Mysteries of the TV Spectrum Auction

Let’s say you live in Columbus, Ohio, and you’re watching TV with rabbit ears or a rooftop antenna, not via cable or satellite. If you live in the green area, you won’t have any trouble receiving a clean signal. In the yellow, you may need an outdoor antenna. If you live in the orange or red zones, you will certainly need an outdoor antenna, and if you’re red, you may still have a tough time. Of course, every over-the-air TV channel broadcasts with its own distinctive coverage pattern— the result of the physics of the specific channel frequency, the antenna height and location, terrain, quality of your home antenna and home receiver, interference with other signals and with physical objects like buildings and mountains. Television broadcasting is a complicated business!

Let’s say you live in Columbus, Ohio, and you’re watching TV with rabbit ears or a rooftop antenna, not via cable or satellite. If you live in the green area, you won’t have any trouble receiving a clean signal. In the yellow, you may need an outdoor antenna. If you live in the orange or red zones, you will certainly need an outdoor antenna, and if you’re red, you may still have a tough time. Of course, every over-the-air TV channel broadcasts with its own distinctive coverage pattern— the result of the physics of the specific channel frequency, the antenna height and location, terrain, quality of your home antenna and home receiver, interference with other signals and with physical objects like buildings and mountains. Television broadcasting is a complicated business!

For most Americans, the story was pretty much the same from the early 1950s until June of 2009: turn on the TV, and watch a handful of channels, perhaps a dozen if you lived in or near a big city, for free. In 2009, the number of channels began to double, then triple. Now, I can watch about fifty channels without the help of cable, satellite, internet, mobile technology, or any other means. I just need a TV set, and a decent TV antenna. These days, there is a difference between a television “station”—a license to operate a portion of the local television spectrum (6 MHz, in case you’re keeping score) within a specific geographic area (say, for example, Syracuse, New York), and a “channel” (in technical terms, a “program stream operating on a portion of the 6MHz channel; this is why you see, for example, channels 10.2, or 14.3, when you use an over-the-air television tuner).

So that’s the new status quo. But it’s about to change. Within the next two years or so, the FCC (the government agency that provides and monitors television, radio, and other broadcast licenses) will, in essence purchase, very roughly, 1 in 10 television stations, maybe more, maybe less. They will buy these television licenses in order to sell them to wireless mobile internet operators so that the television spectrum may be used, for example, to stream video any time, anywhere, on to your smart phone or tablet. Most likely, the smallest and weakest of television stations will cease broadcast, including the few that are affiliated with any national broadcast network.

For several reasons, the situation is strange. As a rule, these licenses do not belong to the owners of these television stations, any more than your fishing license belongs to you. It is a permit to operate a broadcast television station, provided at no cost to the broadcaster in exchange for a promise to provide a public service: local news, programs for children, emergency information, and so on. Of course, broadcasters don’t want to simply give the licenses back to the government—why would they, unless they were either required to do so, by law, or, paid a handsome incentive to surrender what is, for many, a valuable asset. This is why the FCC is going to the buyer—the wireless internet provider who will use this spectrum—for the funds needed to encourage the current licensees, the broadcasters, to give up their chunk of spectrum. Why can’t the local TV station contact, say, Verizon, and say, “hey, want to buy our spectrum?” Yeah, that’s a good question, and no, there is no good small answer to that question. There is, however, a good big answer: there are thousands of local television stations, and the FCC is playing middleman in order to maintain some degree of rational organization.

Why? Also a good question, especially when you consider that about 90 percent of U.S. television viewing has little, if anything, to do with the local television stations and their broadcasts. Nearly all of us ignore the thirty or forty free television channels available via any good recent TV set and a connected antenna, and instead choose to pay Verizon, Comcast, or similar companies about $1,000-$1,500 per year to receive nearly 1,000 channels, plus DVR services, on demand, etc., as well as home internet service. So we’re protecting an asset that is vital for about 10 percent of us, and, largely, irrelevant to the rest. Except, of course, when there is an emergency, or so we’d like to believe. In reality, television is probably the fifth most important communication medium in an emergency situation (for example, Hurricane Sandy): first comes word of mouth, probably followed by cell phone, then internet and mobile, then radio, and then, if the power is on and the television stations’ antennas and transmission systems haven’t been zapped by power or ice or other maladies, there’s TV. Certainly, TV does a better job with storytelling—the term “team coverage” comes to mind—but communication of details is better handled, in 21st century life, by other media that are less needy in terms of power and complex operation.

Which leaves us…where? It leaves us with FCC auction in which wireless providers will bid, market by market, to provide the FCC with the funds needed to purchase the spectrum and associated licenses to broadcast on that spectrum, by some companies (and nonprofits) that currently hold those licenses. I am reluctant to use the term “sell the license” because the term suggests that the operator owns something other than a right to operate for a period of time, but the vernacular has the FCC “buying,” so I guess stations are, somehow, selling.

Will this matter? It’ll matter if you have a favorite small television station that struggles to pay its bills, or simply wants to move past the 20th century notion of local television broadcasting in favor of a different idea. Some state or local colleges own noncommercial educational licenses, and provide PBS service, for example, and some of these could go away because the colleges may decide to “sell” and put the money to other use (for example, establishing a new distance learning scheme for the 21st century, or building new facilities for other educational activities, or hiring many more professors, or just endowing their future). An owner of commercial stations—perhaps even a group of stations—might sell to raise capital, and then put that capital to work in another part of the media business, or another business altogether. The FCC is positioning the auction as a means to raise capital for these kinds of opportunities.

Will this really happen? And might it happen again, until most or all of the broadcast television stations are gone? Yes, it will really happen, unless the new FCC chief, Tom Wheeler, can either politically maneuver in another direction (always possible), or some other part of the Federal machine shifts into an unexpected direction. If all goes as planned, some local broadcast channels will go dark (especially in the top 20-30 largest markets), and many channels will find new homes, new channel positions on the broadcast spectrum, a change that will probably be invisible to most consumers who (a) watch on cable or satellite anyway, and (b) see their over-the-air channels “masked” with channel numbers that do not represent spectrum position, but instead, reflect convenience and tradition (for example, channel 10 in Philadelphia has always been channel 10 in Philadelphia, but it has been broadcasting on channel 34 for several years). As for future changes, there is nothing in place to support the contention that this will not be the final auction, but anything is possible, and the need for over-the-air broadcast stations in the top 20-30 markets is doing the opposite of growing. (In areas that are poorly served by cable, broadcast remains viable in small regions.)

So that’s the story, for now. The FCC plans to release a plan in May, and that could change half of what I’ve just written.

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