The Federal Communications Commission has finally decided to move forward on its long-awaited plan to dictate use of existing UHF spectrum held by TV broadcasters, sitting idle, and not being used. A wireless industry has for years warned of impending bottle-necks in mobile consumer access and use of existing networks as overall demand continues ramping up as predicted. It looks imminent that a voluntary relinquishing of valuable wireless spectrum is not going to be as easy as just asking for it. This brings up an interesting question, will FCC commissioners dictate to broadcaster’s terms and conditions of acquiring a high demand resource?
It is conceivable, if negotiations fail to satisfy both parties, the regulator will have no choice but demand favorable terms since it presides over all spectrum licenses. The broadcast industry was given their abundance of spectrum when no real demand existed for spectrum use or wireless services. Since that time, long ago, broadcasters have let their holdings set idle, either seeing no need for it, or unable to find a realistic use. Logically, it should be reallocated by sheer lack of use. But that scenario will be much more complicated since natural demand and supply models come into play. To avoid court litigation and appeals, the FCC may need to negotiate in good faith, giving attractive incentives to broadcasters for playing nice.
If this becomes the most reasonable solution, what would be a fair and equitable reimbursement to a broadcast industry that has seen falling network subsidies, declining ad revenues and a heavy dependence on the cable industry for its bread and butter revenues?
- Broadcast industry in need of revenues as viewership and ad revenues continue to decline
- Annual US demand for additional wireless spectrum which broadcasters hold as a revenue card
- Wireless carriers with an eye on grabbing any available spectrum to put in their coffers as a competitive advantage
- Large carriers such as AT&T and Verizon with deep pockets who could out-bid any competitor looking to expand market presence or upgrade their customer experience
- FCC intent on freeing up additional wireless spectrum to promote its Broadband Plan of 100% broadband access nationwide
- FCC use of Spectrum Auction proceeds to further its national agenda
The FCC, in its September 28, 2012 meeting, will address these issues in a rule making about how to best move forward to get to an actual auction projected for 2014. The wireless industry has accepted this date as an acceptable time frame. Actual spectrum given up will have to be repackaged from 6 MHZ slices into blocks for wireless use. Inevitably, criticisms of the process will arise as rules and processes are established.
- How much will broadcasters demand as compensation for relinquishing a high demand commodity?
- How will the FCC handle broadcasters unwilling to participate in a voluntary hand-over of spectrum which could be sold privately, on the open market?
- Will large carriers such as AT&T and Verizon be banned from the auction process due to their cash reserves and market dominance?
Pragmatically, the process in getting to an actual auction will be long and arduous. There is no reason to believe all involved are willing to relinquish their best interests by making a patriotic gesture. In a highly competitive environment there are winners and losers, and in this case, the losers may be small wireless carriers unable to compete for a scarce and valuable commodity.
Image via The Guardsman