04 March 2009

We should have seen this coming ...

It seems that many FCC decisions are challenged in Appeals Court, so this one, challenging the "white spaces" decision, shouldn't come as a surprise. This could turn into an entertaining "food fight", though, pitting the powerful National Association of Broadcasters (NAB) against the well connected White Spaces Coalition.

On a related note, you might find this editorial by Tom Hazlett interesting. Hazlett writes:

The new Obama Administration got Congress to fast-track an 11th-hour delay, pushing back the mandatory analog switch-off until June 12, 2009.

But many TV stations wanted to cut their analog broadcasts anyway. In truth, they believe that over-the-air transmissions are a waste, not worth the electricity it takes to send them. Hence, some 420 TV stations pulled the plug last week, joining another 200 analog stations that had already signed off.

Later in the article, he writes:
One hundred million households now pay $600 or so per year to avoid [over the air broadcasting], subscribing to cable or satellite. Well over 90 per cent of TV viewing takes place in households opting out of broadcast delivery. And for a very small additional investment – no more than $3bn – every last rabbit-eared home in America could join them.

Yet, the US is subsidizing off-air receivers; $1.5bn has been allotted for digital set-top converters (two $40 vouchers per family), and the Obama “stimulus” pumps in $650m more. This is not merely money down the drain. In extending life-support to DTV signals that hog hugely valuable frequencies, consumers lose hundreds of billions worth of wireless service. The bandwidth available to iPhones, Blackberrys and GPhones and other emerging technologies would double were TV air waves to accommodate mobile apps as requested in 1985.

Why don’t all broadcasters – digital and analog – just unplug? First, their licenses mandate that they broadcast TV signals, and they cannot legally sell the air waves used for more valuable services. And second, because their signals continue to reach one key target audience: Congress. Those appreciative entertainment fans reward stations with “must carry” rights forcing cable and satellite operators to provide their subscribers all local channels. The off-air transmission is a side show; gaining free cable carriage the main event.

If you agree with Hazlett's viewpoint, the NAB's challenge to the white spaces decision is consistent with a "do whatever it takes" strategy to preserve the existing business model, regardless of whether they are viable in the long term.

02 March 2009

New spectrum license fee in the US?

Spectrum license fees are one way to encourage spectrum users to use spectrum efficiently. The trick is to set the fees properly; if they are set too high, then spectrum will be underutilized with respect to their social benefit, and set too low and it doesn't accomplish efficient utilization. On page 126 of his recent budget proposal, the President is proposing increasing revenues from spectrum licenses to US$550M to US$50M over four years, 1000% increase.

There is little but speculation about which spectrum will be taxed, since the Office of the President is apparently saying little about this. The PFF has remarked that, if applied to mobile carriers (which have already paid for licenses through auctions), the tax is quite regressive. According to this item, this fee may just apply to broadcasters. If this is the case, it will help motivate broadcasters to refocus on being programming producers (and possibly aggregators) since it will cost them ever more to transmit their product to an ever-diminishing audience at even higher costs than before. Michael Marcus just posted this related item.