FCC authorized to auction off TV spectrum

Legislation enacted last week to authorize FCC auctions of TV spectrum contains some protections for pubcasters, but broadcasters will face technical challenges that will exceed the difficulties of their transition to DTV just four years ago.

The new law sketches out an extraordinarily complex process of auctioning off TV broadcast spectrum to mobile digital carriers and repacking reduced TV channels in the remaining spectrum, though many questions remain unanswered.

The law now assures broadcasters that any spectrum giveback will be voluntary, for noncommercial and commercial operators alike. The FCC will not force any relocations from UHF to VHF or from high to low VHF channels. It will hold just one round of auctions, mandated for completion within 10 years, and one repacking to arrange the spectrum more efficiently. The commission will “make all reasonable efforts” to preserve station coverage contours, the legislation states. Cable-carriage rights for pubTV stations are preserved.

“Overall, we’re feeling pretty good about how it came out,” said Lonna Thompson, c.o.o. of the Association of Public Television Stations. “We got nearly all of the precautions we wanted in the legislation to protect stations.” APTS had asked for $3 billion to reimburse stations for costs of repacking the spectrum. While the Senate version of the bill contained $1 billion, APTS and other organizations were able to expand that aid to $1.75 billion in the final bill.

But the bill does not indicate what broadcasters will be paid for spectrum that they give up, Thompson said. The auctions, authorized deep inside the Middle Class Tax Relief and Job Creation Act of 2010, will enable an estimated $22 billion to $25 billion for a payroll-tax break for taxpayers, extended unemployment benefits, funding of a public-safety network for emergency responders, and payments for costs of the spectrum repacking itself — which, according to estimates by the National Association of Broadcasters, could run as high as $2.5 billion nationwide.

The House-Senate conference report that settled on the legislation may be viewed online; the part about the spectrum auction begins on page 118.

From a technical standpoint, the repacking will be “very disruptive,” Thompson said. “With the digital transition [in June 2009], stations had at least two channels, analog and digital. They could get ready, and when the switch came, they just closed the analog channel.” This time around, stations will need to execute the difficult task of shutting down one channel, then moving to another.

System engineers have told APTS that “stations could be off the air for a significant period of time during the switch,” Thompson said. Developing rules and conducting the auctions will take at least two to three years, Thompson estimated, before repacking begins. Full-power stations on channels above 30 will be most affected. According to the NAB, about 106 PBS stations, roughly 36 percent, are in that category. Even stations that don’t give up spectrum may be affected as channels shift.

Multidimensional chessboard

Under the new law, one round of auctions will take place. In the first phase, a “reverse auction” in which many stations will compete to sell spectrum to the FCC, stations that want to turn over some or all of their spectrum can try for the price they want, but without guarantee of getting it.

A broadcaster may choose to:

• give up entirely its license to broadcast on a TV channel of 6 MHz bandwidth,
• keep only part of its 6-MHz channel and share the rest with another station, or
• swap its UHF channel (which wireless companies would want) for a VHF channel (less desirable for digital transmissions).

If two or more licensees in a market offer to sell spectrum, the FCC can choose the lowest price.

Then, in a regular “forward auction,” the FCC will resell the frequencies to wireless carriers bidding for airwaves.

Of the 294 MHz now allocated to TV broadcasters, the commission wants stations, including both commercial and noncomm, to voluntarily return 120 MHz, or the equivalent of 20 TV channels, between channels 31 and 51. Those channels will be repacked to a new “core” band of channels 7 to 30. Exactly how is not known yet.

“Right now, it’s like a chessboard with more than two dimensions,” said Dennis Haarsager, executive director of the Public Television Major Market Group. “I don’t think any of us know at this point how all this will work.”

Yet it is certain that this work will be far more complex than the DTV transition in 2009 and will free up even more spectrum for mobile devices. The government recovered 108 MHz for the DTV transition, compared with the 120 MHz it now wants. To harvest the excess spectrum made available by DTV, no stations had to go off the air; this time around, the NAB estimates, at least 210 stations in 86 markets will go dark for at least some time — “maybe hours, maybe days, maybe weeks,” NAB spokesperson Dennis Wharton told Current.

About 450 stations changed channels for the DTV switchover; for this repacking the NAB estimates 900 to 1,200 stations will have to do so.

Compared with the coming channel shuffle, Wharton said, the switch from analog to digital was “like a walk in the park.”

“Politicians must think it’s just like tuning a TV,” said Bruce Jacobs, chief technologist at Twin Cities Public Television. Hardly. A particular broadcast antenna can transmit on only a narrow range of frequencies, Jacobs said. A transmitter’s range is a little wider, but much associated transmitter equipment is channel-specific, such as mask filters, which tune out “garbage” signals. Even transmission lines may have to be replaced because certain lengths work only for certain channels. The NAB estimates that for a full-power TV station, typical channel-change costs could be:

• $750,000 for a new transmitter;
• $200,000 to $750,000, antenna and transmission line;
• $100,000 to $300,000, mask filter;
• $100,000 to $300,000, signal combiner;
• $200,000 to $1.8 million for a different tower, or reinforcement, to support a larger antenna.

In sum, a typical bill could run $1.3 million, or up to three times that.

Cash value vs. mission value

Some 20 percent of the TV spectrum is licensed to noncommercial broadcasters. While this legislation treats those frequencies the same as it does commercial frequencies, some pubcasters and other stakeholders put additional value on noncomm airwaves as serving the public interest. Should a struggling pubTV station hold onto its frequency even if selling its spectrum would help it serve viewers without cable subscriptions, improve its services or ensure its continued operation?

The issue is complicated for pubcasters, Haarsager says, “because there is mission value to spectrum.”

Ellen Goodman, a Rutgers law professor and pubmedia expert who served as an FCC visiting scholar, suggests that pubcast stations should keep their spectrum. Relinquishing airwaves is “probably a bad idea for stations, and bad for the public interest,” she said. “It’s sort of like how you don’t want to sell off public parklands for short-term gain.”

University licensees may be most at risk because their trustees have “more acute incentives” to abandon spectrum, such as using the proceeds to build a gymnasium or a dormitory. “That’s not serving the same public service,” she said.

“Stations will have tough decisions on this,” Thompson of APTS said. “Spectrum is very valuable. If a station decides to participate in the auction, that spectrum will be gone forever.” Public media has already lost spectrum when noncommercial licensees sold channels in Dallas and Waco, Texas, and elsewhere. Some stations may see the auctions as a way to sacrifice part of their spectrum to save themselves, Thompson said.

Independent Public Media, a consortium of five nonprofits headed by public media activist and John B. Schwartz, was formed last year to save pubcasting spectrum by purchasing at-risk stations (Current, Oct. 6, 2011). APTS is providing member stations with white papers and other research to inform their decisions, Thompson said.