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Gary Shapiro

Gary Shapiro

Posted: May 12, 2010 12:22 PM

Reallocating Spectrum for the Good of the Nation -- What America Must Do to Stay Innovative and Competitive

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The nation's television broadcasters are in a quandary. Their business model depends on the continued inefficient use of hundreds of billions of dollars worth of high-quality wireless spectrum that was loaned to them for free by the American people.

Unfortunately for the broadcasters, the market share of their business has dropped from 100 percent when the government first gave them that valuable property more than 75 years ago to less than 10 percent today. The question that leaves them flummoxed is: how they can possibly defend their continued entitlement to borrowed public property?

Their response: Hire a well-connected former politician as their spokesperson, jam every tried-and-true political hot button and pressure all their Beltway connections in a desperate attempt to preserve the status quo. As for talking points, they claim that if their entitlement is threatened, kids will be deluged with porn, national security will be imperiled and senior citizens will be abandoned.

I am not making any of this up...

Confronted with the inarguable fact that our nation is running out of wireless spectrum and that broadband is a bipartisan national priority, broadcasters are lashing out against proposals to reallocate the nation's spectrum more efficiently. They began by hiring Gordon Smith, a respected ex-Senator, to lead their principal trade association, the National Association of Broadcasters (NAB).

In his first major speech to NAB members, Smith declared war on the Internet. Responding to the spectrum proposals in the FCC's National Broadband Plan, Smith suggested that allocating more spectrum for wireless broadband services would merely enable children to access pornography. "If broadcasting loses spectrum and grandma's new HDTV is rendered useless, at least she will have the consolation of knowing her grandson can get lewd material instantaneously on his cell phone," said Smith. He also suggested that proponents of spectrum reallocation would facilitate successful terrorist attacks by limiting emergency communication. "This matter is one of homeland security," added Smith.

To top it off, he then likened the FCC Chairman, Julius Genachowski, to the "Godfather," saying that the FCC would force each broadcaster to sign up for the spectrum plan by either getting a "signature or his brains on the contract."

Hyperbolic speech is not unique to this issue and in the broadcasters' self-interested view... desperate times call for desperate measures. But when a declining industry monopolizes spectrum that belongs to the American people, and our future competitiveness expressly depends on access to this scarce resource, it is time to take action. Hiding behind sex and national security is simply an attempt to duck a real debate about spectrum and the national interest.

Let's look at the facts--wireless broadband networks are reaching a chokepoint. The FCC reports that we need at least 500 megahertz of spectrum just to keep up with demand for broadband service. The nation's broadcasters use only a portion of the hundreds of megahertz of high-quality spectrum that we let them use for free. Reallocating some of that spectrum for broadband services would allow over-the-air TV to continue while still solving our wireless crisis.

We are in deep trouble as a nation if we can't reallocate a public resource that leaders across the political spectrum agree we desperately need to keep us globally competitive. This is especially true when the business squatting on this spectrum borrowed it without paying taxpayers, and the terms of the loan indicate it is for a limited period of time and subject to the "public interest."

That's the case today with the huge amount of spectrum the television broadcasters hoard even though it is increasingly irrelevant to their business. Nine out of 10 television viewers receive their television through satellite, cable or the Internet. For those television viewers who cannot afford pay service, numerous studies have shown that subsidizing their connection to a "pay" service can be done for a tiny fraction of the money that the reclaimed spectrum would bring at auction. And for broadcasters facing declining market share (TV station revenue has dropped 26 percent since 2005, according to the FCC), the voluntary spectrum auctions proposed by the FCC would provide a revenue windfall - an appropriate market-based incentive to ensure efficient spectrum use.

The 1900s were the era of broadcasting, but this century is the Internet century. We cannot let an old business model hog government property any more than we would have granted horse and buggy makers exclusive use of the public roads after the invention of the car. Our nation needs broadband access for the thousands of new businesses and millions of jobs it will create. Broadcasting is an important part of our past and it has its niche, including new services like mobile TV being driven by innovative equipment manufacturers. But we need to focus on the future and not preserve legacy business models or government grants of monopoly.

We owe it to our children to disregard silly rhetoric about sex, security and seniors and do what is best for our nation. The spectrum proposals in the FCC's National Broadband Plan are a good and long-overdue start.

Gary Shapiro is president and CEO of the Consumer Electronics Association (CEA), the U.S. trade association representing some 2,000 consumer electronics companies.


 
 
 

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