Fixing Broadcaster-FCC Spectrum Goodwill ‘Ebb’ May Get Help from Legislation

For success in the broadcast incentive auction the Congressional Budget Office estimated (http://xrl.us/bmwptj) could raise a gross $24.5 billion, there must be more goodwill, current and ex-commission officials and broadcast executives and lawyers told us. They said relations haven’t always been shown to be the best by the regulator and industry since FCC Chairman Julius Genachowski set out in 2009 to reallot TV spectrum. For the relationship to work, broadcasters will have to be forthcoming with engineering help to the commission, which in turn must provide industry with spectrum models and help on other technical issues, executives said.

That Genachowski and Blair Levin, who wrote the FCC National Broadband Plan to reallocate 120 MHz of TV spectrum, didn’t get more input early on from broadcasters and in a more cooperative way may make collaboration harder now, commission and industry officials said. For Levin, “there have been broadcasters that have said mean things about me, but I'm not there” at the FCC, and spectrum reallocation and repacking post-legislation are technical and not political because engineering questions now must be addressed, he said. Because the law says stations can keep their service areas, there will be some “who think they are entitled to something” beyond current contours, and “that brings in the lawyers, that threatens litigation,” Levin said. “Repacking is really technical -- you can’t solve it with sound bites,” and he predicts “a spirit of cooperation” on industry’s part as the regulator tackles repacking, “and then we'll see how people react to” the final plan. “There are no hard feelings at the FCC that I know of about anything the broadcasters did during the congressional legislation” process, Levin said.

Many broadcasters happy with the outcome of the auction law because it sets aside $1.75 billion for repacking may find it makes more business sense to stay on-air with at least some current spectrum, an FCC official said. “Our plan was the first broadband plan to treat wireless broadband as extensively as wired broadband,” and “many people wondered why we placed so much emphasis on mobile broadband,” Genachowski told the GSMA Mobile World conference (CD Feb 28 p1) in Barcelona last Monday (http://xrl.us/bmwp8v). “Nobody’s wondering now.” Incentive auctions “use market forces” to “reallocate spectrum to its highest and best use,” and bring “market forces to bear on spectrum licensees ... shielded from competitive dynamics for years,” he said.

To increase chances of success, executives and ex-commission officials said, the sides must work more closely. That comes after Genachowski got some but not all the leeway he sought so the FCC can hold a voluntary incentive auction with few legislative restrictions, and broadcasters were largely successful in being guaranteed to be made whole for costs to move channels. Because the agency can hold only one incentive auction and do one repacking under the legislation, it has incentive to get the most broadcaster participation in the auction and work cooperatively with industry on channel changes, executives and ex-commission officials said. Desiring to keep service coverage contours little changed so all viewers can keep seeing their signals after a repacking, broadcasters meanwhile are incentivized to cooperate, the officials and executives said.

Because of the legislation, “there’s a degree of certainty that I think makes everybody a bit more comfortable,” said Meredith Local Media Group President Paul Karpowicz, chairman of the NAB joint board. “Now that we have clearcut legislation about the parameters of how the auction should be structured, I think broadcasters are more comfortable today than how we were previously” and are “happy to work with the commission in whatever way they think would be helpful,” he said. “We were not trying to be contentious or difficult, but there was just so much uncertainty it made people nervous.”

NAB CEO Gordon Smith says the existence of “creative tension between an industry and its regulator” is “always” there for any industry. “The process isn’t personal, it’s professional,” he said of relationship between broadcasters and the FCC. Those who have worked under Genachowski said the same. The NAB will “engage in a professional way with the FCC, to ensure that the will of Congress is carried out” after Capitol Hill “made clear they don’t want the future of broadcast television to be compromised,” Smith said. As a two-term Republican senator from Oregon on the Commerce Committee until 2008, his perception “was the NAB had become “the house of no,” and one of my objectives in taking this job was to change that,” Smith said. “We have engaged on the Hill, we'll engage at the FCC, and we'll do it constructively and optimistically.”

“There is an ebb” of goodwill, said General Counsel Craig Parshall of the National Religious Broadcasters. “What we need is an honest dialogue” among associations like the NAB and NRB and FCC and members of Congress to “start plotting out a long-term strategy,” he said. “That dialogue and those discussions need to be taking place right now -- I don’t see that as happening.” The FCC declined to comment for this story.

Ex-FCC Chairman Reed Hundt sees broadcasters as having been reluctant to give up analog channels to go all-digital, which happened in 2009, years later than the FCC had wanted, and hopes the repacking and spectrum auction won’t see similar industry delay. “History will tell you that they'd still try to delay, but maybe they can drop that history,” said Hundt, a Democratic FCC chairman 1993-1997. Genachowski was his chief counsel. Hundt’s advice to broadcasters: “Get ahead of the game, at least ride the wave, don’t let it ride over you. Get a good engineering model, get a sensible auction theorist, see if you can expedite the rulemakings, not slow them down.” Hundt predicted six to 10 major spectrum proceedings stemming from the legislation, which he called “a very poor piece of legislation overall, but it is honestly much less daunting than implementing the 1996 Telecom Act, which was more than four-dozen processes and statutorily mandated time periods.”

The DTV transition shows government-industry collaboration is readily possible when there’s a “mutuality of interests,” said Michael Copps, who stepped down Dec. 31 as an FCC member. “If this is going to work to serve the intended purposes, to free up spectrum for wireless and not going to do damage to broadcasting -- commercial and public both -- that is going to demand some cooperation, some dialogue, considerable outreach to all kinds of stakeholders” as happened when he was interim chairman during 2009’s full-power broadcast analog switchoff, he said. “It’s going to demand some leadership from a lot of parties, including the FCC, to make sure we understand the implications as we go about writing rules for participation” in the auction, Copps said. “Most people have come around that this isn’t going to happen in the next three months or the next six months.” But within a 12 to 18 months, Genachowski can have “all the major decisions” made on spectrum, Hundt said.

A broadcaster predicted unanticipated technical issues will arise before an incentive auction, such as logistics of stations switching sites for antennas when changing channels. The auction is “a good idea, and the broadcasters came around,” said Koplin of Venture Technologies, with full-power stations not affiliated with major networks in Los Angeles, Seattle and elsewhere. Media Bureau Chief Bill Lake and Rebecca Hanson, special counsel on spectrum, were “extremely transparent” in holding private webinars in early 2011 with state broadcaster associations and otherwise speaking before legislation passed, Koplin said. “If they keep up that transparency in the NPRM process, it gives them time to do it right,” he said of coming rulemakings. “The process does need to be transparent and does need to take it’s time because frankly, with only getting one shot at this, you don’t want to screw it up.”

Spectrum’s a top priority for broadcasters regardless of goodwill, so “if you think the FCC is trying to take away your spectrum, there is a limit” to willingness to compromise, said Steve Waldman, who left the FCC late last year after writing a report on media’s future for Genachowski. “When you have a lack of trust, it can affect these kinds of things,” but frequencies are a “core interest” and that “and not the relationships they have inside the Beltway” dictate broadcaster decisions, he said. When Waldman began working on the report a few years ago, there was some wariness from the industry because of the “backdrop” of the spectrum issue, “and was kind of affecting the general broadcaster attitude toward the FCC,” Waldman said: “On the other hand, I didn’t find it that hard to get past that, if you get to the specifics of what it is that you're talking about” on non-spectrum issues.