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Broadcast & Telecom/Tech duke it out in Battle for Bandwidth

The National Association of Broadcasters (NAB) released a study this week in response to FCC plans to conduct a “voluntary” bandwidth auction of the UHF stations 31-51, currently used by broadcast television stations. The new NAB study suggests that the FCC’s plans will impact roughly 40% of all broadcast stations in the US. The report also suggests that over 70 stations in the top 10 markets will permanently go off air under such a scheme: mostly spanish language stations and public access stations. Further, due to conflicts with Canadian broadcast networks, TV markets on our northern border, like Detroit, could go completely dark.

In response to the NAB’s report, the FCC, the Consumer Electronics Association (CEA) and the CTIA-The Wireless Association (a telecom industry organization) have accused the NAB of using scare tactics to block the FCC’s proposal, which could in theory bring in over $30 billion of revenue to help address the nation’s debt crisis. These organizations have suggested that this plan will actually be a boon for broadcast industry, whose members could use the auctions to make a profitable exit from a declining industry. In the same breath, they argue that the NAB’s report “sets up and knocks down a purely fictional straw man,” simply to protect their own business interests. They don’t seem to notice the discrepancy between these two positions. Either the bandwidth auction and subsequent repacking will be good for broadcast, or it will hurt them. And the truth is, it will do a little of both.

The repacking will force greater concentration of channels in the VHF wavelengths, which could compromise the quality of all channels on the system. The closer the channels are in wavelength, the more neighboring channels will disrupt eachothers’ signals. Additionally, the disruption during the “repacking” will be costly to the networks effected. Of course, the FCC’s plans include compensation for some of the costs of the repacking, but it may not include secondary costs like rebranding and public awareness campaigns. Moreover, the industry as a whole will certainly contract because there simply isn’t enough bandwidth to accomodate every current station within channels 1-30.

The industry contraction may at first seem to be a bad thing, but is it really? Certainly the contraction of the industry will harm the NAB and other industry organizations; the contraction may reduce the industry’s lobbying clout, etc. But for individual players within the industry, the auction plan could result in a greatly reduced competitive landscape, and thereby less rivalry for local advertising dollars. Greater concentration in local broadcast stations may increase the pricing power of those stations that remain. Unfortunately, a reduction in channel options available via broadcast might also drive the remaining 10-15% of the population without cable or satelite to finally sign up. That would destroy one of the industry’s remaining competitive advantages over the cable industry.

Overall, this change does seem to be a poor one for the broadcast television industry in the US. But that shouldn’t bother the FCC. The FCC is supposed to look out for the best interests of consumers; they’re supposed to implement policy in favor of the American taxpayers. In some ways, a reduction in broadcast options certainly would seem to harm consumers. Primarily, there would be fewer local TV stations, and thereby less local news and content. The FCC originally granted TV stations this bandwidth explicity to support public interests in widespread dissemination of news information. Now however, they seem to believe this bandwidth would better serve the public interest in the hands of tech and telecom companies.

The most obvious way this helps the taxpayer is in the aforementioned $30 billion of government revenues, which would help alleviate some of the government debt burden. But one can’t deny that extra bandwidth in the hands of the telecom and tech companies could theoretically be used to drive innovation and fuel economic growth. By comparison, the broadcast tv industry has entered a phase of decline, where jobs are being cut and capital gets smaller returns. Supposedly the FCC believes the public interest in news dissemination can still be served with a smaller amount of bandwidth dedicated to broadcast television (ie. most of the main networks would be unaffected). The FCC might presume that widespread availability of the internet more than compensates for the loss of a few channels of TV for the purpose of information dissemination.

The truth seems to be that, although painful, the reallocation of bandwidth would theoretically be in the best interest of the American public. Really, it’s just a shame that the industry organizations supporting the bandwidth auction are coming off as unfeeling d-bags. The CEA and CTIA should try using a little PR savvy and focusing on the economic good, while acknowledging that there are some painful but necessary drawbacks to their plan. If they did, people might be more inclined to take their side.

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