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CORRECTED-UPDATE 2-US may pay broadcasters for mobile spectrum

(Corrects paragraph 3 to show that portions of the National Broadband Plan will be released to the commissioners on March 16, and the full report will be released to Congress on March 17)

* FCC to seek 500 megahertz of spectrum for wireless cos

* FCC says TV airwaves not being used efficiently

* Broadcasters could get paid for giving up airwaves

(Adds details, background)

By John Poirier and Sinead Carew

WASHINGTON/NEW YORK, Feb 24 (Reuters) - The top U.S. communications regulator offered to pay television broadcasters to give up their rights to airwaves in a controversial bid to free up wireless spectrum for advanced mobile phone services.

But analysts say the plan could run into opposition from broadcasters reluctant to give up their airwaves unless they are offered a price that might be too expensive for the government to pay.

Federal Communications Commission Chairman Julius Genachowski said on Wednesday he wants to free up 500 megahertz of spectrum to wireless carriers over 10 years, as part of the National Broadband Plan. Parts of the plan will be released to the commissioners at an open meeting on March 16 and the full plan will be released to Congress on March 17.

He hopes some of the airwaves would come from broadcasters, which would get a portion of spectrum auction proceeds. He did not say how much the broadcasters would be paid to give up their licenses to use the airwaves.

Genachowski’s proposal is the latest chapter in the battle between broadcasters, unwilling to give up highly prized spectrum acquired from the digital television transition, and the wireless industry, which is concerned with a looming spectrum crisis as more people use wireless to surf the Web.

Broadcasters such as NBC, CBS, Fox and ABC, already grappling with advertising dollars moving to the Internet, would likely push for a high percentage of the auction proceeds, said Sanford Bernstein analyst Craig Moffett. But if Genachowski offers them too much money, public watchdogs would complain.

“He’s trying to strike a delicate balance where the proceeds are at least theoretically split between the Treasury and the broadcasters,” Moffett said. “No matter where you strike that balance, somebody is bound to object and is likely to sue.”

The 500 megahertz proposal is lower than the 800 megahertz the wireless industry said it would need in the next six years, but the move was still welcomed by the CTIA wireless industry trade group.

Genachowski proposed allowing spectrum sharing and other measures to ensure that wireless airwaves are used more efficiently going forward. He said broadcasters typically use just 36 megahertz of the 300 megahertz of spectrum they are allocated in small markets with less than 1 million people. In larger markets, they use only about 100 megahertz.

“The highly valuable spectrum currently allocated for broadcast television is not being used efficiently -- indeed, much is not being used at all,” Genachowski said at a broadband event hosted by the New America Foundation.

“Even in our very largest cities, at most only about 150 megahertz out of 300 megahertz are used.”

But the National Association of Broadcasters disagreed that they were using spectrum inefficiently.

“As a one-to-many transmission medium, broadcasters are ready to make the case that we are far and away the most efficient users of spectrum in today’s communications marketplace,” said Dennis Wharton, spokesman for the National Association of Broadcasters trade group.

“We look forward to working with policymakers to help expand the roll-out of broadband without threatening the future of free and local television, mindful of the fact that local TV stations just returned more than a quarter of our spectrum following our transition to digital.”

Steve Largent, president of the CTIA wireless industry trade group, said the FCC proposal was “a tremendous step” toward maintaining U.S. leadership in wireless.

CTIA represents Verizon Wireless, a venture of Verizon Communications Inc VZ.N and Vodafone Group Plc VOD.L; AT&T Inc T.N; Sprint Nextel Corp S.N; Deutsche Telekom AG's DTEGn.DE U.S. unit T-Mobile USA and Google Inc GOOG.O.

Experts appeared divided on whether Congress would need to approve the auction process since a third-party could stand to benefit from publicly-owned spectrum.

The amount of spectrum the FCC wants to free up is in line with the amount the Department of Commerce proposed in President Barack Obama’s 2011 budget proposal.

Genachowski also proposed setting up a mobile broadband fund that could help rural operators provide broadband in hard to reach areas. (Additional reporting by Yinka Adegoke in New York, editing by Tiffany Wu)

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