Jessell at large

Seaside Or Spectrum: It's Still Extortion

The FCC wants broadcasting spectrum for what it believes is the more important purpose of broadband wireless and it is doing all it can to convince broadcasters to give it up. That's why it cooked up the incentive auction. And if the incentive of sharing in the auction proceeds isn't enough to entice TV station owners, there are now plans to smack broadcasters that choose not to give up spectrum with "spectrum license fees." Come on, a tax on those who don't volunteer? What's voluntary about that?
TVNewsCheck,

For purposes of today's column, we are going to imagine a small town along the seashore. Let's call it Fairview Cove.

It's a happy and prosperous place. Each summer, thousands from the nearby cities swell the population by taking up residence in second homes or rentals.

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The long boardwalk is lined with shops selling more or less the same stuff: T-shirts, suntan lotion, hermit crabs, boogie boards, pizza slices and seashells. At one end is a small amusement park, with rides mild enough for toddlers. The mini-golf has a windmill hazard on the 13th hole.

As I say, it's a happy and prosperous place.

But the Fairview Cove Council, which happens to be unelected, thinks it could be better. Developers have convinced them that what the city folk really want is a luxury conference center with golf and tennis and a high-rise hotel in which every unit has a private balcony facing the ocean.

The only problem is much of the boardwalk will have to go. Of course, the developers are willing to buy out all the current shopkeepers. And it's enticing. The margin on hermit crabs is not what it used to be.

But most of the shop owners have no interest. They like the way things are and they are think that a lot of locals and summer visitors do too. No thank you, they say.

The council knows better. They think that in the long run the planned hotel and conference center will benefit all. The locals will get better jobs, schools and municipal services will improve from the larger tax base and the whole region will become economically stronger once the businessmen and women have a nice place for their corporate retreats.

So, the council hatches a plan. To get people to move, they will impose stiff new property taxes on the boardwalk owners. Then, the shopkeepers will understand the real value of their property and, with their profits clipped because of the new taxes, they will be far more willing to sell.

The town is no longer happy.

Gee, that's a long story to make a point, but I kind of like it.

What we are talking about here, of course, is not sun and sand, but electromagnetic spectrum.

The FCC, now with the backing of the White House and key lawmakers, wants broadcasting spectrum for what it believes is the more important purpose of broadband wireless and it is doing all it can to convince broadcasters to give it up.

That's why it cooked up the incentive auction. Broadcasters that relinquish all or some of their spectrum will enjoy a percentage of the proceeds when it is finally auctioned off to the wireless broadband players.

As NAB President Gordon Smith said in a letter to the White House economist Larry Summers this week, I have no quarrel with that.

What disturbs me and ought to disturb you is the proposal empowering the FCC to smack broadcasters with "spectrum license fees."

The proposal, first floated in the FCC's National Broadband Plan, reemerged in the legislation that Senators John Kerry (D-Mass.) and Olympia Snowe (R-Maine) introduced this week.

Here's the actual language of the bill: "The commission shall have the authority to assess and collect from each licensee an annual fee ... that is based on the fair market commercial value of that spectrum and the public interest of the service the spectrum is being used for, using a methodology adopted by the commission, after providing notice and opportunity for public comment."

At this point, there is really no telling exactly what the authors of this provision have in mind other than that they want to give the FCC a club to make recalcitrant broadcasters pay up.

Is the "fair market commercial value" based on what the spectrum is worth as broadcasting spectrum or what the FCC economists believe it will be worth as wireless broadband spectrum?

How exactly does one calculate the value of "the public interest" that spectrum is currently being used for?

Is the public interest evaluation based in the performance of individual stations? Or of broadcasting as a whole?

TV stations providing good public interest programming are generally more valuable than those that don't. So, do stations providing such programming have to pay higher fees? Or, lower fees?

Whatever the answer to these questions, it's clear that with the ability to impose fees, the FCC can make it tougher for stations who say no to incentive auctions. If I were more of a cynic, I might put it in harsher terms: the FCC can punish those who say no.

At least the bill requires the FCC to notify broadcasters and give them a chance to comment before sticking it to them.

From the start, the policymakers coveting broadcast spectrum have been maintaining that its plan for recapturing it is voluntary.

Continued on page 2…
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Comments (19) -

Snap Nickname posted a year ago
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There are a lot of patrons of the boardwalk who would love to see the empty spots in the boardwalk filled up with more shops. Our vote is for no sell out period. Of course we may just get thrown under the broadband bus.
James Whedbee posted a year ago
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If you ever needed proof that spectrum auctions and spectrum fees were a bad idea, look at what the auctioning of political power has gotten us with all these campaign 'contributions.' The whole of the government is up for sale to the highest bidder...let's not kid ourselves.
hogrod Nickname posted a year ago
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What the govenment is not saying is they will take the free over the air TV and sell it to companies that will then charge consumers for services including things like Flo TV. The companies make more money, the government makes money from the auction and the consumer winds up paying again.
TVGuy Nickname posted a year ago
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I agree 100%. In effect, it's another way the government will be TAXING consumers. Despicable.
Kevin Mirek posted a year ago
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TV stations live and operate "at the pleasure of the F.C.C." so to speak. It is not a real estate deal at the beach, it's a Federal contract between the TV station and the F.C.C. (who represents the people and the public air) to "serve the community." We have to ask ourselves, "How well does the extra spectrum serve the community under the present status? How well will the extra spectrum serve the community if reapplied?" We do not know the alternatives, although I feel that, left to the TV guys, we will get another channel of crap. I know I'd like more broadband and public access. It would be good if Harry gave us some indication of exactly what to expect in either case.
D BP Nickname posted a year ago
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Oh, so you can watch online streams of "Keeping Up with the Kardashians" or "Jon & Kate Plus 8" or any of the other crappy "reality" shows cable serves up but you won't find on broadcast TV?
Oded Bendov Nickname posted a year ago
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No different than recent state and local government application of "eminent domain." The Fed essentially declared free OTA DTV "blight real estate" to earn a new and undeclared tax while enriching favored companies
moonlight Nickname posted a year ago
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With the cash for spectrum bill passing through and out of committee today and moving to the floor, the Jeannie is out of the bootle. Extortion is always painful and thats why people pay it. Get ready to lose either way. The country loses, the industry loses and viewers lose. Chicago politics rides again. All I can say is DON'T SEL!!!!!!!!!!!!!!
James Whedbee posted a year ago
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I'm just curious, moonlight, if Chairman Genachowski, Senator Kerry, or Senator Snowe have asked the banks and insurance companies who lend money to broadcasters what they think about this issue? I'm sure it'll please them no end to learn that if Congress and FCC get their way, several billion dollars' worth of their 'loan products' will be worthless! Again, these folks must hate their jobs so bad that they want to become 'unelected,' or in Julius' case(s), just flat out unemployed. Again, I've given ample reasons elsewhere in this thread for feeling like this is bad politics as well as bad spectrum policy.
Curious Nickname posted a year ago
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I'm afraid that Harry left one thing out of the seaside equation. For all those years the little shop owners paid for inventory and paid for expenses and they paid to build the little stands or shops. However, they did not buy the land they are on nor do they pay rent on the land (spectrum). Now, the owners of that land (the public, embodied by our democratically elected representatives) may decide that they either want some of the land back for another use, one that will generate income for the owners, or the shop owners may have to pay some rent. Sixty years of free rent seems like it was a pretty good deal, while it lasted. A lot of people made some pretty good money with that land. Now they may have to add a little bit to the cost of their operation. But if their product is good enough, there are still ways to get it to the people who want it.
PSIPthing Nickname posted a year ago
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unfortunately, your attempted extension falls through, since spectrum usage fees ("rent") have been changed and paid for decades. And, it's not an insignificant amount.
Curious Nickname posted a year ago
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Can you provide me with a link that details those spectrum usage fees?
D BP Nickname posted a year ago
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Great analogy, Mr. Jessell. There is no reason why the FCC cannot turn over the SHF band (3-30 GHz) to wireless broadband. As it is, wireless broadband is already allocated on 900 MHz, 2.4 GHz, 3.65 GHz, 5.8 GHz, and 75-91 GHz. The telcos don't need broadcaster's UHF spectrum. This entire reallocation proposal, including the carrot and stick component, fails to pass the smell test. It reminds me of the time when GM bought Los Angeles' famous Red Car public transportation system and dismantled it so that more Southern Californians would be forced to buy cars. Giving 120 MHz of UHF spectrum to broadband providers will do nothing but eliminate free over the air TV while sticking consumers, including those on a low or fixed income, with unnecessary monthly fees.
James Whedbee posted a year ago
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You know why broadbanders have 900 MHz, 2.4 GHz, 3.65 GHz, 5.8 GHz, and 75-91GHz? Look at historic band allocations. Bands at 900 MHz, 2.4GHz, are both old ISM and Amateur allocations; 3.65 GHz is adjacent to an amateur allocation, as is 5.8 GHz, and 75-91 GHz straddles one. These broadband types DO NOT WANT TO INVEST THEIR OWN research and development capital into the SHF spectrum. We just got done ramping up the infrastructure for digital TV. Now that we've developed a digital TV infrastructure capable of competing with them, they want the spectrum-it's as simple as that. Now, they will suggest (and they have in the proceedings for NBP) that SHF is unsuitable. That's a lie simply because they enjoy all the benefits of their 75-91 GHz band without complaint, even though the oxygen-attenuation for this band is nearly off the chart. SHF attenuations are nothing like this EHF band, and the antenna gains are huge when using comparable dimensions to the UHF bands (those gains would easily overcome any losses otherwise associated with the environment). For each of these reasons, it is crystal clear that the telcos simply wait until somebody develops an infrastructure suitable to their use and then they lobby Congress and the FCC to take the spectrum-which being gullible politicians rather than technical analysts or engineers, they buy it hook line and sinker. Some of these economists working for President Obama (I'm referring to you, Dr. Summers, are also a part of the problem. You see, the broadcast numbers came out yesterday and assuming the numbers are correct, you are asking the FCC to stamp its approval to a mass layoff of broadcast employees. In spite of that, you think (or have been told by these same 'trustworthy' telcos) these telcos are going to hire more people to develop the infrastructure we're being Shanghaied out of...wrong! They've got plenty of people already and are perfectly content to 'increase productivity' instead of hire people. You'll be responsible for adding between 0.2 and 0.5% to the unemployment rate (Republicans feel free to quote me on this if you wish, or do your own math and prove me right, either way, the statistics are the same). Now, to really put the nail in the coffin of these people's political futures. While all these former broadcasters are looking for work, when you squeeze the rest of us into a smaller and smaller segment of the UHF TV band, we're forced to change emission paradigms. You'll also be forced to amend Part 2 of the FCC's rules to make TV sets that work with these new paradigms. So, politicians, you're going to be telling several tens of millions of registered voters to get new TV sets just after they paid $600-$14,000 for these current HDTVs-great move for political suiciders! In an economic recession, you'll ask cash-strapped working and middle class Americans to shell out even more of their hard earned dollars...way to go! (I think I just heard some political futures die.) To my friends in TV broadcasting: we still own these airwaves and, whether FCC wants to face fact or not, given this is an election year, we may need to take some dramatic measures to drive home our points. Some have suggested (lest I be accused of stealing another's ideas) that we take an hour of primetime in the fall...yes, during the election cycle (so make sure this goes in your public file under political discourse)...and just simultaneously go dark. Prior to and just after this one hour of 'going dark,' put on an explanatory PSA to our audience explaining, among other things, how this really could end up being what they get to watch if the National Broadband Plan-in its current format-is approved. We can give politicians' phone numbers out at the FCC and Congress, and basically jam every circuit in D.C. for days...then, I believe the politicians who want to keep their jobs this fall will get the picture (pun intended). Best wishes, James Edwin Whedbee, M.Ed. KZJW-LD
ChamadaFinal Nickname posted a year ago
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Great column, Harry. The story that begins the column wouldn't have been credible if the Supreme Court ruling in Kelo v. City of New London, 545 U.S. 469 (2005) went the other way. Your point is the same one Kelo made and lost.
PSIPthing Nickname posted a year ago
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but, a better point to pull from the Kelo case is that Mrs. Kelo lost her house, but Pfizer dropped out of the plans to build the underlying development. So, no "public benefit" and Mrs. Kelo lost her house. The same could happen here; lose tv and only speculative plans to use the spectrum.
James Whedbee posted a year ago
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Mr. Jessell, you are spot-on correct: extortion, plain and simple-not to mention it is patently unconstitutional for infringing on the 1st and 5th Amendments. 1-TV Broadcast spectrum is designated as such by ITU allocation; the Senate ratified the treaty/allocations. The Senators in opposition to this proposal have a point of order against its passage. The FCC can't just reallocate broadcast spectrum designated by ITU as such on a whim. 2-TV Broadcast stations were promised that if they returned their 6 MHz analog channel, they'd get to - and I quote - "keep" their 6 MHz digital channel. An exchange of things of value, competent parties to the transaction, lawful subject matter: law-school 101 - it's a contract! Now the federal government wants to reneg on that contract? 3-Spectrum auctions...yeah, like the D Block spectrum where the FCC didn't get a single bid over the minimum! Please, Mr. Genachowski, you are counting chickens before they hatch if you believe the telcos promises of great amounts of money...suckers are born every minute. The telcos aren't in business to lose money (by auction or otherwise); they're going to pay very little. Even if that promise to share with broadcasters is true, the amounts 'won' at auction will be a trifle compared to leaving things alone. 4-Spectrum fee...wouldn't that be code word for taxing free speech? I think we settled this in the Revolutionary War, Boston Tea Party, etc. It's exactly what the Founding Fathers had in mind when they wrote the First Amendment; again, it's patently unconstitutional for its chilling effect on free speech, its deliberate interference with the free press. Any Senator, Member of Congress, or other elected officeholder, as well as any Judge/Justice agreeing that such spectrum fees are legitimate is in violation of their Oath of Office and should not only be impeached but indicted, tried, and sentenced for conspiracy to violate broadcasters' civil rights under 18 USC Section 242. Ahh...skip impeachment,,,just lock 'em up. Now, for those politicians who have been sitting by and watching this debate: it's an election year. We have not only a constitutional right to be left alone, but, if you concur with my arguments above at least an implied contract to be left alone. I can't imagine the litigation which will follow any spectrum grab involving 470-698 MHz, but I would imagine it'll be costly to the U.S. Treasury, and the government will most likely lose as it has been doing in so many other cases involving the FCC lately (not exactly the Courts' favorite federal agency right now...food for thought...). The auctions are NOT going to come close to getting what everybody's been saying lately. The telcos asking for the spectrum don't really need it (I've offered Google 50 MHz of my broadband spectrum...still no response yet...not exactly chomping at the bit for that spectrum...). Broadcasters can ALREADY GIVE YOU your National Broadband Plan under 47 CFR 73.624 and 74.790, PLUS we have to PAY THE F.C.C. a cut of our revenue when we do so...that's the win-win-win solution everybody's ignoring! Best wishes, James Edwin Whedbee, M.Ed. KZJW-LD
HowardMBurgers Nickname posted a year ago
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James is spot on. To take it one step further, I've maintained for years that once the federal government starts auctioning off natural resources such as electromagnetic spectrum, then anyone including broadcasters should be able to bid on and then OWN that channel or spectrum. In reality, the government is looking not to increase rural broadband access, but to create an income stream. If WXYZ wants to bid on their own channel, then they should be allowed to or the government risks another session being shot down in front of the US Supreme Court.
James Whedbee posted a year ago
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Howard, I was serious: I offered Google Inc., through its legal counsel in Washington, D.C., and directly to its management a FREE use of my license, WQJI780. I have registered a base station (which I own) on broadband frequencies here in the Kansas City, MO area (DMA #31 market) which I tested successfully. That base station has #1 priority over all other users in this area. Google hasn't said a word. When I was growing up, it was said, "Actions speak louder than words." There's no pent-up demand for wireless broadband-if there was, the broadband industry has SEVERAL other ways of addressing that demand and they have not done so. The IRS seizes properties and auctions those all the time for unpaid federal income taxes. If the federal government does not get its minimum bid, they sit on the inventory. The FCC will be no different. The D Block auction was a fiasco: not 1 minimum bid from the telcos or anyone else! Do you think the FCC gave anybody a license? So, broadcasters, if you give 'em your spectrum and don't make the minimum bid, you've just screwed yourself...not to mention since we're an 'interested party,' I don't even know if we're allowed to bid! Finally, and here's my 'stick' to go with the win-win-win carrot I posed above. It is a felony offense in the United States of America to violate somebody's civil rights and conspire with others to do the same. Senators Kerry, Snowe, and others need to watch their step. I don't care how high they feel their hands reach: they can still be indicted, tried, and sentenced under 18 USC 242 if a Court agrees that this violates broadcasters' constitutional rights. They might suggest that the U.S. Attorney wouldn't take up a case against them, but there's always a Writ of Mandamus to compel the U.S. Attorney to impanel a Grand Jury, and once you've been indicted, that Senate seat isn't worth much then...just look at a certain former Senior Senator from the State of Alaska for proof of that!

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