The Carrot or The Stick: Wresting Control of the Broadcast Airwaves

An article in the 2010 Streaming Media Industry Sourcebook spent a good deal of time talking about the about the impending battle lines being drawn between traditional over-the-air (OTA) broadcasters and the wireless service providers.

The article mentioned the flanking maneuver that the wireless providers were attempting, arguing that OTA broadcasters had an inordinate amount of unused frequency spectrum at their disposal.

This was due, in part, to the OTA approach to broadcasting several standard-definition (SD) signals in place on one high-definition (HD) signal, with the unused frequency being earmarked for multicasting of OTA channels to mobile handsets.

The potential multicast of traditional broadcast channels in specific geographic markets had the potential to undermine the wireless industry's revenue models for media delivery, as well as render their argument for additional bandwidth somewhat moot if broadcasters bore the brunt of the media delivery load.

Over the course of 2010, the early skirmishes turned in to full-blown battles that raged in Washington, not only at the Federal Communications Commission (FCC) hearings, but also at legislative meetings hosted by Rick Boucher (D-VA) who, up until last week, was Chair of the House Subcommittee on Communications, Technology, and the Internet.

In late December, we reported on the FCC's Technical Study denoting the lack of broadband for the majority of American consumers, which itself was a follow-on to an August technical paper denoting the major disconnect between advertised and actual data speeds that U.S. consumers received in their homes and on mobile devices.

It was only a matter of time before the December FCC study was turned into a weapon on a new battleground, which happened this past weekend at the Consumer Electronics Show in Las Vegas, driven primarily by the speech that FCC Chair Julius Genachowski gave there on the FCC's goals for the 112th U.S. Congress, which convened last Wednesday.

"More spectrum is one of the very top priorities for the FCC in 2011," Genachowski said, adding that his perception was that wireless broadband growth ran the risk of stagnating without the availability of additional spectrum.

In a potential signal that Internet taxes may be coming, which have-to this point-been avoided as data services are not a regulated industry, Genachowski noted that the Universal Service Fund taxes charged to consumers for phone service may need to shift over to be used for broadband growth.

"We had the best phone service in the world and it fueled the economy of the 20th Century," he said. "USF has created a set of dependencies that's holding us back, though, and it now needs to focus on broadband."  

""The future success of this wide-ranging industry [wireless broadband] and others depends on whether our government acts quickly to unleash more spectrum," he said, "which is the oxygen that sustains our mobile devices. If we do this, we can drive billions of dollars in new private investment, fueling world-leading innovations."

The chairman also discussed "voluntary incentive auctions" that would be a carrot for OTA broadcasters to make a decision about giving up their unused spectrum.

Rick Boucher was also on hand at another session. After having been defeated in a wave of anti-incumbent sentiment, Boucher is no longer in office, but has a wide perspective on the issues at hand. He read a prepared statement advocating for the use of the same voluntary incentive auctions.

The National Association of Broadcasters (NAB) which holds its conference in the same Las Vegas Convention Center each April, is opposed to the auctions, arguing its members were equally as innovative as wireless service providers.

Senior Vice President of Science and Technology for the NAB used a barnyard analogy to explain the association's position.

"There are three moving parts [to this debate], said Lynn Claudy, who is NAB's senior vice president of science and technology. "Think of it in terms of owning a farm: incentive auctions, where you sell off part of your cattle, are the most extreme. Two other approaches are channel sharing, which is like "piggybacking" content on top of one another, or "repacking" where content is packaged more tightly together."

The NAB advocates one of the latter two, with innovations allowing both OTA and wireless broadband to co-exist with one another.

The question remains, however, as to the FCC's intent-given Chairman Genachowski's sense of urgency-if OTA broadcasters choose not to give up a portion of their spectrum voluntarily in the coming months.

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