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Nuc
Senior Member
http://www.webcom.com/hrin/magazine/fcc.html
Briefing on the Sept. 11th Terrorst Attacks
While Nation Distracted by Sept. 11th, FCC Chairman Announces Corporate Giveaway of UHF Channel Revenues
By Norman Ornstein and Michael Calabrese , Washington Post
October 14, 2001
On Sept. 17, in the regulatory equivalent of the dead of night, the Federal Communications Commission (FCC) announced a change in policy that amounts to one of the most expensive and unjustifiable grants of corporate welfare in our nation's history. If it isn't reversed, it could set a precedent that will have a long-lasting and damaging effect on our pocketbooks and the U.S. economy.
The FCC's decision virtually unreported in the aftermath of the Sept. 11 terrorist attacks, except by the trade press gives 21 broadcast companies a green light to sell off a slice of the public airwaves and pocket billions of dollars that would otherwise go to the U.S. Treasury. The FCC wants these broadcasters who operate more than 130 TV stations on UHF channels 60 to 69 to clear the band for use by the booming wireless industry. To speed things along, the agency is allowing any broadcaster on the 60 to 69 spectrum to negotiate its own deal with a wireless company. It remains unclear how much of the revenue, if any, will be shared with the public.
The FCC has described this break from tradition as an incentive for the broadcasters to vacate the band more quickly; ransom might be a better term.
Broadcast companies were given these channels five years ago at no cost with the understanding that they would use them temporarily while converting from an analog signal to digital and high-definition television (HDTV).
Many of the broadcasters on the 60 to 69 band, calling themselves the Spectrum Clearing Alliance and led by Paxson Communications, have been lobbying the FCC to let them negotiate their own deals with wireless companies. In short, a portion of the most precious public asset of the information age the electromagnetic spectrum is the captive of licensees who want a payoff to set free something they got for nothing in the first place. And due to congressional inaction and the pressing need to find enough frequencies for the wireless industry, the FCC seems all too willing to oblige. At a time when the federal government is borrowing from the Social Security trust funds, it is a costly mistake for the government to share the billions of dollars in revenue that it usually receives from the public auction of such frequencies.
How did we arrive at this turn of events? Under the Telecommunications Act of 1996, every TV station in the nation received a temporary license for a second channel at no charge. (An auction would have added between $37 billion and $70 billion to the government's coffers, some experts have said and would bring in even more today.) Congress passed this provision because it wanted to expedite the transition from analog to digital and HDTV, which was said to be critical to U.S. economic competitiveness. Since broadcasters, unlike the phone companies, pay nothing to use the airwaves, the law required them to return the extra channel upon substantial completion of the conversion.
Congress instructed the FCC to auction the returned channels to the highest bidders.
This legislative approach was controversial at the time. Several leading conservatives including then-Senate Majority Leader Bob Dole and Sen. John McCain criticized the law as a violation of free market principles. Dole has continued to object to the law. We don't give away trees to newspaper publishers,' he wrote in 1997 after leaving the Senate. The airwaves are a natural resource. They do not belong to the broadcasters, phone companies or any other industry. They belong to the American people.'
The legislation's supporters insisted that the extra channels were no windfall, only a loan. By no later than 2006, they said, broadcasters would complete the conversion to digital and return the extra spectrum. The public would benefit by getting higher-quality TV signals and the revenues, once the returned spectrum was auctioned.
Now fast-forward five years. Digital broadcasting is moving at the pace of a glacier, partly because of technical challenges, partly because broadcasters found little economic benefit in converting quickly to digital. Crisper digital pictures do not boost the number of viewing households or ad dollars especially when 85 percent of homes already receive a clear signal via a paid cable or satellite subscription. Moreover, as cell phone usage exploded, the growing shortage of spectrum inflated its value; the longer broadcasters delayed, the more leverage they gained to demand a payback for returning the extra spectrum they hoarded.
The financial stakes are enormous. While FCC auctions since 1994 have attracted more than $36 billion in bids from wireless phone companies, broadcasters and other incumbent licensees continue to use the spectrum rent-free. This spring, with wireless phone companies eager to further develop mobile Internet and e-mail services, Wall Street analysts told the National Association of Broadcasters Futures Summit that the private market value of all commercial TV frequencies may be as high as $367 billion, based on recent auctions here and in Europe more than twice the stock market value of all local TV stations combined.
Two years ago, Congress directed the FCC to begin the exchange process by auctioning six channels in the 60 to 69 band. The broadcasters occupying 60 to 69 protested that they were unable to give up their space that quickly because so few households had purchased digital-capable television sets, which are quite expensive. Meanwhile, freeing up large swaths of scarce spectrum for wireless broadband services known as 3G (for Third Generation) suddenly became a high priority among government policymakers.
The wireless revolution was advancing rapidly in Europe and Japan, threatening U.S. dominance; pressure to get some spectrum out to the U.S. wireless industry rose rapidly.
Some broadcasters saw an opening. Lowell Paxson, chairman of Paxson Communications Corp., has been open about the Spectrum Clearing Alliance's intention. "We are not holding the spectrum as a hostage seeking ransom," he wrote in a letter to the editor of Barron's earlier this year. "We are entrepreneurs hoping to reward our shareholders who invested in our business of amassing spectrum." His "business of amassing spectrum" is about to pay off big time, thanks to the FCC. Paxson's company has 17 stations on the 60 to 69 band. In return for giving up space he received from the public for free, Paxson is likely to receive a check for $1 billion. After the FCC decision, he said, "The broadcasters are going to be in for a windfall."
FCC commissioners justify their decision by saying it gets spectrum faster into 3G hands and protects Americans who rely on free over-the-air TV from losing certain foreign-language and other niche channels. Privately, FCC officials say that Congress created this predicament when it allowed broadcasters to occupy both analog and digital channels until 85 percent of U.S. homes could receive a digital signal which could take a decade or more.
Free TV is unquestionably a public good, and Congress understandably did not want to force Americans without cable or satellite to pay extra for a digital converter just to keep a television signal. But there was an obvious alternative: The federal government could hold to its original timetable and buy every household in America a digital tuner (with mass production costs likely to be $100 or less) and still have tens of billions left over from auction proceeds. Sound crazy? John Ashcroft, another critic of the 1996 giveaway, suggested just such a plan when he was in the Senate.
To be sure, this FCC decision can be interpreted narrowly, since it directly affects only one slice of broadcast spectrum. But if you were a broadcaster somewhere else on the spectrum, and you saw Paxson and his colleagues rewarded for their delay, what would you do? Congress needs to act before the rest of the broadcast industry decides to make money through their "amassing" of spectrum. That may be a good business plan, but it's a sorry way to manage the public airwaves.
Norman Ornstein is a resident scholar at the American Enterprise Institute. Michael Calabrese directs the Public Assets Program at the New America Foundation.
© 2001 The Washington Post Company
Briefing on the Sept. 11th Terrorst Attacks
While Nation Distracted by Sept. 11th, FCC Chairman Announces Corporate Giveaway of UHF Channel Revenues
By Norman Ornstein and Michael Calabrese , Washington Post
October 14, 2001
On Sept. 17, in the regulatory equivalent of the dead of night, the Federal Communications Commission (FCC) announced a change in policy that amounts to one of the most expensive and unjustifiable grants of corporate welfare in our nation's history. If it isn't reversed, it could set a precedent that will have a long-lasting and damaging effect on our pocketbooks and the U.S. economy.
The FCC's decision virtually unreported in the aftermath of the Sept. 11 terrorist attacks, except by the trade press gives 21 broadcast companies a green light to sell off a slice of the public airwaves and pocket billions of dollars that would otherwise go to the U.S. Treasury. The FCC wants these broadcasters who operate more than 130 TV stations on UHF channels 60 to 69 to clear the band for use by the booming wireless industry. To speed things along, the agency is allowing any broadcaster on the 60 to 69 spectrum to negotiate its own deal with a wireless company. It remains unclear how much of the revenue, if any, will be shared with the public.
The FCC has described this break from tradition as an incentive for the broadcasters to vacate the band more quickly; ransom might be a better term.
Broadcast companies were given these channels five years ago at no cost with the understanding that they would use them temporarily while converting from an analog signal to digital and high-definition television (HDTV).
Many of the broadcasters on the 60 to 69 band, calling themselves the Spectrum Clearing Alliance and led by Paxson Communications, have been lobbying the FCC to let them negotiate their own deals with wireless companies. In short, a portion of the most precious public asset of the information age the electromagnetic spectrum is the captive of licensees who want a payoff to set free something they got for nothing in the first place. And due to congressional inaction and the pressing need to find enough frequencies for the wireless industry, the FCC seems all too willing to oblige. At a time when the federal government is borrowing from the Social Security trust funds, it is a costly mistake for the government to share the billions of dollars in revenue that it usually receives from the public auction of such frequencies.
How did we arrive at this turn of events? Under the Telecommunications Act of 1996, every TV station in the nation received a temporary license for a second channel at no charge. (An auction would have added between $37 billion and $70 billion to the government's coffers, some experts have said and would bring in even more today.) Congress passed this provision because it wanted to expedite the transition from analog to digital and HDTV, which was said to be critical to U.S. economic competitiveness. Since broadcasters, unlike the phone companies, pay nothing to use the airwaves, the law required them to return the extra channel upon substantial completion of the conversion.
Congress instructed the FCC to auction the returned channels to the highest bidders.
This legislative approach was controversial at the time. Several leading conservatives including then-Senate Majority Leader Bob Dole and Sen. John McCain criticized the law as a violation of free market principles. Dole has continued to object to the law. We don't give away trees to newspaper publishers,' he wrote in 1997 after leaving the Senate. The airwaves are a natural resource. They do not belong to the broadcasters, phone companies or any other industry. They belong to the American people.'
The legislation's supporters insisted that the extra channels were no windfall, only a loan. By no later than 2006, they said, broadcasters would complete the conversion to digital and return the extra spectrum. The public would benefit by getting higher-quality TV signals and the revenues, once the returned spectrum was auctioned.
Now fast-forward five years. Digital broadcasting is moving at the pace of a glacier, partly because of technical challenges, partly because broadcasters found little economic benefit in converting quickly to digital. Crisper digital pictures do not boost the number of viewing households or ad dollars especially when 85 percent of homes already receive a clear signal via a paid cable or satellite subscription. Moreover, as cell phone usage exploded, the growing shortage of spectrum inflated its value; the longer broadcasters delayed, the more leverage they gained to demand a payback for returning the extra spectrum they hoarded.
The financial stakes are enormous. While FCC auctions since 1994 have attracted more than $36 billion in bids from wireless phone companies, broadcasters and other incumbent licensees continue to use the spectrum rent-free. This spring, with wireless phone companies eager to further develop mobile Internet and e-mail services, Wall Street analysts told the National Association of Broadcasters Futures Summit that the private market value of all commercial TV frequencies may be as high as $367 billion, based on recent auctions here and in Europe more than twice the stock market value of all local TV stations combined.
Two years ago, Congress directed the FCC to begin the exchange process by auctioning six channels in the 60 to 69 band. The broadcasters occupying 60 to 69 protested that they were unable to give up their space that quickly because so few households had purchased digital-capable television sets, which are quite expensive. Meanwhile, freeing up large swaths of scarce spectrum for wireless broadband services known as 3G (for Third Generation) suddenly became a high priority among government policymakers.
The wireless revolution was advancing rapidly in Europe and Japan, threatening U.S. dominance; pressure to get some spectrum out to the U.S. wireless industry rose rapidly.
Some broadcasters saw an opening. Lowell Paxson, chairman of Paxson Communications Corp., has been open about the Spectrum Clearing Alliance's intention. "We are not holding the spectrum as a hostage seeking ransom," he wrote in a letter to the editor of Barron's earlier this year. "We are entrepreneurs hoping to reward our shareholders who invested in our business of amassing spectrum." His "business of amassing spectrum" is about to pay off big time, thanks to the FCC. Paxson's company has 17 stations on the 60 to 69 band. In return for giving up space he received from the public for free, Paxson is likely to receive a check for $1 billion. After the FCC decision, he said, "The broadcasters are going to be in for a windfall."
FCC commissioners justify their decision by saying it gets spectrum faster into 3G hands and protects Americans who rely on free over-the-air TV from losing certain foreign-language and other niche channels. Privately, FCC officials say that Congress created this predicament when it allowed broadcasters to occupy both analog and digital channels until 85 percent of U.S. homes could receive a digital signal which could take a decade or more.
Free TV is unquestionably a public good, and Congress understandably did not want to force Americans without cable or satellite to pay extra for a digital converter just to keep a television signal. But there was an obvious alternative: The federal government could hold to its original timetable and buy every household in America a digital tuner (with mass production costs likely to be $100 or less) and still have tens of billions left over from auction proceeds. Sound crazy? John Ashcroft, another critic of the 1996 giveaway, suggested just such a plan when he was in the Senate.
To be sure, this FCC decision can be interpreted narrowly, since it directly affects only one slice of broadcast spectrum. But if you were a broadcaster somewhere else on the spectrum, and you saw Paxson and his colleagues rewarded for their delay, what would you do? Congress needs to act before the rest of the broadcast industry decides to make money through their "amassing" of spectrum. That may be a good business plan, but it's a sorry way to manage the public airwaves.
Norman Ornstein is a resident scholar at the American Enterprise Institute. Michael Calabrese directs the Public Assets Program at the New America Foundation.
© 2001 The Washington Post Company
William Joyce
Chemotherapy for PC
I'm not convinced the FCC is the biggest threat to free expression, kherma. They mostly concern themselves with sexual stuff and naughty words, which is by wide swaths of our culture not OK for airway presence. Fine by me. I hardly think lack of sex talk on TV is a big knock to freedom. Seems we get plenty of it... TV is three times more explicit about all that today than a mere 10 years ago.
The bigger threat to free speech is the crackdown on politically incorrect speech, aka "hate speech." In Europe, you literally go to jail for it. In America, it mostly gets you fired from your job or just won't appear. Though it touches on important issues of race relations (or the lack thereof). Why don't we ever hear either CBS or NPR do an hour-long special on the Walt and Mearshimer report? Because Jews own and operate both outlets.
The bigger threat to free speech is the crackdown on politically incorrect speech, aka "hate speech." In Europe, you literally go to jail for it. In America, it mostly gets you fired from your job or just won't appear. Though it touches on important issues of race relations (or the lack thereof). Why don't we ever hear either CBS or NPR do an hour-long special on the Walt and Mearshimer report? Because Jews own and operate both outlets.
Nuc
Senior Member
Bonnie said:Im not quite following you on this? Are you saying that airspace in the U.S should be more like Radio Free Europe?
The airwaves are owned by the people of the United States. They should serve those people, not corporate interests. The programming we get with few exceptions is crap. Would you like to go into the Smithsonian to find that the entire museum has been taken over by big corporations? That the main exhibit is the history of Ronald MacDonald? Other major exhibits are a recreation of a Walmart? Instead of the Kitty Hawk a big Coke vending machine?
People tend to think the radio stations own the airwaves they broadcast on, wrong, we own them. I for one do not like what they are being used for.
Nuc said:The airwaves are owned by the people of the United States. They should serve those people, not corporate interests. The programming we get with few exceptions is crap. Would you like to go into the Smithsonian to find that the entire museum has been taken over by big corporations? That the main exhibit is the history of Ronald MacDonald? Other major exhibits are a recreation of a Walmart? Instead of the Kitty Hawk a big Coke vending machine?
People tend to think the radio stations own the airwaves they broadcast on, wrong, we own them. I for one do not like what they are being used for.
I get the jist of what you are saying, however our airwaves are not soley used and operated by corporations, they are also used by local colleges and public interest groups that share time with each other.
Nuc
Senior Member
Bonnie said:I get the jist of what you are saying, however our airwaves are not soley used and operated by corporations, they are also used by local colleges and public interest groups that share time with each other.
I mentioned that a few times. However the majority is cultural fast food and the educational channels don't have a lot of power most of the time. Not only is a lot of the programming not in the public interest, a lot of times it's against the public interest. An example would be cartoon shows which are basically advertisements for their own products. Or pushing sugary cereals on kids. I'm sure someone's thinking, "Well then don't let your kids watch it." But if it wasn't on in the first place I wouldn't have to do that.
Nuc said:I mentioned that a few times. However the majority is cultural fast food and the educational channels don't have a lot of power most of the time. Not only is a lot of the programming not in the public interest, a lot of times it's against the public interest. An example would be cartoon shows which are basically advertisements for their own products. Or pushing sugary cereals on kids. I'm sure someone's thinking, "Well then don't let your kids watch it." But if it wasn't on in the first place I wouldn't have to do that.
Careful Nuc, your entering dangerous territory here, singing our tune now??
If the public were to have complete control over the airwaves can you imagine what that would spawn? One could argue that some of the entertainment on PBS which I do watch can be very biased in it's content in fact, almost anti-American.
Nuc
Senior Member
Bonnie said:Careful Nuc, your entering dangerous territory here, singing our tune now??
It is a slippery slope when the government funds art. Still I think that since the public airwaves don't belong to the broadcasters and they don't compensate the public adequately for access, which nets them billions, there should be much broader public access to the airwaves. Although any government attempt to spead the wealth among various groups will be flawed it's still better than letting the likes of Clear Channel determine our programming.
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