Attorney David Oxenford of Davis Wright Tremaine LLP has a good overview of what procedures broadcasters might expect from the FCC in the matter of repacking and auctioning of television broadcast spectrum. Link: Broadcast Law Blog. Trackback (posted 20 Feb. 2012).
Updated 22 Feb. 2012: Attorney Stephen Coran of Rini Coran PC also has a good overview of provisions of this legislation. It goes in somewhat different directions than the Oxenford post from yesterday. Link: TelecomMediaTech Law Blog (posted 21 Feb. 2012).
And Attorney Rob Schill of Fletcher, Heald & Hildreth also has a useful analysis of the provisions of this legislation. Link: CommLawBlog (posted 18 Feb. 2012).
There has been some talk within the television industry of giving up part of one’s spectrum for remuneration. It appears that the only way to accomplish that would be to forgo reimbursements for repacking costs or to consolidate operations with another station or stations on a single channel.
Updated 24 Feb. 2012: The legislation which created this spectrum auction authority is contained in H.R. 3630, the “Middle Class Tax Relief and Job Creation Act of 2012,” now signed by the president. Link: Library of Congress [pdf].
Here’s Kim McAvoy’s in-depth report on the legislation. Link: TVNewsCheck (posted 17 Feb. 2012).
Updated 25 Feb. 2012: VP Technology for NBC Stations, Doug Lung, takes up some engineering aspects of this in his regular column. Link: TVTechnology.
Updated 28 Feb. 2012: Here is another good legal analysis of provisions in this legislation in the form of Harry Jessell’s interview with attorney John Hane of Pullsbury Winthrop Shaw Pittman. Link: TVNewsCheck.
... says Blair Levin, former FCC staffer who's described as the chief architect of the Commission's 2010 National Broadband Plan. The GOP version of this legislation:
... contains provisions designed to protect broadcasters who hang on to their spectrum. And they are what has Levin worried. ¶ "The legislation ties the FCC’s hands in a variety of ways," said Levin, who left the FCC following release of the broadband plan and is now attached to the Aspen Institute. "It opens it up to litigation risk, which then, in conjunction with the other handcuffs, makes it difficult to pull off a successful auction. ¶ "The nature of the bill dramatically increases the probability that there will be less spectrum recovered and less money for the [U.S.] Treasury."
Link: Article by Kim McAvoy in TVNewsCheck. Thanks to Joyce Herring for the tip.
Also see Jon Eggerton's Levin: Current Hill Take on Spectrum Auctions Likely Won't Work in Multichannel News. --Dennis
Loudoun Co., where I live in northern Virginia, has or had the highest median income of any of the 3,000+ U.S. counties. But that doesn’t give my wife and I access to terrestrial broadband, and neither of the WISPs that operate in the county reach here. We live on a farm in a remote corner of the county where the only broadband is via satellite. Email, web browsing, audio streaming and YouTube, yes; Hulu and Netflix, no.
We had HughesNet, which got dumped due to unreasonable data limits and lengthy outages, and are now using WildBlue, which sucks less. We do lose service in thunderstorms and other moderate-to-heavy rains, and wet snow is a problem (keep a broom handy). WildBlue has about the same data limits but averages them over a month so automatic software and system upgrades don’t, as punishment, knock your speed back to sub-dialup rates for 24 hours. When connected, speeds are just under a T1 rate, so that’s not awful, but latency is. Connecting with DNS is a big problem, and makes the whole web experience frustrating. One gets tired of hitting refresh and often the sites just give up before you connect. It’s particularly bad with Google sites and Twitter. WildBlue has a so-called “optimizer” which does speed up things somewhat with Firefox, but doesn’t seem to help with IE or Chrome.
I used earlier versions of Opera when I lived in Idaho and used a WISP, and remembered it was faster than IE and Firefox, but I got out of the habit during the three years I lived in the urban DC area where I had a cable ISP. So last night, I downloaded Opera 11.6 and the improvements just blew me away. So far, DNS access has worked on the first try each time and page loading is swift. The only downside so far is that me.com doesn’t work with Opera.
If this keeps up, I’m going to have to find something else to complain about. --Dennis
On four different occasions since early 2004, I’ve used information from the Television Bureau of Advertising web site (click “Cable & ADS” on the right navigation) to determine the number of households that use over-the-air reception (OTA) exclusively (that is, not counting antenna reception by secondary and tertiary receivers in wired cable and ADS homes). The term ADS refers to SMATV, MMDS, large-dish satellite, and DBS, and currently 30.6% of the 30.9% total ADS households are DBS subscribers.
On a tab labeled “ADS and Wired-Cable Penetration by DMA,” you’ll find for May 2011 a table of the 210 Nielsen DMA’s which contains a column labeled “% Cable and/or ADS” (there being a small percentage of homes that have both). If you subtract the numbers in this column from 100, you’ll get the OTA numbers for each market. No need to use some lame telephone survey to estimate this as the Consumer Electronics Association did in December 2010; TVB.org has it for just a little copy/paste work in Excel.
The first time I did this using November 2003 data, OTA-exclusives came up to 19.7M households. My most recent effort prior to this week used September 2006 data, and that showed 14.6M households (13.1% of TVHH). The one I did yesterday showed 11.1M households (9.6% of TVHH). ADS is now at an all-time high, so the addition of local channels to DBS has resulted in another decline in OTA.
So, yes, it’s falling and, yes, it’s gotten pretty low as a nationwide average. That’s some higher than the 8% in the CEA’s phone survey mentioned above that’s gotten some circulation (e.g., “Spectrum Reform Now” in The Technology Liberation Front blog).
From a public policy standpoint in a democracy, a national average of doesn’t mean a lot if there is a high “standard deviation” in the numbers that make up the average – and that’s the case here. There are 535 members of Congress who get to weigh in on what to do with spectrum policy, and when the Boise DMA has 30% OTA usage (antennas exclusively), four members of Congress get to have a vested interest. Ditto, when Los Angeles has 720,000 antenna-only households (13%), about 30 members of Congress have a vested interest. As L.A. proves, it’s not just rural markets – 15 of the top 50 DMA have 12.5% or greater OTA-exclusive usage. On the other hand, Congress members in New York City, Connecticut and Massachusetts might wonder what the fuss is about.
It’s that political complexity, fueled by the fact that OTA homes have a greater economic impact to stations (especially for public television which has underwriting and individual giving driven by viewing) than do homes with multi-channel programmers – perhaps double the value per household by my own guesstimate.
Don’t get me wrong, I think that freeing up additional wireless spectrum from broadcasters and others – voluntarily and properly compensated – ultimately is a good thing because services on multipurpose devices wireless and wired internet provides will be at least as important to broadcasters in the not too distant future as broadcast spectrum services will be. We broadcasters need it as much as anyone.
But let’s get our data right and make decisions based on understanding complexities, not over-simplifying for political expediency. Thanks to the TVB for their goldmine of information. --Dennis
When I was managing public radio and television stations in the Pacific Northwest, I used as a decision-making tool what might be the effect on the imaginary equity value of our organization of this or that significant decision. It tended to move me in a “build” or new product direction, sometimes to the patient consternation of my excellent team. I found it helpful as one of multiple indicators.
Equity values are determined by a lot of things, including market forces largely outside the control of management. We’ve all been concerned about declining television audiences while public radio audiences have continued strong, so I suppose it was inevitable that station equity values in the two media would meet at some point. There is now evidence we’re there and it has significant implications for the FCC’s effort to free up spectrum for wireless services.
Yesterday, it was announced that Nashville Public Radio has purchased a second station in Nashville for $3.35 million plus full time access to one of its HD Radio channels (congratulations to Rob Gordon, his board and team). Reports say it will be a classical music station. Link: Nashville Scene. In television terms, Nashville is the 29th market with just over 1 million TV households. It therefore paid $3.22 per household for Vanderbilt’s student-managed station.
In the recent past, we’ve seen the sales of public television stations for $3 million each in Pittsburgh (the 24th market with 1.16M TVHH) and Orlando (the 19th market with 1.45M TVHH). Pittsburgh’s was not the primary PBS station, but Orlando’s was – and that market had two secondary stations. So, the Pittsburgh station brought $2.58 per household while, more recently, Orlando’s brought only $2.06.
All of this may lead a gloomy television station exec to look at the possibility of a whole or partial sale to the wireless industry as a good thing. Perhaps that’s so if you’re sitting on a pile of debt you need to quickly liquidate, but these valuations wouldn’t produce much as an endowment investment. The median of 864 college and university endowment investment returns was –18.1% in 2009 (source: NACUBO). Things are up from there, of course, but even a long term average of +5% seems optimistic these days. So, if that $3M spectrum sale produces only $150,000 per year and you can’t net better than that with more traditional revenue sources from that spectrum, you’ve got some pretty serious problems.
There are other factors, too, that make a sale to wireless problematic. It’s likely, said the CTIA and CEA in an FCC filling, that they can get all the spectrum they need through repacking and will need to resort to auctioned spectrum only in the top 30 markets (full disclosure: I’m executive director of the Public Television Major Market Group, but the usual disclaimer about these being my own opinions applies). Further, one presumes that the marketability of your spectrum will vary by where you are in the UHF TV band, with a preference for spectrum that can be contiguously aggregated.
Yesterday’s surprising (maybe) announcement of AT&T’s acquisition (pending regulatory approval) of T-Mobile is being billed as a spectrum play for 4G, a move in response to the U.S. Administration’s goal of covering America with wireless broadband. See the Wall Street Journal’s interview with Kevin Werbach for a perspective on this.
However, one analyst says that 70%-90% of AT&T’s current spectrum currently sits unused. AT&T acquired two nationwide aggregations of spectrum that lie mostly unused for roughly one-twentieth of the price they paid for T-Mobile. Interestingly, this (the 1/20th figure) is what the NTIA and CEA said in a recent white paper that broadcasters would need to be paid to clear enough spectrum to meet FCC goals.
You pay a 20-fold premium over bare spectrum because this spectrum – all of which they won’t use – comes with customers and this new customer base will make them the largest wireless provider (they and Verizon will control 70%). So this is really about that market share and the control over pricing this will give them.
Recently, I’ve found myself tweeting more from @haarsager and blogging less. Most of the tweeting has the same media economics and technology content as I normally put in the blog, so thought I’d share them here. So I invite you to scan my January tweets (those off topic have been deleted for length) for some interesting and, in some cases, important links. --Dennis
Some web browsers have had trouble accessing the link I posted in various places for a pdf document containing all four essays in the series on radio innovation that I wrote for NPR, so here is another try. If you're typing in the first address, TypePad requires the file name to be case sensitive. If you can't make it work, try the Dropbox link.