Study refutes TV broadcasters got free spectrum

The argument that broadcast television stations received spectrum licences “for free” is grossly misleading, said a new study by Navigant Economics Managing Director and Principal Jeffrey Eisenach. The study found nearly all TV station owners paid market value for their spectrum licences through private transactions, and noted other spectrum holders including wireless carriers and satellite television providers DirecTV and DISH Network received spectrum licences without compensating the government.

The study found 92 per cent of all full-power television stations as of August 2013 have been bought and sold since receiving their initial licences from the Federal Communications Commission. The report estimated the cumulative value of transactions involving full-power stations to be over $50 billion, which includes the market value paid for the stations’ spectrum licences.

“Broadcasters can hardly be said to be receiving a ‘windfall’ from their spectrum licenses just because the checks they wrote to pay for those licences were made out to private companies, rather than to ‘Uncle Sam,’” said the study.

The study also refuted the notion that television broadcasters are unique in receiving spectrum licences without direct payment to the government. Other current licensees received spectrum rights from the government prior to the FCC’s first spectrum auction. In addition, these licensees are not under the same regulations and public service obligations governing broadcast TV stations such as children’s programming requirements, indecency standards and ownership restrictions.

“Initial cellular licences were issued in the 1980s, prior to the auction era, either through lotteries (to new entrants) or simply by designation (to incumbent wireline carriers),” said the study. “Yet no one suggests mobile wireless carriers’ rights to these licences are diluted or impaired because they ‘got them for free.’ Similarly, direct broadcast satellite licensees received initial licenses prior to the creation of the FCC’s auction authority and thus without making direct payments to the government.”

Evolution in spectrum policy has given rise to the recognition by policymakers that spectrum licensees have de facto property or property-like rights over their spectrum interests, according to the study. Continuing to recognise television broadcasters have these same property rights will promote efficient spectrum usage, a robust private market-based system to reallocate spectrum, and technological innovation, the report concluded.

Posted by on Jan 22 2014. Filed under Articles, Broadcast, Markets, Research, Standards.

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