COUNTDOWN TO NAB 2011 — Issue 4

FCC’s “DTV Spectrum Grab” and Auction … and HD News?

Public policy must support national economic expansion, but not damage local employment. HD News operations employ the vast majority of broadcast personnel in major local TV markets.

The Shrinking TV Broadcasting Spectrum

One year ago (March 15, 2010), the FCC submitted the National Broadband Plan (NBP) to Congress and made the 300+page report public. Although the NBP in the preamble talks about broadband in terms of both wired and wireless, it quickly turns into a National “Wireless” Broadband Plan where the word spectrum is the key common denominator in nearly all detailed discussions in the report, and largely meaning “wireless spectrum”. There is NO MONEY for Uncle Sam in the “wired spectrum”, as FTTH spectrum cannot be auctioned off!

The NBP outlines a goal for the FCC to re-assign (or make available) an additional 500 MHz for mobile broadband use within 10 years, of which 300 MHz (in the spectrum from 225 MHz to 3.7 GHz) should be made available within 5 years.

But the real troubling statement for TV broadcasters is FCC’s recommendation on page 76 stating that: “The FCC should initiate a rule making proceeding to reallocate 120 MHz from the broadcast television (TV) bands”.

Look at this Chart. Subject to the FCC being successful in reallocating 120 MHz, the TV broadcasters will have lost 312 MHz or 75% of its UHF channel spectrum from 1982 to 2012. In 1982, 84 MHz was given to the cell phone industry. The 700 MHz band (108 MHz) was removed from the TV broadcast spectrum over several years with completion in 2009 (DTV transition). And now the proposed 120 MHz GRAB and auction in 2012, with proposed transition by 2015. (Recall that UHF channel 37 has been assigned to radio astronomy for many years, and it is located in the FCC Grab 120 MHz spectrum. Thus there are only 17 UHF channels remaining if Ch.37 does not count in the specified 120 MHz FCC Grab.)

The FCC moves to eliminate “Over-the-Air DTV Spectrum” for 682 TV Stations

There are about 1784 “full power licensed” DTV stations operating in the U.S. in 2011, which by spectrum currently breaks down as follows:

Presuming that the FCC is successful in reclaiming the “600 MHz band” (UHF Ch.31—Ch.51 consisting of 120 MHz of spectrum, not counting Ch.37 assigned to astronomy), 682 currently operating full power DTV stations need to be relocated or shut down This is more than 50% of all operating UHF stations.

To relocate all 682 stations to the remaining VHF/UHF DTV bands is a technical impossibility under the current DTV broadcast regulations. This Issue 4 shall not attempt to detail possible long term technical solutions to this problem. Those discussions are for another day.

The solution in the mind of the FCC seems to be to ask TV stations to voluntarily give up their OTA spectrum in exchange for unspecified compensation. Under a full compliance scenario, and where the current OTA ATSC format is maintained, including all current DTV OTA channel assignments below Ch.31 without “squeezing” in more OTA channels in the remaining DTV spectrum, 682 TV stations must “voluntarily sell” their spectrum to the FCC or vacate by other arrangements.

In this scenario, a total of about 1100 ATSC TV stations will be able to remain OTA after the proposed 2015 transition.

Public Spectrum Policy must favor important local economic activities, after nation-wide priority

The FCC creates a definite serious spectrum shortage in the OTA DTV broadcasting field, as a direct consequence of preventing a possible (even unlikely) shortage of wireless broadband spectrum. The Author does NOT believe that we are soon facing a wireless broadband spectrum shortage. As a matter of record, the forecast rapid growth of mobile television/video watching over wireless broadband, used by FCC partly to justify the GRAB of 120 MHz of the DTV UHF spectrum, is so far not materializing. And just consider Qualcomm’s shut down of FLO TV and the very slow adoption by broadcasters to put Mobile DTV on the air.

FCC states in the NBP that the relocation of 120 MHz from the DTV broadcast spectrum to wireless broadband providers will greatly benefit the society and create economic growth in the future years. That is FCC’s primary driver of the spectrum relocation proposal in the NBP. It is obvious that public policy must prefer economic growth over stagnation or inefficient allocation of public spectrum resources.

FCC knows that any major spectrum auction (like the 700 MHz band auction in 2008) is only for larger rich companies. Of the $19 billion in proceeds in 2008, Verizon and AT&T counted for $16 billion or 84%, and #8 (Cellular South) on the winners list paid $191 million for several local spectrum. FCC administers public policy by getting maximum for the spectrum, which shuts out small business.

Public policy obviously trumps equal opportunity for small business in spectrum cases, now that TV OTA spectrum will no longer be in ample supply.

It then follows that, in any given local television market, a larger successful “full service newscast” TV station with 100, 200 or even 300 employees is much more important to the local economy than the “infomercial-rerun” TV station without significant local content delivery and perhaps less than 10 employees. Based on local employee ratio, the “full service newscast” TV station may be over 10 times economically more important than the infomercial-rerun TV station.

Again, it naturally follows from there that, if there currently are twenty (20) OTA (over-the-air) full power DTV stations in a given larger DMA, and IF there are only ten (10) OTA channels available after the FCC has “grabbed the 120 MHz”, the ten (10) largest local economic activity DTV stations should be allowed to continue OTA while the ten (10) smallest local economic activity DTV stations should be OTA de-licensed. This approach seems on its face to be in the best interest of the local economy, by avoiding to interrupt the DTV stations with the highest local employment level. The TEST is purely (local) economic based: What is your annual local payroll? Not program or ethnic oriented. Not whether it is a commercial station or a public station. Not whether news DTV station A is better than news DTV station B.

The only reason for the TEST is that the public spectrum is to be used for maximum positive impact on the local DMA economy in the shorter and longer term. What will the losing DTV station do? (In addition to possible sue?) Accept a mandate that the de-licensed DTV stations must be carried by the local cable or satellite TV system for a minimum time period, and/or device a delivery scheme to deliver their signal by broadband.

Local HD-News operations enable TV Stations to lead local economic growth

A major market TV station with “large scale” HD news operations may contribute to the local economy, just in annual payroll terms, in excess of $20 million, while a smaller “infomercial-rerun/non-news” station’s annual local payroll may only be 10% of that, or even less. It is obvious that the “large scale” HD news stations are much more essential in protecting and growing the local economy than the “infomercial-rerun/non-news” stations. In addition, the HD news stations generally serve a significantly larger local audience OTA in rating terms than do the non-local-news stations. And OTA reach to local TV households is generally materially superior for the much larger HD news stations operating at maximum ERP and HAAT at the long established common TV transmitter location, while the smaller non-news stations may be disadvantaged (by choice) in ERP, HAAT and transmitter location.

Today’s successful and profitable “large scale” newscast TV stations make smart decisions when it comes to replacing the old standard definition camcorders, cameras and newsroom systems, as the recent developments in HD news acquisition, file-based editing and play-out equipment and systems have greatly improved time-to-air, ability to do live HD ENG, and producing for the 3 television screens while capital and operating costs are declining. Just look at the market leading solutions from JVC, where the ProHD camera/camcorder line-up is the choice of more Group TV Station Owners than any other local broadcast-oriented HD product line.

The Los Angeles DMA:
The Nation’s #1 spectrum grab headache

The Author resides in Los Angeles (DMA #2) where the FCC says there are currently 26 full power licensed DTV station on-the-air, of which 16 are transmitting on a “doomed channel” in the range Ch.31 through Ch.51. Remember the saying “you cannot get there from here”? That’s the size of the Los Angeles spectrum problem. The 10 DTV stations NOT on a doomed channel includes KABC-7 (Ch.7), KCAL-9 (Ch.9 partial duopoly with KCBS-2), KTTV-11 (Fox Ch.11), KCOP-13 (MyFox Ch.13 in partial duopoly with KTTV=11), and the recent ex-PBS station KCET (Ch.28).

A large market duopoly operation (like KCBS/KCAL and KTTV/KCOP in Los Angeles) may each employ 200 to 300 persons, and a large portion of those positions are good paying jobs in the talent, newsroom and technical fields. At the other end of the spectrum are the automated infomercial-rerun (non-news/non-local-content) TV stations employing very few, perhaps at lower pay, and not significantly contributing to the local economy. The local infomercial TV stations may run mostly national infomercial programs with much less economic benefit to the local community.

The major Los Angeles TV stations needing relocation (which perhaps should “worry”) include KCBS-2 (Ch.43), KNBC-4 (Ch.36), KTLA-5 (Ch.31), KMEX (Univision Ch.34), KWHY (Telemundo Ch.42), and then KTBN (Trinity religious station on Ch.33) and KOCE (the major/full service PBS affiliate on Ch.48). This means that at least five (5) major commercial newscast stations, all of which are believed to operate at or near maximum allowed ERP, need to relocate to below Ch.31, in addition to KOCE and possible KTBN if it passes the “high-local-employment” test.

There happens to be five (5) non-major/non-news DTV channels currently in operation in the remaining UHF band (Ch.14—30) which are likely to be classified as NOT being material in local economic terms, and all of which are carried by cable. The Author will not mention call letters. As in many other major markets, relocation and possible de-licensing will be a very difficult and messy undertaking. In the LA DMA, there is no OTA transmission on the VHF-low band. The four (4) TV stations transmitting on VHF-high band are all major HD news operations (KABC-7, KCAL-9, KTTV-11, KCOP-13) which will presumably stay where they are. Thus we can presume that the only OTA spectrum in the LA DMA where the “high-local-employment” TV stations can relocate to is UHF Ch.14—30, but only after “low-local-employment” TV stations have “voluntarily sold out” to the FCC or having been de-licensed by other FCC authority.

The Los Angeles DMA impossibility:
Fitting 16 pounds in a 6-pound bag

A total of sixteen (16) TV stations operate OTA in the spectrum to be reclaimed (Ch.31—51) of which at least five (5) have major news operations, one (1) is a large religious station (KTBN), and one (1) is the major PBS network affiliate (KOCE). If we add the ION “movie station” (KPXN), at least eight (8) DTV stations would probably not “voluntarily sell out” to the FCC, but rather be reassigned to the Ch.14—30 UHF band if channels become available.

BUT … there are ONLY six (6) UHF channels licensed in the spectrum Ch.14—30 for the LA DMA, of which three (3) transmit from Mt. Wilson main LA TV antenna farm (Ch.18, 28, 29) while the other three (3) transmit from Ventura County (Ch.24), San Bernadino (Ch.26) and Twenty-nine Palms (Ch.23). Adjacent channel interference is minimized between Ch.24 and Ch.23 as they are about 150 miles apart. Note that co-located adjacent DTV channels (in the same antenna farm, i.e. on Mt. Wilson) generally do not produce adjacent channel interference, thus Ch.28 and Ch.29 are co-existing.

Let’s say that five (5) “low-local-employment” TV stations end up vacating their spectrum for “carrots or sticks” in the Ch.14—30 band, while at least eight (8) stations are “competing” to fill those five (5) channels. The “Local Economic Importance Test” says that the five large commercial HD news stations (most important to the local economy) will be assigned to the five available channels, absent any other “technical solution scheme” by the FCC.

Possible Scenario: The Los Angeles DMA will be served by only ten (10) OTA ATSC DTV stations after the FCC proposed 2015 transition, requiring sixteen (16) currently operating DTV stations to be de-licensed and go off the air. Of the 10, four (4) may be unchanged in the VHF-high band (KABC-7, KCAL-9, KTTV-11, KCOP-13), but who will be re-licensed on the current UHF assignments of Ch.18, 23, 24, 26, 28 and 29? KCBS, KNBC, KTLA, KMEX, KWHY and KOCE are the TV stations with likely highest score on the “Local Economic Importance Test” assigning local public interest priority.

“Common Ownership” FCC Rulemaking:
Only ONE of the Duopoly OTA?
OR Duopoly share ONE OTA channel?

Here is an interesting “discussion point”: In the Los Angeles DMA, there are currently two major duopolies occupying four (4) full power OTA channels: KCBS-2/KCAL-9 and KTTV-11/KCOP-13. Their local news operations are significant, using common resources and in-part talent. In an environment of severe spectrum shortage, is it fair and good public policy to allow both TV stations in the duopoly to maintain separate full power OTA channels? The FCC may NOT think so, particularly when both stations in each duopoly are carried on local cable and satellite TV.

As KCBS-2 needs to vacate Ch.43, a possible FCC “common ownership” mandate for KCBS is to share Ch.9 with KCAL as technically provided for in the ATSC DTV rulebook. Both KCBS and KCAL are currently using 1080i, which, in a 50/50 share of the available net 18 Mbps (gross 19.4 Mbps in one 6 MHz DTV OTA channel), will give each station only 9 Mbps encoded 1080i in MPEG-2 ATSC. This is NOT sufficient to transmit KCBS in network quality HD OTA. “Forced” by the FCC, perhaps owner CBS decides for KCBS to transmit OTA on Ch.9 and for KCAL to just be on cable? Perhaps the FCC will give CBS two options: (1) Both KCBS and KCAL on the same Ch.9, OR (2) KCBS to assume Ch.9. FCC may dictate NO “proceeds share” to CBS, as NO OTA channel is freed up for a third party?

Fox’s KTTV-11 is OTA on Ch.11 while duopoly partner KCOP-13 is on Ch.13. Same FCC two options to Fox: (1) Both KTTV and KCOP on Ch.11, OR (2) KTTV to remain alone on Ch.11 (while KCOP is just on cable). In this case, Fox may receive “proceeds share” as Ch.13 is freed up for a third party.

Fox TV stations are 720p, thus it is possible to operate two HD signals simultaneously at 9 Mbps OTA each maintaining good quality ATSC MPEG-2 transmitted HD signals for both KTTV and KCOP, however, the HD duopoly will consume nearly all of the 19.4 Mbps gross channel bitrate, leaving NO space for Mobile DTV.

Again, the Author points out the apparent advantage of 720p60 over 1080i60, as 9 Mbps encoding is sufficient for progressive 720p60 to deliver fair HD OTA quality, while it is NOT sufficient for interlaced 1080i60.

What about Public Television OTA?

The Los Angeles DMA has four (4) non-commercial public television full power licensees: KOCE (Ch.48—now the exclusive full service PBS affiliate in the LA DMA), KCET (Ch.28—NO longer the PBS affiliate, just resigned), KLCS (Ch.41—Los Angeles Unified School District), and KVCR (Ch.26—San Bernadino Community College District). Obviously, the only full service PBS network affiliate KOCE must have priority OTA, thus it may make sense that one (or both) of the other two (2) PBS stations in the remaining UHF OTA band must surrender their license to first benefit KOCE, and, second, to benefit a commercial station with significantly higher score on the “Local Economic Importance Test”, and the two vacating PBS stations shall then receive a “share of auction proceeds”.

FCC giveth and FCC taketh away:
The 600 MHz Band Spectrum Auction

TV OTA broadcasting over UHF began in 1949, but did not become commercially viable until 1965 when the FCC implemented the regulation that all TV sets sold in the US must be capable of receiving UHF channels 14 through 83 OTA, in addition to the VHF channels. FCC authority was given when Congress passed the “All-Channel Receiver Act” in 1961.

In March 2008, FCC conducted what was labeled the most successful spectrum auction to date, selling 52 MHz (of the 62 MHz offered) in the 700 MHz DTV band for $19 billion. The 700 MHz band (Ch.52 698 MHz—Ch.69 806 MHz) was finally vacated by the broadcasters in June 2009 (the final DTV transition).

FCC’s NBP (National Broadband Plan) released a year ago proposes yet another “spectrum grab” from the broadcast spectrum in the 600 MHz band (Ch.31 572 MHz—Ch.51 698 MHz) for a total of 120 MHz. (Note that Ch.37 is not a DTV channel but has been assigned to astronomy for many years, thus 572 to 698 MHz is actually 126 MHz.). FCC’s logic seems to say that if the 2008 52 MHz auction brought in $19 billion, then a 120 MHz auction in 2012 will bring in proportionally $44 billion. The Author does not think so …

Permitted usage for the 700 MHz (and 600 MHz) band is broad and flexible

We quote FCC’s statement of Permissible Operations for the 700 MHz band as posted on the FCC website:

“The 700 MHz Band licenses may be used for flexible fixed, mobile, and broadcast uses, including fixed and mobile wireless commercial services (including FDD- and TDD-based services); fixed and mobile wireless uses for private, internal radio needs; and mobile and other digital new broadcast operations. These uses may include two-way interactive, cellular, and mobile television broadcasting services.”

“Fixed broadcast uses” and “digital new broadcast operations” are permitted.

There are additional technical requirements, but considering that Qualcomm operated their FLO TV nationwide (primarily in major markets) multi-channel mobile television service on a UHF Ch.55 utilizing a cell-based single frequency network (SFN) of transmitters with ERP up to 50 kW, obviously conforming to FCC technical requirements, “digital new broadcast operations” is permitted. FLO TV is closing down as this is written for lack of public interest. AT&T has agreed to purchase the Qualcomm Ch.55 nationwide spectrum (including related 700 MHz spectrum) for $1.9 billion last month. In round numbers, it appears that one nationwide UHF TV channel (6 MHz) is valued at about $1 billion by this deal.

There are 20 UHF channels available in the 600 MHz band, with permitted usage expected to be the same as for the 700 MHz band. On a nationwide basis, to get a total of $44 billion in one swoop in the proposed 2012 auction, each nationwide 6 MHz UHF channel must sell for $2.2 billion, to proportionally match the $19 billion in proceeds from the 2008 auction for the 700 MHz band. Again in round numbers, the FCC hopes to get about $2 billion for one nationwide UHF TV channel (6 MHz), or double the market value indicated by the Qualcomm-AT&T deal.

Offer it … but will they come?
And who will pay the big bucks?

A part of the 120 MHz spectrum in the 600 MHz DTV band is likely to be set a side for government communications, thus lets assume that a net of 108 MHz will be offered at the proposed 2012 auction. Wireless broadband spectrum is generally offered in paired blocks, as frequency spacing between the paired block is required to prevent interference by the downlink transmitter into the uplink receiver, generally cell tower mounted side-by-side. Accordingly, unless the FCC make special provisions for single 6 MHz spectrum blocks “upon request”, the 108 MHz band holds 18 single 6 MHz blocks, or 9 paired blocks of 12 MHz (2x 6 MHz). Fewer larger blocks may be offered by FCC, but as we are primarily in the TV business, let’s in here operate with 6 MHz “channel” blocks. As a nationwide TV UHF 6 MHz channel seems to be worth a minimum of $1 billion (established by the AT&T-Qualcomm deal) and a maximum of $2 billion (established by the 700 MHz band 2008 Auction), while paired blocks (each pair 12 MHz) seem worth between $2 billion and $4 billion. The average worth for the nationwide 108 MHz seems then to be about $27 billion, as average value per 6 MHz channel is $1.5 billion.

Although single 6 MHz blocks may be offered in nationwide packages, most wireless broadband paired blocks are historically often offered by regions (i.e. Midwest, Northeast, etc.) or by metropolitan areas. Thus any FCC auction participation for large spectrum chunks are often complicated and requiring lots of preparation.

So, who will bring the $27 billion checks in 2012?
Verizon CEO Seidenberg stated in 2010 that there may NOT be a spectrum crisis anytime soon. Seidenberg is not likely by that statement to bring any big checks, like the $10 billion he brought FCC in 2008. AT&T, expecting to just have closed the T-Mobile acquisition (see “Stop the Presses” below) and paid out at least $25 billion to Deutsche Telekom before the proposed 2012 auction, is not expected to spend big on spectrum in 2012. Sprint is not cash rich. None of the Big 3 wireless providers support a 2012 auction for the 600 MHz band. They all want to wait, in the Author’s opinion, and the FCC already recognizes this problem.

It seems to be an opportune time for the major TV broadcast networks and the likes of Google, Microsoft and Apple to buy nationwide UHF channels for a reasonable price. Even if the Big 3 wireless providers do show up collectively with $10 billion (each buying a paired block), 12 single 6 MHz nationwide channels remain for the TV broadcast networks and others to buy for $1.5 billion each (?).

Will the major TV Networks each buy a nationwide TV channel?
Imagine, to prepare for a future OFDM-based nationwide OTA TV delivery to replace the current ATSC/DTV OTA operations, ABC, CBS, Fox and NBC each buying a 6 MHz nationwide TV channel in the upcoming 600 MHz band auction? And, additionally, Univision and others may throw their hat into the ring, even some of the big cable channels? It’s possible.

Will Google, Microsoft, Apple buy a nationwide TV channel?
Google TV? MS TV? Apple TV? Collectively, these three giants have cash holdings exceeding $130 billion. Imagine a future Google TV set-top-box with a built-in OTA tuner/receiver to not only receive the new nationwide Google TV channel (or MS or Apple), but also possible future OTA OFDM TV channels transmitted by others. A partnership with the major TV networks? If Google, MS and/or Apple sell the $99 STB with built-in OFDM OTA TV receiver, such may enable a relatively rapid adoption by the TV households of a new digital OTA TV broadcast delivery of the major TV networks. It’s possible.

Will Verizon, AT&T, Sprint buy most of the 600 MHz band?
Verizon has spent in excess of $15 billion over the past 5 years on spectrum, inclusive of nearly $10 billion spent buying 700 MHz spectrum in the 2008 auction. AT&T has also spent in excess of $15 billion over the past 5 years, including nearly $7 billion in the 2008 auction and the $1.9 billion for the Qualcomm spectrum last month. Sprint has invested about $10 billion while T-Mobile has invested about $5 billion according to Author’s estimation. Not likely.

Stop the Presses:

AT&T is acquiring T-Mobile for $39 billion

AT&T announced on March 20, 2011 it is buying T-Mobile USA from the German parent for $39 billion, subject to regulatory approvals. It may take as much as one year to close the deal. At least $25 billion will be in cash, with balance paid in AT&T stock such that Deutsche Telekom will own between 5 and 8% of AT&T. This acquisition will seriously affect AT&T’s cash position and lines of credit, thus it is likely that AT&T will come to the FCC’s proposed 2012 auction with “limited cash” to spend. As a matter of speculation, AT&T may quietly (behind the scenes) push any 600 MHz auction out to 2013 or even 2014 which may also suit Verizon.

FCC to share auction proceeds with 682 “doomed” TV stations?

We have established that 682 licensed full power DTV stations (of a total of 1,784) must be taken off the air in order to maintain the current ATSC-DTV 6 MHz assignment of 12 VHF channels (54—72/76—88/174—216 MHz) and 17 UHF channels (470—572 MHz) without any efforts to repack or squeeze in more ATSC-DTV channels than the current 1,102 DTV licenses assigned those remaining 29 channels nationwide. To significantly expand the number of VHF OTA licenses is not a viable option, and channel sharing will reduce HD OTA picture quality and eliminate bits for Mobile DTV (unless a whole new OTA OFDM transmission scheme is implemented, which will take a decade).

The value of voluntarily relinquishing full power DTV licenses:

It is not important whether the 682 DTV licenses to be “voluntarily relinquished or recaptured” come from below Ch.31 (the remaining VHF/UHF channels) OR from above Ch.30 (the 600 MHz band to be auctioned), OR from a combination of below and above. In a given DMA, the “relinquish value” of a “below Ch.31 license” and a “above Ch.30 license” should perhaps be the same. A DTV license relinquished on Ch. 24 means that a DTV licensee above Ch.30 wishing to remain OTA may relocate to Ch.24. However, the value of a 6 MHz slice of spectrum in Los Angeles (DMA #2, 5.7 million TV Households) is multiple times higher than the value for the same slice in Johnstown-Altoona (DMA #102, 294,000 TV Households).

Sharing Proceeds DMA-by-DMA:

A wholesale reassignment and repacking of DTV licenses across the U.S. will be very costly, complicated and time consuming. Time is of the essence, thus DTV channel vacation and reassignment should first be attempted DMA-by-DMA.

Chicago (DMA #3—16 licensed DTV stations) has eight (8) DTV stations located above Ch.30, while New York (DMA #1—23 licensed DTV stations) has eleven (11), and Los Angeles (DMA #2—26 licensed DTV stations) has the most of any DMA with sixteen (16) DTV stations located above Ch.30 probably making it the most difficult DMA to clear just with “incentive proceeds sharing”. With only ten (10) currently operating DTV licenses below Ch.31, sixteen (16) DTV OTA licenses must be retired to maintain the “status quo” of ATSC-DTV in Los Angeles. This is a local problem which must be solved locally, as a “voluntary vacation” of a DTV station anywhere else will NOT help Los Angeles. It will take a lot of incentive funding to have 16 DTV stations (out of a total of 26) in one DMA surrender their licenses. That is why each DMA must be handled as a separate issue, but with sharing of nationwide proceeds proportional to size of the DMA and to number of licenses requiring to be retired. The top “DTV OTA spectrum problem DMAs” are:

NO sharing of proceeds with DTV stations in DMAs where NO station occupies any channel above Ch.30?

To share in the auction proceeds should be limited in each DMA to the number of DTV licenses required to clear the 600 MHz DTV spectrum for that DMA. The logic and fairness here is that there is no local need for any vacated 6 MHz spectrum. 28 DMAs are void of “above Ch.30” licenses, with the highest rank being Corpus Christie, TX at DMA #129. This will eliminate a lot of administrative services and frivolous compensation for voluntary license surrender where such surrender does not result in another station remaining OTA. The exception is if such surrender will enable a neighboring DMA to use the channel.

Will Congress act in time?

The 112th Congress convened on January 3, 2011. At least three (3) Spectrum related bills introduced in the prior 111th Congress expired at the end of that term, as they were never voted on. The following new and re-issued spectrum bills have been introduced since late January:

  • S.415 (The Spectrum Optimization Act). A 4-page bill by Sen. Warner (D-VA), it would give the FCC the authority to conduct auctions of voluntarily relinquished spectrum, and proceeds being shared with relinquishing licensees
  • H.R.911 (The Spectrum Inventory and Auction Act of 2011) introduced by Rep. Barrow (D-GA), requiring FCC to conduct a “spectrum inventory and public report” before any auction.
  • S.455 (The Reforming Airwaves by Developing Incentives and Opportunistic Sharing Act – “RADIOS Act”). A re-issue bill by Sens. Kerry (D-MA) and Snowe (R-ME) which original bill died in the prior Congress. By far the most detailed, at 51 pages.

It is now April. Congressional campaigning for the November 2012 federal elections (including the presidential election campaign) will start by November 2011 (just about six months away), after which no congressional candidate will commit to difficult political positions. There are still millions of voters getting free TV OTA! A candidate’s support for future elimination of free TV OTA will not be a beneficial position in any campaign. Congress is not likely to act in time, as the major commercial interests including trade organizations on the telecom side may not want a 2012 auction after all.

Read my lips: NO 2012 Spectrum Auction

The Author believes that there will be no 2012 600 MHz Band Spectrum Auction, for the following reasons:

  • Congress will NOT pass any bill in time this year permitting the “spectrum grab” and any immediate 2012 auction (in part due to the Republican-controlled House not wishing for the Democrat-controlled Senate and Administration to get “2012 election brownie points” for possibly bringing in many billions of dollars to the Treasury)
  • Verizon is not likely to bring any really big checks to any 2012 auction, because CEO Seidenberg stated in 2010 that there may not be any (wireless broadband) spectrum crisis anytime soon. (Verizon has 32 MHz of 700 MHz band spectrum near nationwide)
  • AT&T is not likely to bring any really big checks to any 2012 auction, because AT&T will just have paid out $39 billion in early 2012 to close on the acquisition T-Mobile USA, after a long governmental approval process, and because AT&T just acquired nationwide 700 MHz spectrum from Qualcomm which lifts AT&T near nationwide 700 MHz spectrum holdings to 32 MHz, equal to Verizon’s.
  • Sprint may wish to buy some 600 MHz spectrum, but, with less cash available, may not see fit to spend the many billions of dollars required to buy enough to make sense, and Sprint’s investment in Clearwire/Clear enables Sprint to use part of the 150 MHz owned by Clear in the 2.5 GHz band
  • Google may come to the table if there is an 2012 auction, but is not likely to encourage the FCC for a 2012 auction. (Microsoft and Apple may be less interested in acquiring nationwide spectrum)
  • The major TV networks may come to the table if there is an 2012 auction, but will not encourage the FCC to hold a 2012 auction

When will the 600 MHz auction happen? Probably in 2013, and with still time for the TV broadcasters to lobby Congress and the FCC. It always takes longer to restructure major government-licensed industry segments. FCC proposes a final 600 MHz band transition to wireless broadband by 2015. The Author suggests 2020, and the “spectrum overhaul” includes provisions for a new “free-over-the-air” TV delivery system for homes and mobile.

Eight (8) more years of ATSC:

Let’s presume that the TV broadcasters and the FCC agree on one issue: The ATSC 8-VSB OTA format will stay as is through this decade, to protect the many billions of dollars worth of television sets with built-in OTA ATSC tuners so far purchased by the consumers (and still being sold) and to prevent the waste and consumer headaches associated with yet another “NTIA set top box coupon program”. And if they don’t agree, it will take through this decade anyway before a new OTA broadcasting format is implemented. We have eight (8) more years of ATSC 8-VSB OTA, so let’s use the remaining OTA spectrum (after any FCC DTV spectrum grab) in the best possible way: “In the Public’s best local interest, according to Public Policy by applying the Local Economic Importance Test”.

Local HD News earns OTA channel?

The overall local TV station business model for success does not change. Maximum audience share requires local HD news, live HD-ENG, weather and traffic. And the substantial payroll required for a large local TV station doing full newscasts, often with hundreds of employees, wins the Local Economic Importance Test (as compared with the infomercial/re-run station) and thus gets priority for the limited OTA channels available. It’s clearly Public Policy at the local level.

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