February 17, 2012 / 11:05 PM / 8 years ago

U.S. spectrum hopes hinge on wary broadcasters

WASHINGTON (Reuters) - Television broadcasters are reluctant to part with airwaves that regulators want to resell to bandwidth-hungry wireless companies, casting doubt on the $25 billion estimated to be raised through auctions approved by the U.S. Congress on Friday.

The wariness also may maintain the threat of a spectrum crunch that wireless companies have warned will result in dropped calls and slower connection speeds for their customers.

A provision tucked into a payroll tax compromise allows the Federal Communications Commission to auction off some television airwaves and compensate broadcasters from a portion of the proceeds.

About $15 billion of the auction money is marked to fund the year-long extension to payroll tax cuts, meaning that if broadcasters don’t give up the expected number of airwaves, the nation’s deficit figure could swell.

“That’s not to say that there won’t be some, but I would be shocked if there’s some kind of stampede of broadcasters lining up to turn in their TV licenses,” said Dennis Wharton, the National Association of Broadcasters’ executive vice president of communications.

While broadcasters do have the lure of $1.75 billion in potential auction proceeds, they are worried about the unintended consequences that parting with airwaves could have on future innovation, their TV signals and the 46 million viewers that still rely on over-the-air TV.

News Corp, Sinclair Broadcast Group Inc and LIN TV Corp are among the companies that could potentially give up spectrum.

Wharton said broadcasters are less desperate for cash because advertising dollars are starting to flow back into the industry.

Also, broadcasters see a hitch in the FCC’s plans to allow broadcasters to engage in spectrum sharing that would let them part with some airwaves but continue operations.

Wharton said such sharing agreements would limit a TV station’s ability to engage in mobile digital television, where live local broadcasts could be delivered to smartphones, laptops and other mobile devices.

“If stations chose to do that, they’re sort of abandoning what many think is the future of broadcasting, which is to have our programming on a lot of new mobile devices and new platforms,” Wharton said.


The FCC has called for repurposing 120 megahertz of TV airwaves for mobile broadband use since 2010, and is targeting channels 31 through 51.

Until now, the agency lacked the congressional authority to divert funds away from the Treasury to give broadcasters a financial incentive to return spectrum licenses.

Broadcasters are alloted six megahertz of spectrum for each channel, which means 20 channels would have to be given up to meet the FCC’s target, affecting some 672 stations nationally, the NAB said.

“I think that is an optimistic projection,” Wharton said.

Paul Gallant, an analyst at Guggenheim Securities, said in a research note late on Thursday that current discussions supported closer to 60 to 80 megahertz of spectrum being made available for auction from broadcasters.


Wireless carriers like AT&T Inc, Sprint Nextel Corp, Deutsche Telekom AG’s T-Mobile USA and Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc, have clamored for more airwaves to stave off a looming spectrum crunch.

The growing use of wireless devices like Apple Inc’s iPad tablet and Google Inc’s suite of Android-powered smartphones has added to the urgency to find more airwaves.

The FCC estimates mobile data demand to grow between 25 and 50 times current levels within five years.

The first auction of television spectrum is still likely years away, industry sources said. It will take time for the FCC to develop rules for the new auctions and to seek public comment, as well as for companies to raise capital for bidding.

“The challenges ahead in implementing the legislation and determining whether or not broadcasters will return some of their spectrum cannot be understated,” Medley Global Advisors analyst Jeffrey Silva said.

Reporting By Jasmin Melvin; Editing by Tim Dobbyn

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