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  • rickaplan 2:03 pm on April 9, 2014 Permalink
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    The Missing Piece of Chairman Wheeler’s Broadcast Vision 

    At the annual NAB Show in Las Vegas on Monday, NAB President and CEO Gordon Smith publicly called for the Federal Communications Commission (FCC) to develop a National Broadcast Plan. He suggested that this plan, inspired by the National Broadband Plan, should outline the FCC’s vision for how the government can help drive, or at least not impede, innovation and investment in broadcasting.

    Broadcasters have been craving a coherent and holistic FCC vision for their industry for quite some time. Rather than be subject to piecemeal and often contradictory regulations and expectations, broadcasters yearn to understand where the agency sees them as part of the overall telecommunications landscape. Are broadcasters “special” because they are the lone voice of localism and diversity, and therefore will be regulated as such? Or is the FCC going to measure the relative value of the industry on how it competes with the wireless and cable industries, and thus level the playing field by freeing up broadcasters from their shackles of unparalleled regulation?

    FCC Chairman Tom Wheeler responded in a speech Tuesday to Smith’s call by setting forth his high-level vision for broadcasters. The chairman should be commended for sharing his long-term view of the industry. It’s essential that broadcasters understand how their regulator perceives their role within the overall telecommunications landscape.

    The chairman explained that the broadcast industry is at a crossroads, saying, “We are at an inflection point where broadcast licensees can move from being the disrupted, to being the disruptor.”

    He is right on the money. Broadcasters have the potential collectively to be a major disruptor. They can provide the increasingly vital competition to the heavily consolidated – and ever consolidating – cable and wireless industries.

    The chairman is off target, however, with respect to the manner in which broadcasters can most significantly be disruptive. In his mind, broadcasters should aim to become another Netflix; in other words, they should focus on delivering their content over the Internet. He asked broadcasters to focus on “digital,” meaning they should focus more on their Web properties than broadcasting over their own wireless networks.

    I don’t know about you, but a future that gives even more power to the incredibly consolidated and exceedingly powerful cable and wireless industries – one that puts them as our gatekeepers – sounds like a future that ultimately only disrupts broadcasters, and not the overall ecosystem.

    In my view, with the right policies and flexibility in place, broadcasters can leverage their exceptional local content and, perhaps most notably, superior transmission system, to truly shake up the wireless and cable grip on the marketplace. Broadcasters even have a terrific opportunity to serve as a driver of the over-the-top industry (as opposed to a mere client), by allowing cord-cutters to receive free broadcast TV while supplementing with over-the-top content.

    The chairman’s own words brought our differing visions into stark focus:

    “[Broadcasters] possess the two most important components of a successful digital strategy: compelling content – specifically, the most important content: local content – and the means to promote it.”

    What is most notable about this passage is what is missing. Most TV broadcasters in attendance assumed that the chairman would note that the two best broadcast assets are local content and a unique and spectrally efficient architecture. The omission of the latter is important because it demonstrates that the chairman does not see, as many broadcasters do, a game-changing value in our one-to-many architecture. At no point did he acknowledge this competitive advantage. The only value of our architecture in his mind was as a wireless sandwich board, advertising how great our over-the-top content is.

    It is not lost on many broadcasters that the chairman’s vision happens to fit nicely into two of his three highest priorities: the spectrum incentive auction and the open Internet. First, if broadcasters buy into his vision of them as over-the-top content providers, they don’t really need their spectrum and therefore they should participate in his incentive auction. Second, if broadcasters become over-the-top content providers, they should be concerned about broadband providers slowing down their service or demanding payments for delivery to consumers, and thus should line up in support of the chairman’s controversial drive for robust rules governing the Internet.

    To what degree the chairman’s vision is truly comprehensive or instead a clever way of convincing broadcasters to support his legacy items is anyone’s guess. At this point, it’s frankly too hard to judge.

    Either way, forward-thinking broadcasters truly understand the value of their transmission system and the value of their spectrum. They also know that spectrum value will only increase. That’s why broadcast companies have spent over $50 billion in buying and selling stations for years. Despite the chairman’s not-so-subtle warning that the incentive auction is a “once-in-a-lifetime opportunity,” broadcasters get that their spectrum values will not drop anytime soon.

    Indeed, many broadcasters are looking to do far more with their spectrum, whether it is higher quality video (4K and 8K), robust delivery to mobile devices or new IP-based solutions for emerging needs such as machine-to-machine technologies. They are also looking to help address the challenge of delivering wireless video; that pesky issue that causes wireless networks to slow down and even fail altogether. And broadcasters can do this for consumers for free; i.e., video delivery over a broadcaster’s transmission system that won’t eat into expensive wireless data plans.

    The chairman’s remarks demonstrate that broadcasters have their work cut out for them. Unlike the chairman, they don’t, and likely never will, view themselves as mere content companies or websites. Obviously their digital properties are a strong compliment to their core businesses. In fact in most markets the most viewed local websites are already broadcast television and radio websites. And local broadcasters continue to find new ways to go over-the-top with their network partners. But the industry also possesses a unique and spectrally efficient delivery system that should not be overlooked. In fact, the FCC can’t overlook it. Our architecture – both radio and television – has to be a key component in addressing our nation’s spectrum needs in the future.

    A National Broadcast Plan would look at the ways in which our transmission system could make a meaningful difference in spectrum policy and services to which all Americans have access. A meaningful National Broadcast Plan would not shrink broadcasting into a mere Web service, but grow it into a real competitive force against wireless and cable. If all we do is ride on their backs, we will ultimately always be beholden to them. For a chairman whose watchwords are “competition, competition, competition,” his remarks conspicuously overlooked meaningful intermodal competition in the delivery of video content.

    Broadcasters want to be a major part of the future, and not just in the way in which they’ve been an integral part of the past. Broadcasters – both radio and television – want to continue to morph technologically to help address the need for competition, localism and diversity. We cannot do that by surrendering spectrum and putting ourselves and our viewers at the mercy of the wireless and cable industries. We must be a true competitive force, and we need the FCC to have the vision and courage to be a partner in allowing us to do so.

     
  • jmago2014 12:31 pm on March 11, 2014 Permalink
    Tags: , JSA, media ownership   

    Looking to the Law 

    As a General Counsel – now at NAB and formerly of the FCC – I tend to believe that adhering to the law is a good thing.  That is why I am very troubled by the broadcast ownership order now circulating at the Commission and the blog posts filed by senior FCC officials supporting it.

    The very first line of the Chairman’s blog post makes it surprisingly clear that the agency must take a closer look at the law before moving forward on the proposed order. His post describes the FCC’s quadrennial obligation to review the broadcast ownership rules as one to “determine if they need to be modified to serve the public interest.”  That is not the law.

    Section 202(h) of the 1996 Telecommunications Act which imposes the quadrennial review requirement on the FCC was adopted as part of a deregulatory framework. The statute states that the Commission “shall determine whether any [broadcast ownership] rules are necessary in the public interest as the result of competition.” And, it goes on to say that the Commission “shall repeal or modify any regulation it determines to be no longer in the public interest” (emphasis added).

    Given this directive, I find it very hard to understand how one could conclude that reaching back to a docket from 2004 to increase regulation of joint sales agreements (JSAs) without any consideration of the larger picture or change in the marketplace is consistent with the directive of Section 202(h).

    I am even more perplexed and troubled that the apparent basis of the decision to declare television JSAs attributable is a sweeping and inaccurate generalization that JSAs necessarily create de facto ownership and thus violate existing ownership rules.  The blogs do not reference or apparently consider the very significant database of JSAs that resides at the FCC. Instead, they draw conclusions from Securities and Exchange Commission (SEC) filings.  Those filings respond to rules and goals established by the SEC for a very different purpose than FCC licensing. SEC filings are not a part of FCC precedent or law.

    Indeed it is striking that the blogs make no reference to the decades old FCC indicia of control: decision-making authority over programming, personnel and financing. Those indicia led the FCC staff to approve at least 50 JSA arrangements since 2011, making clear in their review that the licensee must control at least 85% of programming and retain at least 70% of net advertising revenue. Also, to pass muster, the terms of the deal must apply at least 20% of station value to the license value.  The FCC is not free to ignore precedent.

    Similarly, as a matter of law, the FCC is not free to simply ignore the record before it. Here, basing a decision on gross generalizations that JSAs are intended to get around ownership rules is wrong.  Adhering to the law in this case requires the agency to take a hard look at the evidence in its own records and consider the presentations made by NAB and others – presentations that demonstrate the varied nature and very real public interest benefits of television JSAs.

    Finally, adhering to the law in this case means taking the directive of Section 202(h) seriously. The Commission must look at the local television ownership rules in light of current competitive conditions. That cannot mean starting another never-ending quadrennial review while tightening restrictions on local broadcast stations alone. 

     
  • rickaplan 2:00 pm on January 28, 2014 Permalink
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    What to Expect When You Are Expecting 

    For those interested in the voluntary broadcast spectrum incentive auction, this should be an interesting week at the Federal Communications Commission (FCC). At the FCC’s monthly meeting, the Commission’s staff will lay out its timeline and project plan for the upcoming auction. This update should be helpful, as all stakeholders seek to get a better handle on what to expect next. Most of all, we hope that the staff seizes this opportunity to go beyond a discussion of dates and timelines – auction timelines have garnered the bulk of the headlines so far – and delve into their current thinking on the substance of the auction and its components. This week’s meeting comes nearly 500 days after the incentive auction Notice of Proposed Rulemaking (NPRM) was adopted, and the FCC has since collected approximately 350 ex parte submissions and 375 written comments on the subject. The time certainly is ripe for the staff to let the public in on its proposed approach to a variety of hotly contested topics. 

    To be more specific, here are some things NAB would like to see emerge from Thursday’s meeting:

    • The staff discusses its latest thinking on the 600 MHz band plan.
    • The chairman announces that he is forming an “expert user group” of outside stakeholders who are willing to commit the time and resources to evaluating the auction and repacking software once it has been created. This group will test the software to ensure the final product will produce the intended results, without unpleasant surprises.
    • The staff provides a substantive update on its latest work on the international front. The report will not merely list the number of meetings with Canada and Mexico; but rather, will detail how the staff intends to proceed if it has no agreement in place with one or both countries. The chairman indicated in a House hearing last month that he does not expect to have such agreements. Assuming that it is even lawful to proceed with the auction without these agreements (and NAB believes it is not), how will a lack of meaningful coordination affect the auction and the amount of spectrum recovered across the country?
    • The chairman announces that the Commission will move certain parts of the incentive auction order sooner, rather than later. Discrete pieces of the order, such as which broadcasters will receive protection in the repacking, the process for relocating and protecting translators and low-power TVs and the eligibility constraints, if any, placed on forward auction bidders, can and should be decided now, helping the process move more swiftly overall.
    • The staff announces that it will release the long-awaited Public Notice on co-channel interference.
    • The staff of the Office of Engineering and Technology announces that it has dropped its proposed incentive-auction-specific changes to OET-69, and instead will focus all of its energy on ensuring the accuracy of the repacking model. The proposed changes, as well as literally 12 different versions of the TVStudy software (in less than a year), have only served to introduce uncertainty into the process and threaten to slow down the auction process considerably.
    • The staff discusses its plans for wireless microphones, in light of the fact that the NPRM suggests displacing their operations although offers no solution as to where this critical service might find a home.

    It would also be a welcome sign to see the chairman publicly affirm that the Commission, under his watch, will in no way take actions to harm broadcasters in unrelated proceedings to encourage participation in the auction. Not only would such actions be unlawful, they would be bad policy. If there was ever a time the Commission needed to develop trust with broadcasters, that time is now. Our participation in all phases of the auction is essential to its success. We are eagerly watching and waiting to develop a true partnership with the Commission as it seeks to execute the first spectrum incentive auction in history. 

     
  • Dennis Wharton 11:19 am on January 22, 2014 Permalink
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    Spectrum Sophistry 

    Thank you, Jeffrey Eisenach.

    Thank you for driving a stake deep in the heart of one of the Beltway’s biggest whoppers – namely, that broadcasters are the boondoggle beneficiaries of “free spectrum.”

    For my 31 years living in “This Town,” it’s been presented as gospel that TV stations “got the airwaves for nothing.” It started as “the $60 billion giveaway,” morphed into $80 billion, and if memory serves me correct, eventually became a “$600 billion giveaway”. (Do I hear $600 trillion gazillion, anyone?)

    “The Largest Corporate Welfare Program in History” read one headline. “The Best Bargain Since Manhattan” screamed another.

    Which brings me to the aforementioned Jeffrey Eisenach. A few months back, this well-respected economist was asked to review the validity of claims of a “TV spectrum giveaway”.

    After an intensive review of FCC filings, the compilation of data from media research firms and an analysis of communications law and history, here’s what Eisenach found:

    Ninety-two percent of all existing full-power television broadcasters PAID MARKET RATES for spectrum licenses on the secondary market. Today, fewer than one in ten full power TV licenses is held by an original licensee, and collectively, broadcasters have shelled out $50 billion dollars for their TV licenses (which, coincidentally, just happens to be just about exactly the amount of money that the FCC has raised in spectrum auctions).

    Translation: Suggestions of broadcasters being the recipients of a “billion dollar giveaway” are – in a word – bogus.

    But wait, this gets better. Eisenach also exposed the hypocrisy of those who bemoan the government’s “broadcast spectrum giveaway.”

    As Eisenach makes clear – long before the FCC’s first spectrum auction — wireless carriers and satellite TV providers DISH and DIRECTV were the recipients of FREE spectrum themselves. Those “free” airwaves remain in the hands of the original licensees or the companies that gobbled them up.

    Moreover, these wireless and satellite TV providers who continue to operate on government-granted free spectrum have NONE of the public interest obligations of local TV stations. They have NO program decency standards, NO ownership limits, NO online political advertising requirements, and NO children’s educational programming regulations.

    Yet, is anyone calling out cellular companies for receiving spectrum “for free”? Is anyone objecting to DISH and DIRECTV’s bonanza of “free spectrum”? I didn’t think so.

    And let’s not forget: None of broadcasting’s competitors embrace the localism mandate that broadcasters embrace. None of them have the network redundancy that is built into broadcasting which allows us to remain “always on” in times of crisis. Cellphone and broadband networks were rendered inoperable by events like Hurricane Sandy in New York, killer tornadoes in Oklahoma City, Tuscaloosa, and Joplin, Mo. and by the derecho in Washington, DC. When it mattered most, broadcasting was the indispensable medium because of its “one-to-everyone” architecture.

    Harping on the false claim that broadcasters received spectrum “for free” ignores the tremendous investment local stations have made to utilize airwaves for its highest and best use. It also ignores the $15 billion broadcasters spent on the DTV transition, with no guarantee that a dime of that would be recouped.

    Every day, local television stations and our network partners invest in quality news, weather, sports and entertainment that remains the most-watched programming on TV. More than 90 of the 100 top programs every week are on broadcast TV, and are available free of charge to anyone who installs a $50 antenna. Broadcast TV is growing because of the cord-cutting phenomenon, and today there are 59.7 million people who rely exclusively on over-the-air broadcast television.

    There will always be distortions and half-truths served up by those who would love to eliminate free and local broadcasting as a competitive, innovative force in communications. Thanks to Jeffrey Eisenach, we can finally put to rest the phony claim of a “broadcast spectrum giveaway.”

     
  • rickaplan 12:40 pm on January 13, 2014 Permalink
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    Spectrum Reflections: It’s Time for A Moment of Reflection, CCA 

    CCA, please tell us you are kidding.

    In December, the Competitive Carriers Association (CCA), a trade association that represents most wireless carriers with the exception of Verizon Wireless and AT&T, filed comments at the Federal Communications Commission (FCC) in response to the FCC’s proposed rulemaking to eliminate the so-called UHF television discount. The filing would be downright funny if it wasn’t so desperate, specious and irresponsible.

    The UHF discount proceeding is a pure broadcast television issue. By way of brief background, the broadcast television ownership rule prohibits a single entity from owning stations that reach in the aggregate more than 39 percent of total television households nationwide. The “UHF discount” allows stations broadcasting in UHF to count toward that cap only half of the TV households in their markets, as opposed to all of the households for VHF stations. The FCC has proposed to eliminate that discount.

    The issue has absolutely no impact on the wireless industry. So why would CCA file? Was it a mistake?

    CCA’s comments prodded the FCC to “examine . . . rules applicable to broadcast stations and take action to eliminate remaining regulatory distortions. . . . [T]he Commission should carefully consider how the existing rules and proposed reforms would affect broadcast stations’ incentives to relinquish spectrum in the upcoming 600 MHz incentive auction and adopt reforms in light of that vital consideration.”

    In plain English, CCA expressly asked the FCC to strong arm broadcasters into participating in the wholly unrelated voluntary broadcast spectrum incentive auction. CCA’s theory is that if the FCC takes actions that affirmatively harm broadcasters, more broadcasters will participate in the voluntary auction, and then CCA’s members will have access to more spectrum than they would have otherwise. 

    Underlying CCA’s advocacy is the notion that broadcasters benefit from regulations that “distort” the market. Presumably CCA is not referring to all of the obligations imposed on broadcasters (that are not imposed on the wireless industry), such as children’s programming mandates, indecency regulation and captioning requirements, just to name a few. 

    I don’t know whether to laugh or cry. Maybe both.

    Let’s have a good laugh first. CCA apparently neither understands the regulatory regime under which broadcasting is governed nor the concept of irony.

    First, no industry is more heavily regulated by the FCC than broadcasting. Unlike any other industry, the FCC’s regulations govern many facets of broadcasters’ operation. The very structure of our industry is dictated by the federal government. For example, as noted above, in terms of ownership, Congress set a cap on how big any one television group can get: no entity can reach more than 39 percent of the U.S. population. There is no corresponding rule in the wireless industry. Indeed AT&T and Verizon Wireless produce maps claiming to cover more of the country than the other. The government has also imposed a number of mandates on broadcasters to which no other industry is subject. Broadcasters have to produce a certain amount of children’s programming for example. CCA’s members, on the other hand, just have to throw up a tower and let whatever comes across – and we sure know what can come across – reach the end user. Speaking of the Internet, unlike wireless companies (including those that got their spectrum “for free”), the FCC has imposed decency standards on broadcasters. Cable channels don’t even have the same obligations. Broadcasters are also subject to accessibility regulations far beyond what CCA’s members could fathom. So it is safe to say that broadcasting is not an industry propped up by regulation – unlike small wireless carriers (a point to which I will return) – we are primarily saddled with government regulation.

    Second, unlike broadcasters it is CCA’s members that depend on government regulation.  Government intervention is their oxygen. In a largely deregulated wireless industry, CCA pays visits to the Commission time and time again, imploring the FCC to give its members preferential treatment. In fact, in the incentive auction proceeding itself, CCA is virtually begging the Commission to give its members a leg up on AT&T and Verizon Wireless. CCA also routinely seeks forced interconnection among wireless carriers, so that its members can free ride on the investment of others who have invested billions to build their networks. It asks the FCC to subsidize its members through the Universal Service Fund so they don’t have to invest. And it routinely seeks to force other carriers to interoperate with its members so they can ride off the bigger carriers’ backs on equipment orders. CCA is an association that has never met a regulation it hasn’t liked. It relies on, and affirmatively seeks to increase, government intervention in the marketplace.

    This characterization is not simply my opinion; all it takes is a quick walk through CCA’s recent filings to discover its government-prop-us-up mission. Just over the past year, CCA has fervently advocated in favor of the following market interventions:

    • Revision of the spectrum screen to impose government-mandated limits on the amount of spectrum commercial carriers may aggregate;
    • Adoption of auction rules that limit the amount of spectrum large carriers may  acquire, as well as bidding credits and other mechanisms to favor other carriers, and license areas tailored to the desires of CCA’s membership;
    • Forced provision of data roaming arrangements;
    • Mandated interconnection obligations for  incumbent Local Exchange Carriers following the IP transition, including the full panoply of Section 251 and 252 requirements;
    • Forced interoperability of handsets;
    • Revision of the USF rules to increase subsidies for rural wireless service providers;
    • Conditions on the merger of AT&T and Leap, including divestiture of spectrum in markets where AT&T exceeds the spectrum screen, as well as forced offering of roaming arrangements on the same terms and conditions carriers previously negotiated with Leap; and
    • Conditions on the Verizon-AT&T spectrum swap, including an interoperability mandate.

    Now for the part that’s no laughing matter.

    Somewhere along the way, CCA – and they are not alone in this – conveniently overlooked Congress’s clear direction that the incentive auction must be voluntary. “Voluntary” means that no broadcaster, by any means, can or should be coerced into participating in the auction. CCA is asking the FCC to violate the law by forcing broadcasters, through regulatory arm twisting, to give up their spectrum. If the FCC turns up the heat enough, says CCA, then broadcasters will have no choice but to “volunteer.” That is a big no-no, although CCA seems not to care about staying within the bounds of the law.

    If CCA were the only organization heading down this road, I likely would not be writing this post. For if a tree falls in a forest…well, you know the rest. But there are others out there with similar motives. And it is time to shine light on an issue that needs to be crystal clear. The FCC cannot, under the law, take any action designed to harm broadcasters with an eye towards encouraging participation in the auction. The lone incentive for participation is the market-based auction itself, and the compensation broadcasters are offered to relinquish their licenses.  Anything else is unlawful, and it is no laughing matter to push the FCC to violate the law.

    The voluntary broadcast spectrum incentive auction can be a success. The Commission does not need to cheat in order to make it so. NAB, as always, stands ready and is committed to doing what we can to see the Commission succeed in its auction and to do so in a way that adheres to the law.

     
  • rickaplan 1:10 pm on December 18, 2013 Permalink
    Tags: ,   

    Spectrum Reflections: The Impending Sprint-Mo and the Auction Oh-No 

    I have to imagine that AT&T and Verizon Wireless (and their troops in Washington, in particular) are taking some pleasure in the recent stories suggesting that Sprint and T-Mobile are once again contemplating a merger. The potential for such a union adds a new level of intrigue in the campaign these four wireless heavyweights have been waging over whether the Federal Communications Commission (FCC) should limit the amount of spectrum any one carrier can acquire in the FCC’s upcoming voluntary broadcast spectrum incentive auction.

    For more than a year, AT&T and Verizon Wireless, aka “the big guys,” have been slugging it out with Sprint and T-Mobile, aka the “not-quite-as-big guys,” over whether the FCC should impose caps on the amount of spectrum the big guys can acquire in the voluntary broadcast spectrum incentive auction. The not-quite-as-big guys have been arguing that, if the FCC does not limit the amount of spectrum the big guys can acquire in the incentive auction, the not-quite-as-big guys will be frozen out, and the already expansive gulf between the big guys and not-quite-as-big guys will expand. The big guys respond that an “open auction” – one without restrictions – will yield the largest payday for the U.S. Treasury, as any artificial limits could hamper the auction’s overall success. As one might imagine, the not-quite-as-big guys disagree with this analysis, and what has followed is a massive subsidy of the economics profession in the United States, as each side has enlisted countless economists to support their respective worldviews.

    The recent revelation concerning Sprint and T-Mobile has now fueled a new element of the wireless competition debate. Namely, how does this potential merger affect, if at all, the auction eligibility rules the FCC has been designing with today’s wireless industry in mind?

    To illustrate the specific challenge this merger poses, let’s assume that the FCC is contemplating rules that would ensure that each of the top four wireless carriers has a reasonable shot at acquiring spectrum in the incentive auction. What happens, then, if those rules are enacted, and Sprint and T-Mobile subsequently reach a deal to merge, but prior to the auction itself? Or, what happens if the two companies participate in the auction independently, benefit from competitive rules designed for them, and then merge with spectrum assets they wouldn’t have had access to had they merged pre-auction?

    The plot has certainly thickened.

    The National Association of Broadcasters (NAB) has not taken a formal position on whether the FCC should enact any rules within the voluntary broadcast spectrum incentive auction to foster competition in the wireless industry. While competition in the wireless industry is certainly a good thing for broadcasters (e.g., Sprint’s deal to activate FM chips in cell phones when the big guys passed on the public safety opportunity), we haven’t studied carefully the effects of various rules imposed in an auction and their likelihood of success.

    For the Commission, the rumors of a Sprint/T-Mobile merger seriously raise the stakes for the wireless competition issue; one that has already had more airplay than any other. One way to think about the added complication of the potential merger is through the eyes of those designing the rules. Any competitive rules being considered by the FCC necessarily have some “ideal” number of national carriers in mind. For example, the Commission could determine that no bidder should win more than 25 or maybe 33 percent of the licenses in each market area. The former (25 percent) is likely based on a desire for at least four carriers, while the latter (33 percent) for at least three. If the Commission chooses four (i.e., a 25 percent cap on each carrier), but then Sprint and T-Mobile merge post-auction, the new “Sprint-Mo” could walk away with 50 percent of the licenses in a given area, potentially undermining the Commission’s long-term competitive aims.

    One may argue that this alleged problem is overblown, as a newly merged Sprint-Mo (pre-auction) could give even smaller carriers a shot at spectrum in the auction. One could also assert that a post-auction merger would likely result in serious spectrum divestitures, thus benefitting small wireless carriers. But, time has shown that most small carriers cannot survive the capital-intensive wireless business long-term, and they ultimately end up either relying on significant government intervention to survive (e.g., data roaming, interoperability, special access reform, the Universal Service Fund, auction rules to their benefit), or more likely, they simply sell out to the big guys in the end, anyway. This is likely why the Department of Justice focused almost exclusively on the nationwide providers in the competition analysis it submitted to the Commission last April.

    The challenge for regulators is that the commercial wireless industry is consolidating at a rapid rate, therefore providing a moving target. It is difficult to employ effective competitive auction rules if you have no idea what the industry you are trying to keep competitive will look like when those rules take effect (i.e., in an auction at least 18 months away). This is not to suggest, in any way, that the FCC should not be looking closely at how to foster a competitive wireless marketplace, and even do so in the context of this auction. Rather, I’m merely highlighting the high degree of difficulty in getting it just right.

    The major concern for AT&T and Verizon Wireless is that Sprint and T-Mobile may have a chance to end run the process. If they are savvy, they may be able to achieve favorable auction rules, win convincingly at auction and then merge. The FCC would then be in the tough position of having to either deny that merger or exact major divestitures, the latter of which (divestitures) has historically been a disaster. On the other hand, if approved, the resulting Sprint-Mo would be a spectrum powerhouse, having navigated the regulatory wireless morass in a way that only DISH Chairman Charlie Ergen has managed to so far.

    And speaking of Charlie, let’s not forget that his 40 – oops, soon to be 50 – megahertz is still out there, lonely, fallow and perhaps waiting for a call from Sprint-Mo as well.  

    It should be a fun first half of 2014. Happy New Year!

     
  • rickaplan 10:04 am on December 17, 2013 Permalink
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    Representing Broadcasters and True Incentive Auction Success 

    At last week’s Senate Commerce Committee hearing on “Crafting a Successful Incentive Auction,” the executive director of the Expanding Opportunities for Broadcasters Coalition (EOBC) sounded the alarm that the Federal Communications Commission’s (FCC) upcoming incentive auction was on the path to complete failure. The reason? The FCC is allegedly not moving fast enough to inform broadcasters exactly how much money the agency plans on shelling out for their spectrum licenses and that the agency may be considering reverse auction rules that approximate the actual value of spectrum licenses. He concluded that anything that gets in the way of paying broadcasters handsomely for their spectrum licenses is going to lead to auction catastrophe.

    Let me ease your minds: There is no cause for alarm. The sky is not falling. Broadcasters are patient, digesting what emerges from the FCC and recognize that this is a long, complex process.

    The National Association of Broadcasters (NAB), along with the Association of Public Television Stations (APTS), represents the true interests of all broadcasters. Our aim is to serve America’s local broadcasters and to expand their opportunities in the 21st century, whatever they might be. We have members who will continue broadcasting for decades to come and others that may look to the incentive auction as an opportunity to exit the business after a long history of serving their communities.

    The EOBC, while apparently made up of companies that hold licenses in the broadcast band (its membership list is a closely guarded secret), does not represent broadcasters. In many respects, this group seems to stand in stark contrast to what is in the best interests of broadcasters and broadcasting. Its mission is singular: to capitalize on regulatory arbitrage. Its aim is to make sure that its members are paid as much money as possible and paid as quickly as possible for their spectrum licenses. 

    While there is nothing wrong with having one’s own interests at heart, we must take the comments of this coalition in that context. This context explains why, as opposed to NAB, APTS, as well as the representatives of wireless companies and associations, cable companies and associations and public interest groups, the EOBC is not concerned with the resulting 600 MHz band plan, how international coordination impacts the future of television, interoperability, co-channel interference, or any other issue beyond how much they get paid and how quickly. The day their checks are cashed, their engagement in this auction ends; the EOBC has no interest in the subsequent repacking or consumer welfare.

    The FCC staff is working hard to solve dozens of challenges in this extremely complicated auction. The agency is not close – nor should it be at this point – to determining starting prices in markets or even to confirming which markets are eligible for auction. These are very difficult questions among many others that need to be sorted out over time.

    If done right, the FCC will make it as easy as possible for willing broadcasters to participate in the auction. In practice, this means ensuring that broadcasters understand the rules of the road and that their participation does not require an army of economists or mathematicians. There should be low barriers to entry. The process will take time, and in all likelihood will require the cooperation of those such as NAB and APTS, that truly represent broadcasters. These broadcast advocates want to weigh the potential benefits of participation, not just quick-hit investors looking to turn a quick profit because of the government’s unique offer to buy back licenses.

    NAB has been engaged with the FCC to ensure the auction’s success and viewer protection from start to finish. Success for us includes, but goes far beyond, those looking to profit on their licenses. So, when Congress, the FCC and the public ask where broadcasters stand, and how can we ensure success for the auction – both for participants and non-participants – they should look to NAB and APTS. These associations represent America’s television broadcasters – not just companies that happen to hold licenses – and are focused on both the short- and long-term success of the industry. 

     
  • Ann Marie Cumming 10:06 am on July 1, 2013 Permalink
    Tags: , , , , , Moore,   

    Local Broadcasters: A Lifeline for Residents of Moore, OK 

    NAB is proud to present the third installment in a powerful video series demonstrating the irreplaceable and indispensable role that local radio and television broadcasters play as “first informers” during times of emergency.  The first installment featured the tornadoes of Joplin, MO and Tuscaloosa, AL; the second featured broadcast station efforts from Washington, DC to New York in the coverage of Superstorm Sandy.

    This film focuses on Moore, OK, where in May deadly tornadoes stretching 17 miles long and measuring 1.3 miles wide ripped through the nation’s heartland, demolishing neighborhoods, businesses, a hospital and two elementary schools. Twenty-four people died, a toll that could have been far greater were it not for the efforts of local broadcasters.

    Oklahoma governor Mary Fallin thanked broadcasters in a post-storm press conference, saying, “The media has done a superb job over the last couple of days of keeping people informed about the current weather conditions, especially our weathermen and those that have been on the ground driving and calling and tracking the storm itself…I had many people come up and say, because of the media and their rapid response and reporting on the track of the storms, they were able to get to a storm shelter and be safe.”

    This 6-minute mini-documentary features never-before-seen footage of the devastation, along with testimonials from local broadcasters related to their preparation for the unprecedented weather emergency, their uninterrupted news coverage, their support for first responders and victims of the storm, and their assist in recovery efforts.  The film includes commentaries from broadcasters such as these:

    “It was no longer about having good television, and instead it was about providing life-saving information.”  Damon Lane, KOCO-TV Oklahoma City chief meteorologist

    “You have to be as descriptive as you can and paint the best picture of what the storm is doing and where the storm is.”  Jon Welsh, KFOR-TV,  Bob Moore Chopper 4 pilot/reporter

    “(Our station) was constantly getting needed, vital information…(Listeners) knowing that you’re connected like that means the world to them.” Janet, KJ103 (KJYO-FM), morning show host

    “When we really shine is when the storm has passed and the recovery efforts start.”  Brad Copeland, KATT-FM morning show host

    “Any little way that we can help make someone’s life a little easier during these tough times.  I think that’s what it’s all about.” Steve O’Brien, Magic 104.1 KMGL, program director/morning show host.

    “With the power of that storm and with the velocity that it had coming in to that Moore area; if (residents) hadn’t known, we could have lost hundreds (of lives), and we didn’t.” Linda Cavanaugh, KFOR-TV, anchor/reporter

    NAB salutes the heroic lifeline coverage of Oklahoma broadcasters. Many thanks once again to the film’s producer Media Arts Professor Scott Hodgson from the University of Oklahoma.  Working with the Broadcast Education Association, Scott and his students spent countless hours collecting footage and conducting interviews for this video account of broadcasters’ remarkable efforts in covering this horrific act of Mother Nature.

     
  • rickaplan 11:47 am on June 25, 2013 Permalink
    Tags: , Broadcast, , Genachowski, , Spectrum Act, Wireless   

    What Consensus Really Means and the Importance of Driving It 

    In December, the U.S. House Energy and Commerce Committee conducted an oversight hearing on the Federal Communication Commission’s (FCC) implementation of the Spectrum Act, and specifically the Commission’s work on the upcoming voluntary broadcast incentive auction. One of the most instructive moments of the hearing occurred during a series of questions posed to then-FCC Chairman Julius Genachowski by Rep. Ed Markey (MA-5). The congressman repeatedly asked Genachowski varying versions of the following questions:

    So again, do you have a process that’s totally fair to the broadcasters and to the wireless industry that’s in place? Have you had them in your office simultaneously with their engineers to talk about the issue so that you can hear and your experts can hear the differences which they have?

    . . . .

    Do you ever have a meeting yourself with the engineers in the room with the other, you know, from all industries you’re sitting there with you? Are engineers hearing the disagreements?

    The congressman was pushing the chairman to see if he and/or his staff were taking an active leadership role and directly engaging with industry to tackle this extremely complex proceeding. In effect, he was urging the FCC to drive consensus – to bring stakeholders together to see if there is a sweet spot where those most affected by the auction can find value and buy into the process. Thus, rather than passively perusing the filed comments in a back room and then eventually one day producing a final order seemingly out of thin air, he was suggesting that the FCC should be getting everyone in a room and driving towards a decision.

    Had that happened yet at that point? No.

    Has it happened in the more than six months since the Commission was urged to do so? No. (That is, unless we count a lone public workshop that was followed up in record time by a Public Notice unsurprisingly having little to do with what was actually achieved at the workshop).

    In the absence of a staff process designed to drive consensus through openness, transparency and engagement, however, diverse industries and public interest groups have assembled on our own to work through the various challenges presented by the auction and attendant broadcaster repacking. These conversations have led to a great deal of progress, and even consensus on some major issues.

    Have we found unanimity? Of course not. To be clear; reaching consensus is not the same thing as unanimity. Certainly everyone doesn’t have to agree for a general consensus to emerge. Our work has moved the ball far down the field on typically contentious issues. And we believe strongly that the Commission staff should have adopted, and should be adopting, a “get in the room together” approach so we can achieve an expeditious and successful conclusion to the pre-auction process.

    Industry and public interest progress is nowhere more apparent than the general consensus that emerged concerning the defining feature of the band plan offered in the original incentive auction Notice of Proposed Rulemaking, which widely separated the wireless uplinks and downlinks and placed in between them high-powered broadcast operations. By sitting down together – outside the traditional and somewhat opaque FCC comment process – every company and organization invested in the outcome of the auction (except literally one) agreed that the proposal was an engineering nonstarter. This conclusion was facilitated by broadcast, licensed wireless and unlicensed wireless engineers conferring, sharing information and working towards what would best serve the public interest.

    Last Friday, the FCC posted a blog entitled, “A Band Plan that Serves the Public Interest,” which along with some previous staff remarks, appears to imply in response to growing criticism over the staff’s proposed plans, that only the Commission, and not industry or the public interest community, has the public interest truly in mind. Nothing could be further from the truth, especially in this instance where what is at stake is delivering high quality broadcast and wireless signals to consumers. Indeed, a band plan in the public interest is most likely to result from a process that engages stakeholders in a meaningful fashion and thoroughly examines all of the thorny issues involved.

    We do not appear, however, to be headed in that direction. Most notably, in its unyielding quest and determination for reclaiming variable amounts of spectrum in different markets, the inherent interference consequences of a variable approach are simply being ignored. The staff steadfastly refuses to study the issue with any rigor, model it or even ask a single question about it.

    With respect to the challenges of variability, NAB has itself adopted a “getting everyone in the room” philosophy, even without the incentive auction staff leading the way. At stake is significant co- and adjacent channel interference that affects broadcast and wireless operations and arises under most variable band plans. The problem in the most basic terms is this: If Market A (e.g., New York) clears less spectrum than adjacent Market B (e.g., Philadelphia) and therefore Market A continues to have broadcast operations on channel X (e.g., channel 46) while Market B moves to wireless operations on that same channel, the wireless and broadcast operations on that shared channel will interfere with one another. There is no doubt this is a serious issue. And even though the Wireless Bureau dismissed the problem without any analysis (in a nonsensical footnote in its Public Notice), following the bureau’s Public Notice, AT&T, Verizon Wireless, Qualcomm, Ericsson and others have joined in to second the notion that further work on the subject is required.

    We understand why variability could be of great benefit to the Commission’s auction designers at Stanford, but its potential positives do not necessitate that we should turn a blind eye to inconvenient engineering realities. As we’ve learned from a number of interference missteps in the not-so-distant past, including the frustration on the part of the wireless industry with the interference between channel 51 and the 700 MHz A block, even if you look the other way and pretend there’s nothing to see, interference will come back to bite you where it counts one way or another.

    Even though we’ve identified a serious concern, we are not arguing that we are at the end of the variability road. We are merely stating that we’ve identified a potentially fundamental problem and, at the very least, this must be the beginning of the road. It’s not enough to say, as the blog post did, that “[b]y implementing a band plan that supports variation between markets, we would not be forced to limit the auction to the amount of spectrum available in the least cleared markets.” While true, that completely neglects the question precedent of whether, from an engineering perspective, variability is possible or even wise.

    Once again, rather than cross our fingers and simply hope that we don’t end up on the wrong end of an uninformed and therefore arbitrary decision, we’ve actively engaged with stakeholders across industries on the issue. We’ve laid out everything we know about co- and adjacent channel interference, not only in filings at the FCC, but in data we’ve openly shared throughout the commercial wireless and unlicensed industries.  We have one aim: to figure this issue out, one way or another, so that the Commission can truly have a successful and timely auction.

    We have also laid out an alternative plan should the interference inherent in variability not be worth its benefits. Our nationwide non-variable plan incorporates three relatively easy steps:

    • After setting a spectrum acquisition target (e.g., 84 MHz), lay out the various nationwide repacking scenarios to determine in what areas the Commission must have volunteers and how many it needs.
    • Determine how much revenue will likely be raised from a forward auction from the target amount of nationwide spectrum.
    • Use those anticipated (and soon to be realized) funds to pay broadcasters in areas where the spectrum is actually needed, and repack broadcasters to the nationwide spectrum target in markets where no volunteers are needed.

    This proposal helps the Commission maximize its use of the information it has up front – where it will, and will not, need participants under various scenarios – and then focus its financial incentive efforts on the areas where volunteers are truly needed. If this is done correctly, we believe the Commission can develop a great wireless band plan that clears the same robust amount in every market (international coordination notwithstanding), and leads to a harmonious balance between broadcasters and wireless operations in the new 600 MHz band. Furthermore, it eliminates the co- and adjacent channel interference threat that looms large under most variable scenarios.

    We remain committed to driving a process that is best for the public interest and thankfully the Acting Chair and Commissioners have each made clear that they recognize the need for engagement and balance among industries. By engaging with all stakeholders, we’ve been able to find large areas of general consensus on a number of issues, which should help the Commission move expeditiously in this process. We will continue this push, all with the aim of creating a band plan and auction that serves free, over-the-air broadcast viewers as well as licensed and unlicensed consumers, otherwise known as the public interest.

     
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