TVNewsCheck, Jan 19 2010

Last October, FCC broadband czar Blair Levin set off alarm bells throughout the TV broadcasting industry by floating the idea of shifting some spectrum from broadcasting to providers of wireless broadband access. Although TV stations would be compensated for any spectrum they gave up under the Levin scheme, the industry quickly made it clear that it wasn’t interested.

Others, notably the Consumer Electronics Association and the CTIA (the wireless lobby), have endorsed reallocating broadcast spectrum, affirming the FCC’s assessment that the nation will soon run out of spectrum for wireless broadband and that the “inefficient” broadcast service was a good place to find more.

Just what the FCC has in mind will not be known until March when the agency releases the National Broadband Plan, the policy recommendations that Levin is preparing for Congress.

To deflect the spectrum grab, broadcasters have rallied around their two principal trade groups, the National Association of Broadcasters and the Association for Maximum Service Television.

Here, in a written responses to questions posed by TVNewsCheck, MSTV President David Donovan makes a point-by-point case for why broadcasters want — and deserve — to hang on the spectrum they have and why the FCC should look elsewhere for additional wireless broadband spectrum.

Why shouldn’t the FCC take back all or some of the broadcast spectrum? After all, 90% of viewers do not get their TV signals off the air, but from their local cable systems or satellite.

It is incorrect to assume that television broadcasting merely serves 10% of the audience. According to the GAO, 35% of all television households, including those subscribing to cable and satellite, have at least one TV set that relies on over-the-air reception. More than 34 million converter box coupons were redeemed.

As Consumers Union documented, and the FCC discovered during the transition, all viewers — including those subscribing to MVPDS — place a high value on over-the-air reception. Indeed, wireless reception of video content is the future.

Moreover, most MVPD subscribers rely on the actual broadcast signals to obtain service. Approximately 50% of all cable systems rely on broadcast signals received at their headends to provide service to all their subscribers. Most of the local collection facilities used by DirecTV and Dish Network use over-the-air TV signals to obtain local broadcast service.

Thus, placing local off-air TV in jeopardy, either SD or HDTV, will negatively affect most MVPD subscribers. The only alternative would be to connect headends and local collection facilities by fiber, which is cost prohibitive. This is especially true for small and more rural cable systems.

How do you respond to those who say broadcasting is simply an inefficient use of spectrum?

That assumption is based on an outdated snapshot taken in the waning days of analog television. It ignores the new digital reality. Consumers are responding to the more than 1,400 multicast channels being made available along with superior HDTV quality.

A recent study [Informa Telecom & Media, Global Digital Television 9th Edition, October 2009] found that over-the-air only homes in the U.S. will increase by 36% between now and 2014. By 2014, approximately 59% of all homes will have at least one TV set that relies on over-the-air signals.

Second, our use is not mutually exclusive with developing a robust wireless broadband system. Indeed, our system, which is a point-to-multipoint system, is the most efficient way to distribute high-quality video content in real time. When combined with DVR technology in receivers, it becomes an on-demand system. Add to this an early roll out of mobile video as anticipated by OMVC, and you have a very attractive component of an overall broadband ecosystem. The two systems are complementary.

Third, with the digital transition, the government already reclaimed more than 25% of the television band. In addition, the government also reclaimed 35 MHz of spectrum from the broadcast BAS band, which has remained mostly fallow and not used commercially by the mobile satellite industry. Broadcasters were able to make a full transition to digital, increased their capacity by a factor of four, and did this within the existing TV allocation.

Under Levin’s original cash-for-spectrum proposal, each station would retain enough spectrum to air a single SD channel so that no consumer would lose over-the-air service and stations would receive cash compensation for the spectrum they gave up. The government would also pay to hook up off-air viewers to cable or satellite. What’s so bad about that idea?

Consumers definitely lose under the plan. They will lose access to free over-the-air HDTV and new multiple free channels. Despite the government’s promise to the American public regarding the benefits of the DTV transition, additional programming services and HDTV will become the exclusive province of pay-based systems. Consumer costs will skyrocket, as they will be forced to pay monthly to receive these services.

With current budget constraints, it is unrealistic to expect the government will subsidize cable and satellite bills. The political problems in subsidizing some — but not all — subscribers are insurmountable. In addition, the costs are far greater than the proponents realize.

For example, most HDTV offerings by local broadcast stations are often carried on a separate, and more expensive, digital tier of service, not the basic “lifeline” service often cited by proponents. Thus, to make consumers whole, the annual cost to the government will be orders of magnitude higher than currently envisioned.

The plan also cripples our industry’s ability to compete in the new digital age. Television broadcasters would be limited to providing a single stream of video content in low resolution (SD) to fixed locations (home). That was the analog model, not the digital model.

To compete as a wireless video provider, local stations must have the ability to provide a mix of multiple channels, HDTV, data and mobile services. The mix will be determined by the demands of each local market.

From the broadcasters’ perspective, stations would be forced to either give up spectrum or be compelled to share facilities with other stations in the market. Such coercion is inconsistent with the task force’s mantra that they are looking for “voluntary” marketplace solutions.

The latest idea comes from CEA and the CTIA. They have proposed what they believe is a win-win. If broadcasters would use DTS technology and networks of low-power transmitters rather than a single, high-power transmitter in each market, they claim, the FCC could free up all kinds of spectrum and each TV station would continue to have a full 6 MHz channel just as it does today. Is it a win-win?

We are examining this proposal very closely. We are delighted that CTIA and CEA now support having every broadcaster retain its 6 MHz channel and 19.4 mbps bit stream. This is a major change in position.

At first blush, the proposal may not be the panacea envisioned by the proponents. It appears to be unrealistic economically. With the current 8-VSB system, a single frequency approach can be used to fill in gaps in a service area.

However, as the ATSC itself has noted when adopting the SFN standard for 8-VSB, there are interference issues. Each transmission site has to be perfectly synchronized to avoid interference. As a result, each tower will have to be connected by fiber, an incredibly expensive option.

CTIA and CEA also did not consider the day-to-day operating costs of providing fiber connections to every transmitter and small tower. You will need multiple transmitters at every location. If you have 26 stations in a market, you may need 26 small transmitters at every tower. CEA and CTIA assumed you only need one transmitter for each location, thereby grossly underestimating the costs of the proposal. The power levels contained in the proposal will require far more tower/transmitter sites, thereby increasing the costs by orders of magnitude.

Finally, this plan is unlikely to secure the amount of spectrum claimed in the proposal. This is especially true on the East Coast and other areas of the country where markets are close together. In these areas, stations would still have to protect channels of stations operating in nearby adjacent markets. In other words, the government may not be able to reclaim sufficient spectrum in large urban markets.

A big part of broadcasters’ keep-your-hands-off-our-spectrum argument is that TV stations provide unique public service that cable cannot replace. If local broadcast news went away tomorrow, isn’t it likely that local cable would step up their local news efforts to meet market demand? Many cable systems already provide local news in competition with broadcasters.

There is an assumption that the services provided by local TV stations, especially the provision of news, emergency information and public interest programs, will continue if spectrum were taken away from local television stations. This assumption is incorrect. The services provided by local television stations cannot be duplicated in an all-cable world.

First, most local cable news channels either are joint ventures or supported directly by local television stations. Many of these channels leverage the newsgathering assets of the local television stations. Absent support from existing local television stations, it is far from clear these services would continue in their current form.

Second, it is far from clear that the current system, which has multiple local broadcast news outlets, would be replicated in an all-cable world. With most markets have only one major cable provider, you could expect at best to have only one local cable news channel per market. Thus, the absolute number of news operations may decline.

Third, cable systems do not have universal reach. The negative impact will vary from market to market. In some local markets, nearly 25% of the homes rely exclusively on off-air TV. Viewers in these markets will be disenfranchised immediately. Purported plans to subsidize cable fees are completely unrealistic.  

Fourth, the provision of local news depends on the ability of the local station to reach 100% of a markets audience. From an economic standpoint, the unique universal reach of local stations accounts for higher advertising rates in terms of costs per thousand. The universal reach of local television stations is extremely important in attracting top-quality programming, which in turn provides the economic for local broadcast news operations.

It is not at all clear these local news operations could continue if stations became just another cable channel. Given the fragile state of journalism in the country today, it’s not clear we would want to pursue such a policy.

Finally, the concern should not be limited to news. Today, with multiple stations in each market, local television stations are the primary forum for local political debate. Local television stations account for up to 80% of  local political advertising revenues. Absent local television stations, local political debate we may be limited to only one source for local political expression — the local cable operator. Such a result conflicts with time honored communications policy.

FCC Chairman Julius Genachowski insists that there is a looming spectrum crisis that will handicap the U.S. in developing mobile broadband services. Broadcasters seem to dismiss this idea. Why?

We are not alone in this assessment. Other industries have questioned this “crisis” as well. Interestingly, none of the wireless carriers noted there was a spectrum crisis in their previous pleadings. It appears that the term “crisis” became part of the lexicon in August of last year.

Almost all of the estimates regarding spectrum demand stem from an International Telecommunications Union study from 2006. Developed in a forum whose job it was to promote wireless broadband worldwide, the study grossly exaggerates the amount of spectrum needed for broadband services. For example, the study’s analysis predicts there is a shortfall of spectrum today of several hundred megahertz. This is obviously not the case, and no wireless proponent argues this point. If the study can’t accurately predict spectrum needs in 2009-10, how can we rely on it to predict needs in 2015?

There is a long history in “spectrum grab” proceedings where proponents file numerous predictive studies to justify an increased need for additional spectrum. Such predictions often turn out to be incorrect and should never justify taking away spectrum from an existing service. So we are urging the task force to conduct a full spectrum inventory before moving forward with any recommendations to Congress.

This analysis should include an examination of whether existing spectrum allocated for wireless broadband purposes is being used efficiently. Our analysis demonstrates there are 749 MHz of spectrum already available for licensed mobile broadband between 225 MHz and 3.7 GHz (the so-called beachfront). In addition, there are hundreds of MHz available in the unlicensed bands and in frequencies above 3.7 GHz. To date, the Broadband Task Force has not examined whether existing broadband allocations are being used efficiently.

Where is the impetus for reallocation coming from? From the wireless industry? From within the FCC?

I assume the impetus is coming from both. Although it is interesting that the fervor in some segments of the wireless industry increased as the television industry moved forward with mobile video. If you look at the filings carefully, most of the anticipated spectrum demand is to meet the needs for mobile video.

The television industry is poised to start meeting the demand this year with an efficient point-to-multi-point service. By taking spectrum away from television stations, or at least creating some uncertainty about the availability of spectrum, some wireless providers can forestall competition. Unfortunately, American consumers lose in this process.

What are we likely to see in the FCC National Broadband Plan when it finally delivers it to Congress?

At this point, we simply do not know. As far as I can tell, the commissioners do not know. This has been somewhat frustrating. We have heard that the task force is looking for 100-150 MHz of spectrum. We see press statements that the FCC will allow stations to keep their full 6 Mhz channels and 19.4 Mbps. However, there is always a qualification. The plan will be voluntary — as least initially.

I am not sure why the task force did not put a specific plan out for public comment before making its recommendation to Congress. Issuing a specific plan would have allowed the affected industries to engage in a rational discussion. It would improve the product. It is difficult analyzing the impact of a specific policy when that proposal has not been put out for public assessment.

We are hopeful that the task force’s recommended plan will allow the television industry to fulfill its role as part of the broadband wireless ecosystem in this country.

I get the sense that the FCC reallocation push is losing a little steam right now. Do you?

That’s not entirely clear. Obviously, Sen. Rockefeller, Sen. Snowe, Rep. Boucher and Rep. Dingell have expressed concerns with any plan that impairs off-air television broadcasting. However, we really will not know what the task force is doing until the recommendations are published.

If broadcasters can’t make a go of mobile DTV or multicasting over the next year or two, do you think it will then be time for broadcasters to start thinking about giving up some spectrum?

Based on what we have seen so far, HDTV, multicasting and mobile video will be successful. It’s worth noting, however, that it takes time to build a business. Already there are 1,400 new multicast programming streams and the trend will continue. Approximately 70 stations in 28 markets covering 39% of the population have committed to mobile television. This is a tremendous start. Of course, new multicast programming channels must “find an audience.”

It will take some work to get mobile DTV on a variety of platforms, including wireless phones. While we have a great beginning, I am not sure you can put an artificial one-two year time limit. For example, it took several years for the cellular telephone industry to gain momentum in the marketplace.  

It is worth noting that the continued talk about taking away spectrum from the broadcast television industry does not help stimulate investment in new multicast programming services or mobile video. We do not want to create a self-fulfilling prophesy. We hope we can move past this issue and move forward with providing American consumers with the best local wireless video service in the world.