revealed.  But even that will mark, at most, the starting point of what is likely to be a difficult struggle.

Interestingly, it’s not at all clear what difference (if any) the FCC’s views will make.   The statute requiring the NBP doesn’t say who is in charge of adopting it, or whether it even needs to be adopted by the Commissioners as the formal recommendation of the agency to Congress. The law simply directs the FCC to do its due diligence to come up with a plan, then tell Congress about it.  Other than that, the FCC appears to have no independent authority to jumpstart or otherwise implement the NBP; the only entity explicitly granted authority by Congress to adopt regulations related to the broadband initiative is the Assistant Secretary of Commerce in charge of NTIA, not the FCC.  Moreover, the FCC’s statutory auction authority doesn’t say anything about turning over any proceeds to incumbent licensees or anyone else but the U.S. Treasury.

Given the uncertainty about the follow-through, we are cautiously advising broadcasters to view the NBP as the FCC’s recommendation to Congress, and not a final decree.  It is also appropriate to bear in mind that the folks in Congress may be reluctant to turn their backs on broadcasters, particularly if broadcasters increase the intensity of use of their spectrum by introducing more multi-channel broadcast or non-broadcast services.  Notwithstanding social media and Internet advertising campaigns, etc., candidates continue to flock to broadcasters at election time to reach for voters.  And broadcasters’ ability to deliver voters’ eyes and ears may constitute an “unlocked value” of its own.

We will, of course, have to wait and see.

Taking that hint, the Commission has posed a series of questions about (a) how generally to assess the use of spectrum, and (b) what approaches might be available to “increase spectrum availability and efficiency”. We won’t bother to reproduce all the questions here – you can find them in the FCC’s notice. The notice does ask how the relative merits of broadcast and wireless broadband services should be evaluated. But it then tips its hand ever so slightly by asking the following:

What would be the impact to the U.S. economy if insufficient additional spectrum were made available for wireless broadband deployment, in terms of investments, jobs, consumer welfare, innovation, and other indicators of global leadership?

From the way that question is framed, our guess is that the Commission already has its answer, and that answer is “a really, really big bad impact”. In a display of ostensible fairness, the Commission also poses an “impact” question about broadcasting: 

What would be the impact to the U.S. economy and public welfare if the coverage of free over-the-air broadcast television was diminished to accommodate a repacking of stations to recover spectrum?

Apparently, investments, jobs, consumer welfare, innovation and other “indicators of global leadership” aren’t likely to be factors there. Go figure.

The notice also asks how TV spectrum is currently being used and what plans broadcasters have for its future use. Not unreasonable questions in some circumstances, BUT let’s not forget that the TV industry has just been forced, by the government, to convert itself to digital at a cost of hundreds of millions of dollars. Less than six months after the completion of the DTV transition, it seems a bit premature to expect the industry to have fully settled into its new mode, much less to have fully explored all the possibilities that that new mode entails. Any data on current operations or possible future innovations are likely to be less than compelling simply because it takes more than six months for an industry, and its consumers, to settle into a new technology and identify (and avail oneself of) all its possibilities.

With respect to more efficient use of TV spectrum, the Commission is clearly looking at crowding broadcasters together, spectrally and geographically, in order to free up space for broadband. “Channel-sharing”, greater collocation of antennas, use of to-be-developed transmission technologies, revised transmitter and receiver standards – all are in the possible mix, according to the Commission’s notice. And the FCC is also looking at the possibility that enough viewers get their TV from cable or satellite delivery that it might make sense to “replace over-the-air delivery to MVPDs and consumers with other means”.

Interestingly, the Commission also asks “what are the benefits of free, over-the-air television broadcasting, in particular with respect to public awareness of emergency information, local news, political discourse, and education?” That is interesting because the Commission has, for several years now, been pounding on the importance of localism in broadcasting. To ask now what the public interest benefits of local broadcasting might be seems inconsistent with the urgency with which the Commission has previously pressed its localism proceeding.

Finally, the Commission asks about “market-based or other incentive mechanisms” that might “enable broadcasters to choose whether or not to make any spectrum (excess or otherwise) available” for wireless broadband use. The Commission may be looking for a way to make an offer that broadcasters can’t refuse.

One question the notice does not ask is exactly how much spectrum is needed.  And another is exactly how much spectrum the wireless broadband folks already control but are not yet using -- and how long they may have been sitting on it.  If there is considerable spectrum already sitting unused in the wireless warehouses, wouldn't it make sense to put that to work first before poaching spectrum for other services?  (This leads to the suggestion that, as part of an orderly and logical decision-making process, the Commission might first want to develop an inventory of all spectrum -- including who holds it, how long they have held, and what they are currently using it for.  A bill has been introduced in the Senate that would require a spectrum inventory along those lines, but there's no law that says that the FCC can't develop an inventory on its own, even without Congressional direction.)

Of course, it may turn out that the national expansion of wireless broadband will be of such overriding national benefit that serious disruption of over-the-air television can and should be tolerated to achieve that expansion. These are the types of predictive judgments that administrative agencies get paid the big bucks to make. But the TV industry – and the viewing public – were seriously disrupted just months ago. The repercussions of the DTV transition are still being experienced, and are likely to continue for some time to come. Does it really make sense – and is it really fair – to put over-the-air TV (and its viewers) through the wringer again so soon after the last time?

In that vein, let us not forget that the DTV transition was delayed, at the last minute, because of governmental concern that a significant portion of the audience dependent on over-the-air reception might not be ready for the transition (despite the months of build-up to that moment). Aren’t those same at-risk audience members likely to be equally at risk from some further re-tooling of over-the-air service. And would those at-risk folks be ones who would likely derive any significant benefit from increased availability of wireless broadband?

Such questions – including those the Commission has asked and those which loom, unasked but nonetheless important – are all massively complicated. The Commission can’t be faulted for seeking public input. But the Commission has provided less than three weeks within which to submit responsive comments.  Again, if you missed it above, the deadline for comments is December 21, 2009.  Like we said, if you’ve got a TV license, you’ve got a problem – and very little time in which to make your case. Stay tuned to CommLawBlog.com for updates.