The President Nominates Tom Wheeler to Chair the FCC - What Will It Mean for Broadcasters?

The President has nominated Thomas Wheeler as the next FCC Chairman, to become effective after confirmation by the US Senate. What does this mean for broadcasters? As we have said before, one never really knows what issues will drive a Chairman’s agenda. For this Chair, some issues are clear – like dealing with the incentive auction to reclaim some TV spectrum for wireless use, which is inevitably marching forward. Other issues are forced on the FCC – like dealing with the indecency issues still pending after Supreme Court remand, or the multiple ownership quadrennial review still pending at the Commission while waiting for the MMTC study on the effects of media cross ownership on the ability of minorities and other new entrants to get into broadcast ownership. And some are issues that for one reason or another capture the interest or attention or concern of the FCC Chair. Usually, these issues don’t become clear until after the Chairman assumes his position, but that has not stopped many in Washington from speculating what the new Chairman will do once he is confirmed.

Interestingly, the speculation ranges the gamut, from Free Press fearing that he will be too friendly to big business because of his past service as the head of two trade associations – NCTA (the cable television industry trade association) and CTIA (the wireless industry association), to the statement of Republican leaders of the House Energy and Commerce Committee, fearing that he will impose too many regulations on these same big business organizations. In short, the perspective on the nomination seems to be based, at least in part, on the initial perspective of those who muse about what it means.

Some have also looked to Mr. Wheeler’s Blog, Mobile Musings, where he has commented on issues of interest to the communications industry. Of course, we think that it is great that a blogger will assume the Chair of the FCC. But, as with this blog, any writings are just the musings of the writer at the time they are written – and sometimes don’t provide deep insight into the personal preferences of the writer. But Mr. Wheeler’s writings provide ammunition for speculation and deduction as to what the positions of the new Chair will be.

Some on the television side of the broadcast industry fear various comments about the incentive auction to reclaim portions of the television band for wireless uses. The comments suggest that broadcasters should not be fighting the move, but embracing it. They also suggest that the multicast digital television capability of over-the-air stations should provide capacity for those broadcasters who want to continue to serve their communities with an over-the-air signal to do so, while still allowing the reclamation of significant spectrum for wireless. There were a few suggestions that television owners themselves should be paying more attention to digital media – comments with which many broadcasters no doubt agree themselves.

Do these articles spell some anti-broadcast prejudice on the part of the new Chair? Who knows? Just as this blog represents the thoughts of the author only at the time it is written, so too do the posts of Mr. Wheeler. From experience, I know that some of the speculations and predictions that I made on this Blog years ago have been proven wrong, and positions on issues change over time. In assuming a new position like the Chair of the FCC, where he will have to weigh the comments, perspectives and concerns of different industries and different stakeholders, as well as having to get the vote of at least two other commissioners for any action that he may want to take, we would assume that Mr. Wheeler’s positions as Chairman won’t necessarily be the same as those that he offered when he was speaking for himself, musing on his blog about the state of the communications industry.

But, only time will tell. Of course, broadcasters on the radio side can’t even speculate on the impact of a Wheeler administration from the writings on his blog about the radio industry, as a search of the blog reveals few mentions of radio – and those that exist often seem to be in the phrase “television and radio,” and talk generally about how the new media is invading the turf of the old, and how the old media needs to adjust. Not exactly controversial positions – even for an FCC Chair.

So what does it mean for broadcasters? It means watching to see what develops over the next few years. No surprise there.

FCC Imposes Freeze on Television Station Technical Improvements - Preparing for Repacking the TV Spectrum to Allow for Spectrum Auctions

With broadcasters making their way to the NAB Convention in Las Vegas, the FCC on Friday provided one topic for conversation among TV broadcasters – issuing a Public Notice imposing a freeze – effective immediately – on the filing of any technical application by any licensee or permittee of a full power TV station or a Class A station if that application which would increase their protected service area. The freeze was imposed, in the words of the FCC, in order to “facilitate analysis of repacking methodologies and to assure that the objectives of the broadcast television incentive auction are not frustrated.”  In other words, the FCC wants a stable TV database from which it can begin the process of repacking TV stations into a smaller portion of the TV spectrum to facilitate the auction of parts of the TV spectrum recaptured after an incentive auction for wireless broadband purposes.

According to the notice, the Media Bureau will no longer accept the following types of applications:

·       Modification applications (and amendments to pending modification applications) by full power and Class A television broadcast licensees and permittees for changes to existing service areas that would increase a full power station's noise-limited contour, or a Class A station's protected contour, in one or more directions beyond the area resulting from the station's present parameters as represented in its authorizations (licenses and/or construction permits).

·       Class A displacement applications that would increase a station's protected contour.  (However, the Bureau will continue to accept Class A minor change applications to implement the digital transition (flash cut and digital companion channel) subject to current rule limitations.  

The Notice states that the Bureau will consider requests for waivers of the freeze, on a case-by-case basis “when a modification application is necessary or otherwise in the public interest for technical or other reasons to maintain quality service to the public, such as when zoning restrictions preclude tower construction at a particular site or when unforeseen events, such as extreme weather events or other extraordinary circumstances, require relocation to a new tower site.” So, if your tower collapses and you need to move to a different site, a waiver may be possible, but improvements for the sake of improving a station’s signal will most likely be prohibited by the freeze.

 With respect to already pending full power and Class A modification applications, the Bureau will process those that do not increase the full power station’s noise-limited contour or the Class A station’s protected contour.  For pending applications that do not comply with that limitation, applicants will have 60 days to amend those applications to comply with the limitation or request a waiver.  If an application is not amended, it will sit at the FCC and only be processed after the FCC adopts rules governing how the repacking and the incentive auction will proceed.

It is interesting that the FCC has already taken this action to freeze the television spectrum even though the decision in its proceeding to design the incentive auction is probably months away. Does this mean that the FCC is further along in its incentive auction planning than many had thought? Is there a plan in the works that has specifics for TV station repacking after the rules are adopted? When willThese and many other questions are sure to be pondered in the hallways, suites, bars and restaurants of Las Vegas this week. 

February Legal Deadlines for Broadcasters - Online Public File, Review of Incentive Auction Comments, Filing Deadline for FM Auction, and Lots of Renewals and EEO Public File Reports

February is almost upon us, and it brings a host of regulatory obligations for broadcasters – as well as the filing deadline for those interested in pursuing new FM channels in an upcoming auction, and a number of opportunities to comment on important FCC proceedings. The week before last, TV NewsCheck published our latest quarterly update on the regulatory issues facing television broadcasters – and these include several with February dates. Most importantly (at least in the short term), there is the obligation for television broadcasters to upload to their Online Public Inspection file all documents created before the August 2 effective date of the rules (but for documents relating to political broadcasting).   So documents that had been kept in paper – like Annual EEO Public Inspection File Reports and Quarterly Issues Programs Lists – need to be in the Online Public File by the beginning of the month. 

In the longer term, while not due in February, comments to be filed this Friday (January 25) on the television incentive auction process, will need to be analyzed in preparation for the Reply comments due on March 12 in this most important proceeding which may well define the composition of over-the-air television in the coming years. Comments on the FCC proceeding on expanding the information gathered in the Form 323 Biennial Ownership Reports are also due in February – just in time for Valentine's Day on the 14th

 

In addition to these deadlines, parties wishing to participate in the next auction for new FM channels (details available here) have until February 6 to file their initial applications for the 112 available channels.

 

On top of these dates, the license renewal cycle continues to march on. Our Regulatory Calendar for Broadcasters lists the many filing deadlines for February 1 and beyond. Radio stations in Oklahoma, Nebraska and Kansas, and TV stations in Arkansas, Mississippi and Louisiana, should be well on their way to completing their license renewal applications that are due to be filed with the FCC on February 1. Radio and TV stations in those states, as well as those in New Jersey and New York, also must complete their Annual EEO Public Inspection file reports. Noncommercial radio stations in Oklahoma, Nebraska and Kansas, and noncommercial television stations in Arkansas, Mississippi, Louisiana, New Jersey and New York, all have

Biennial Ownership Reports that must be filed with the FCC by the 1st.

 

Other stations have other deadlines so, as in any month, broadcasters should make sure that they are on top of their regulatory obligations. Stay on top of what you need to do to avoid the fines that can otherwise come your way.

Gazing Into the Crystal Ball - What Washington Has In Store For Broadcasters in 2013

Every year, about this time, I dust off the crystal ball to offer a look at the year ahead to see what Washington has in store for broadcasters. This year, like many in the recent past, Washington will consider important issues for both radio and TV, as well as issues affecting the growing on-line presence of broadcasters. The FCC, Congress, and other government agencies are never afraid to provide their views on what the industry should be doing but, unlike other members of the broadcasters' audience, they can force broadcasters to pay attention to their views by way of new laws and regulations. And there is never a shortage of ideas from Washington as to how broadcasters should act. Some of the issues discussed below are perennials, coming back over and over again on my yearly list (often without resolution), while others are unique to this coming year.

Last week, we published a calendar of regulatory deadlines for broadcasters.  This article looks ahead, providing a preview of what other changes might be coming for broadcasters this year – but these are delivered with no guarantees that the issues listed will in fact bubble up to the top of the FCC's long list of pending items, or that they will be resolved when we predict. But at least this gives you some warning of what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.

General Broadcast Issues

 

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

 

Multiple Ownership Rules Review: The FCC is very close to resolving its Quadrennial review of its multiple ownership proceeding, officially begun in 2011 with a Notice of Proposed Rulemaking. The rumors were that the FCC was ready to issue an order at the end of 2012 relaxing the rules against the cross-ownership of broadcast stations and newspapers, as well as the radio-television cross-interest prohibitions, while leaving most other rules in place. TV Joint Sales Agreements were also rumored to be part of the FCC's considerations – perhaps making some or all of these agreements attributable. But even these modest changes in the rules are now on hold, while parties submit comments on the impact of any relaxation of the ownership rules on minority ownership. Still, we would expect that some decision on changes to the ownership rules should be expected at some point this year – probably early in the year. 

Indecency: After the Supreme Court decision in June, upholding the FCC's right to regulate indecency but questioning the current procedure for doing so, the FCC's regulation of indecency is up in the air. Many license renewal applications for both radio and television stations are held up because of pending complaints, and many sales of stations happen only when the seller's agree to escrow funds to cover any indecency fine that may occur at some point in the future – when the Commission decides what standards to apply to the pending complaints. With so many applications held up, it would seem that the FCC should deal with this issue soon.

 

EEO Rules: There are fundamental issues about the FCC's EEO policies that have not been addressed in the 9 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today's reality - such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved.

 

Privacy Issues: As the digital operations of broadcasters become more and more important, they will face many of the same issues that trouble many of the pure digital media companies. Chief among these issues is that of privacy. Congress, the FTC and other government agencies all are looking at issues as to how to protect the privacy interests of individuals while still allowing digital media companies to use information that allow the functioning of the digital systems, including the placement of advertising targeted to particular individuals based on their interests, as shown through their online habits. The FTC recently issued a report looking to update its enforcement of the Children's Online Privacy Protection Act, and expect that this will be but one of many attempts to impose new regulation on online services in an effort to protect the privacy of individuals.

 

Political Rules: In the recent election, we saw the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don't expect action in that area this year. Instead, though, there may be some minor tweaking of the political broadcasting rules, as there are outstanding issues remaining before the FCC – including appeals of the decision of the FCC, issued just before the election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station's coverage area, and even when such candidates are "running" for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. In an "off-year", this might be the time to address some of these outstanding issues.

 

Public Interest Programming Reports: At the same time as it began its proceeding to adopt an Online Public File, the FCC began a proceeding to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 5 years ago for television but never implemented. The proposal released in 2011 was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. While we have not heard much about the status of this proposal lately, with some of the complaints about the usefulness of the Online Public File, this proceeding could bubble up at some point this year although, as no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don't expect a new form this year.

 

Television Issues

 

Spectrum issues have been the dominant TV concerns in past years, first with the digital transition, and more recently with the "white spaces" rulemaking and the proposals advanced as part of the FCC's Broadband Plan to reclaim part of the TV spectrum for wireless broadband uses. As in past years, these issues remain on the FCC's agenda, as do issues dealing with the carriage of television stations by cable and satellite television providers. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

 

Spectrum reclamation: The FCC has issued its Notice of Proposed Rulemaking, proposing methods to implement a "reverse auction," where certain TV stations would bid to be able to sell their spectrum to wireless companies and either go out of business or move to a VHF channel or share spectrum with another station. This proposal has been a high priority of the FCC, and FCC staffers have been spending significant time working to convince broadcasters that there are real opportunities for some broadcasters in this proposal. Much consideration will be given to this proposal this year, and there will be a push to move toward finalizing these rules, as the Commission would like to actually hold the auction in 2014. Part of this process will also involve the "re-packing" of the current TV band, by trying to squeeze the remaining TV stations into less of the TV band, in order to provide more contiguous spectrum to the wireless companies. Look for more details on those proposals as the year rolls on.

 

Retransmission Consent Reform: There has been much talk in Congress, and a proceeding initiated at the FCC, to determine if the rules governing the negotiation of retransmission consent agreements should be changed. Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process. MVPDs also object to TV stations operating through a JSA or Shared Services agreement negotiating jointly, while TV broadcasters see that as a way to equalize their bargaining position, especially for stations not affiliated with the Top 4 networks. Look for some movement in this very controversial proceeding later in the year.

 

Accessibility: Each year, accessibility issues play a more and more important role in video transmissions – with this year bringing further obligations for video providers to caption television programming that has been repurposed for the Internet, including mobile applications. We would also expect that the FCC will rule on many of the waiver requests that are on file from independent programmers who had received closed-captioning waivers that were revoked when the FCC decided that it had been using the wrong standard for such waivers. The Commission also has a proceeding in which comments have recently been filed that seeks to impose rules requiring that TV broadcasters provide a second audio channel to convey to the blind emergency information that is presented visually on-screen. This would be to aid the blind, in the same way that the current requirements for on-air video captioning is required to aid the hearing-impaired. Look for more action in this area later this year.

 

White Spaces: The FCC has authorized the operation of wireless devices in the television spectrum, and permitted these operations throughout portions of the east coast of the United States. Expect that the roll-out of authorizations for full-implementation of white spaces to continue this year.

 

LPTV/Class A TV: As these stations look toward a mandatory digital conversion in 2015, expect that there will be more examination of the qualifications of Class A TV stations to retain their protected status. As the FCC looks to the spectrum auctions, Class A TV stations may tie up spectrum that will otherwise be available for the repacking of the TV band or auction to wireless companies. Thus, expect the FCC's scrutiny of these stations to continue through 2013 – especially with the license renewals of many of these stations coming due.

 

Radio Issues

 

Radio has fewer unique issues on the front burner in Washington, but something always comes up. Here are some of the issues we see coming to the fore in 2013 for radio broadcasters:

 

Performance Royalty: Even though things were relatively quiet on the performance royalty in the last Congress, we would not be surprised to see the issue resurface in 2013. SoundExchange, for the first time in a long time, will not be directly fighting a royalty proceeding at the Copyright Royalty Board. As, as described below, the issue of the streaming royalty rates will likely be in front of Congress, giving more opportunities for this issue to be considered.

 

Streaming Royalties: In 2012, the Internet Radio Fairness Act  was introduced in Congress, looking to apply a single standard for deciding the royalties to be paid by all digital music services. With a new proceeding to determine Internet radio royalties to begin in 2014, we expect that this bill will be back on the table early in 2013, and there will be significant pushes to get it through Congress this year – and significant push-back from SoundExchange and the record labels.

 

SESAC Antitrust Action: Broadcasters affiliated with the Radio Music Licensing Committee has filed an antitrust lawsuit against SESAC, seeking to bring it under the same kind of consent decree as ASCAP and BMI so as to try to rein in the rates that SESAC is able to command. Expect lots of litigation on this case this year, but no resolution, as these cases are very long and complex.

 

LPFM/FM Translator Issues: At the end of 2012, the FCC issued its long-awaited order finally dealing with the processing of FM translators left over from the 2003 FM translator window, and setting up procedures for processing LPFM applications once the translators are dealt with. The FCC has already issued an order setting January deadlines for translator applicants to pick the translators that they will prosecute under the application processing limitations imposed in last month's order. Expect the FCC to push hard to deal with all 2003 translators this year, and to open an LPFM window at the end of the year (October being the projected time, but it could potentially slip to later in the year).

 

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. Each year, we make these predictions, and there are always numerous other issues arise that we did not anticipate. So watch the trade press and the pages of this blog to see what other challenges may be coming from Washington for broadcasters as this year progresses.

Congress Authorizes FCC Incentive Auctions to Clear Part of Broadcast TV Spectrum for Wireless Broadband Users - The Details of the Legislation

Congress finally has given to the FCC authority to conduct spectrum auctions to reclaim parts of the TV spectrum for wireless users, and most DC-based industry associations, including the NAB, have reacted favorably. For a process that was so controversial, this seems like a very favorable result. Television stations, in particular, will have much relief from concerns about the forced-reallocation of their operations to less favorable spectrum. While most trade press reports have reported on these statements and the very general outlines of the legislation, few have looked closely at the provisions that apply to the broadcaster auctions. Just what do they provide?

The auction provisions were adopted as part of the legislation that just extended the Social Security payroll tax deduction rollbacks, extended unemployment benefits, and fixed certain limitations that had arisen on Medicare reimbursements to doctors. All these benefits needed offsetting revenues to avoid unduly increasing the Federal deficit, and the one seemingly easy place to “find” money, was through spectrum auctions. So Congress ordered the President to identify certain Federal spectrum that could be made available for wireless users, and also authorized the FCC to conduct auctions of broadcast spectrum, but under the very specific guidelines set out below.

The auction rules set by Congress provide limits on how the FCC can conduct the auction, putting in place limits that protect television stations from being forced to change to an undesirable channel without their consent. And it talks a broad view of what a station can get compensation for in a “reverse auction” that establishes how much stations will take to clear spectrum for wireless broadband. The provisions include the following:

  • The FCC will need to conduct two sets of auctions – the reverse auction to determine how much a station will be willing to take to abandon spectrum that can be used for wireless, and a “forward auction” looking at how much the wireless carriers will pay for the spectrum
  • The reverse auction will only be held if there is more than one broadcaster in a particular area looking to give up spectrum – presumably to see who would be willing to give it up for the least amount of money
  • In the reverse auction, television broadcasters can get paid for any of the following:
    • Turning in their licenses
    • Turning in their channel to share spectrum with another station (e.g. to use part of their digital capacity). Where stations share a single channel in order to make another channel available for auction, both stations will retain their must-carry/retransmission consent rights
    • Abandoning a UHF channel to move to a VHF channel (less suitable for digital transmissions)
  • In any reverse auction, the FCC is to do its best to protect the identity of the participating station until a decision has been made to take their channel (presumably to not let competitors know that they are open to getting out of the TV business)
  • A fund of $1,750,000,000 will be established to pay the costs of broadcasters incurred in repacking the spectrum to make any abandoned spectrum more interesting to wireless bidders. Cable systems will also be eligible for payments to cover the costs of channel changes of television stations that they carry.
  • In lieu of cash payments, TV broadcasters can opt for relief from FCC regulations requiring that their channels be used for broadcast use, providing waivers for mixed use of the spectrum as long as at least one broadcast channel is retained.
  • The following limitations on spectrum repacking will limit what the FCC can do:
    • The FCC will “make all reasonable efforts” to preserve the coverage area and population served by each television station
    • No station will be forced to move from a UHF to a VHF channel, or from a high VHF channel to a low VHF channel (which are even worse for digital broadcasting – especially mobile digital transmissions)
  • Proceeds of the forward auction will be used for the following purposes:
    • To provide funds for the repacking
    • To provide funds for the payments required to pay the winners in the reverse auctions
    • To provide $2,000,000,000 to fund the build out of a public safety network on part of the television spectrum already reclaimed as part of the original digital transition
    • To provide $300,000,000 to move users of channel 37 (currently used for radio astronomy)
    • To fund all FCC administrative costs of the auctions
    • Finally, after all of these costs are funded, the remaining proceeds would go to general Treasury obligations to help balance the Federal budget
  • If there are insufficient funds raised from the forward auction to meet all the costs of the auction, there will be no reassignment of channels and repacking of the spectrum, and parties in the reverse auction will not give up their channels
  • The statute specifically says that there is no status change for LPTV stations – which would seem to mean that they remain secondary services
  • Nothing in the statute is to prevent the continued deployment of White Spaces devices (about which we last wrote here)
  • The FCC can only repack the TV spectrum once, and it can do only one reverse auction. All auctions must be done within 10 years

All in all, these restrictions seem to make television broadcasters secure from their fears that their spectrum would be pulled out from under them, or that their service areas would be undermined to force their participation in an auction. We will be interest to see how the FCC proceeds to implement this auction authority. Look for rulemaking proceeding to implement this legislation in the not too distant future. 

Reclaiming Over-the-Air TV Spectrum for Wireless Broadband Use - What Will the Budget Super Committee Decide?

The battle over the reclamation of television spectrum for wireless broadband rages on, and some in the television industry fear that the future of over-the-air television may be sacrificed to Congressional attempts to reduce the Federal deficit. The current Congressional “Super Committee” that is attempting to find billions of dollars in spending reductions to lower the Federal deficit is reportedly considering “finding” potentially 20 billion dollars or more from the proceeds of an auction of spectrum reclaimed from television broadcasters. Various Congressional proposals have been submitted for the committee’s consideration, essentially to authorize the FCC to conduct “incentive auctions” to reclaim some TV spectrum. But, the National Association of Broadcasters and others have claimed that broadcast television service to a number of markets, particularly those in areas near the Canadian border and in urban, densely populated northeast corridor between Boston and Washington, will be particularly hard hit – imperiling the continued existence of free over-the-air service to some markets, including Detroit. In other markets, broadcasters fear there will be a lessening of the protections from interference that stations currently enjoy, or a repacking of the spectrum that will put stations on new and potentially inferior channels, without reimbursement of the costs of relocation.

The proposal for the reclamation of television spectrum was first advanced in the Commission’s Broadband Report, where the FCC committee that drafted the report suggested that as much as 120 MHz of television spectrum  be reclaimed for use for wireless broadband – 20 television channels from 32 to 51 on the TV dial.  With tablets and smartphone usage growing quickly, and the ever-increasing demands for wireless spectrum to deliver video, audio and other rich internet content, the Commission fears a spectrum shortage – especially in certain urban markets. As over-the-air viewing rates have been falling over the last two decades as more people sign up with multichannel carriers, the Report suggested that the TV band could be shrunk, with some of the spectrum being redistributed to wireless. TV stations could be incentivized to surrender their spectrum for wireless use or to share channels, an option that the proponents of reclamation claim is very feasible, as digital technologies now allow one television channel to rebroadcast multiple streams of programming.

Television broadcasters have fought back, claiming that, while the digital transition does allow for more channels in the same spectrum, they are just now rolling out new uses of that spectrum – including new programming streams and, soon, mobile video targeted to smartphones and other digital devices. An article in one newspaper  last week reviews some of the new ways for over-the-air TV viewers to get access to additional video programming to augment over-the-air programs, allowing some consumers to “cut the cord” – eliminating their multichannel video subscriptions. Some studies have suggested that such cord-cutting opportunities, combined with the recent economic turmoil, has actually increased the amount of over-the-air television viewing in the last few years, reversing or slowing the trend of decreasing broadcast TV viewership.

The most fundamental issue for broadcasters is how deeply any channel cuts would go. NAB statements have indicated some flexibility in working with Congress and the FCC to allow for some spectrum reclamation – if it does not materially impair the current service provided by TV broadcasters. In a recent study highlighted in the Washington Times, and discussed with various groups in Washington and across the country, the NAB has looked at spectrum usage and what would happen to TV service if 20 television channels were reclaimed by the FCC, as suggested in the Broadband Report. By compacting existing stations into a smaller television band, and because of the limitations imposed by television uses in Canada (where the digital television transition is not yet complete), NAB claims that there simply would not be enough TV channels in some markets for all of the current broadcast television stations to continue to operate.  In Detroit, there would be room for none of the current stations, and in many areas near the Canadian border and in the Northeast, more than half of the television stations would disappear.  (See our prior article on this study, here).

The FCC has not responded officially to this study, nor has it released details of its plan for “repacking” TV stations into whatever spectrum is left after any spectrum reclamation that may occur (see NAB statement on the issue here). There have been many statements by FCC officials that such a plan cannot be developed until it is determined how many television stations will survive after “incentive” auctions are held. These auctions are planned to pay some stations to turn in their spectrum, or to enter into arrangements to share spectrum with other stations, freeing some channels for broadband use. Broadcasters, on the other hand, are concerned about how any such auction would really work. Questions include whether the auctions would truly be “voluntary” (as there have been recent reports that the Obama administration is favoring some sort of spectrum tax that would apply to broadcasters that don’t voluntarily turn in their channels) and whether there will be enough spectrum bidders, especially in rural areas, to compensate stations that may cease operations. Even in rural areas where the demand for wireless spectrum is far less than in urban centers, there are questions about whether stations will have to change channels, so the same spectrum will be available for wireless users across the country. The question of who would pay for channel relocation is also unanswered. As many smaller, rural stations are still struggling with the costs of their DTV transition in 2009, being forced to pay for further channel changes could be financially disasterous.

All these questions and more (see, e.g. our article on the question of whether VHF channels are still adequate for broadcast use – as those channels 2-12 would have to be used in some areas were the FCC to reclaim the portions of the current TV band in which the FCC has indicated interest) are currently being debated in the halls of Congress. Broadcasters have asked why the government should assist one industry (the wireless providers) take spectrum from another, especially as some TV operators have claimed the ability to provide some broadband service of their own (see our article here), and as the new services offered through wireless would require subscription payments, while TV is free to the user. Other studies have questioned the reality of the spectrum shortage. Wireless advocates, on the other hand, dispute those studies (with evidence of dropped calls and slow wireless service in certain urban areas as evidence of their need for more spectrum), and claim that TV broadcasting is an outdated technology that should move out of the way to allow wireless to become an engine of economic growth.

Thus far, Congress seems to be pursuing different paths on this issue, with the Senate draft bills providing the FCC maximum flexibility to craft incentive auctions, while the discussion in the House seems to be looking to provide broadcasters protections from significant new interference and ways to pay for any spectrum repacking. But suggestions from all sides have gone to the Super Committee for consideration, and that committee’s decision could preempt the actions that would normally be taken in the House and Senate committees. With the budget Super Committee supposed to deliver its report before Thanksgiving, and with Congress to vote on it before Christmas, the future of free TV may soon be decided. Stayed tuned for more developments. 

The Debate Continues Over Using TV Spectrum for Wireless Broadband - Incentive Auctions, International Considerations, Deficit Reduction, and Public Safety All Play a Role

The debate over repurposing some of the television spectrum for wireless broadband have been raging over the normally quiet Washington summer, as issues as diverse as the budget negotiations, the tenth anniversary of 9-11 and international treaties all play their part in the discussions.  Whatever changes are made could have a profound impact on TV broadcasters nationwide, not just those in the congested metropolitan markets where everyone acknowledges that any spectrum crunch that may exist would be most acute.  This week, Congressman John Dingell, long one of the most influential Congressmen on telecommunications issues, complained that the FCC was deliberately withholding details of its plans for spectrum allocation - plans that the National Association of Broadcasters have challenged as unworkable as they would doom over-the-air television in many markets, especially those near the Canadian border.  With all the issues swirling around the spectrum reallocation debate, the realistic timing of any reallocation of the spectrum and the real impact on the free over-the-air television broadcast industry are becoming major issues being considered in Washington.

The FCC has been pursuing the idea of repurposing some of the television spectrum for wireless broadband use since well before the Broadband Report was issued last year.  As we summarized in our review of the Broadband Report, the FCC suggested that as much as 120 MHz of television spectrum could be reallocated from TV to wireless broadband uses.  The FCC and the consumer electronics and wireless industries have contended that there is a looming spectrum crunch, particularly in major markets, as smart phones, tablets and other connected devices become a bigger part of the lives of many consumers in serving not only their entertainment needs, but also providing information and business services.  The FCC's Broadband Report thought that as much as 500 MHz of spectrum would eventually be needed, and that 120 MHz could come from the television spectrum, which proponents feel has been underutilized by broadcasters since the digital television transition in 2009.  Proponents of the reallocation contend most consumers get their TV service not over the air, but from cable or satellite providers, so the need for spectrum dedicated to broadcast television is far less than it was 70 years ago when the television service was first popularized.  Broadcasters, of course disagree with that assessment, contending that the digital transition is still very new, and that uses of the digital spectrum - including a mobile DTV service and multicast channels - are just developing.  Moreover, TV broadcasters have argued that their digital offerings, when combined with Internet service, are providing an option to many to "cut the cord" from pay TV options, leading to more over-the-air viewing.  In recent weeks, as detailed below, the National Association of Broadcasters has also been contending that the proposed reallocation would irreparably damage the over-the-air television industry, especially in markets in the Northeast and near the Canadian border where, in some markets, the reallocation would be impossible without ending most or all over-the-air television service.  The radically different pictures painted by the participants in this debate have led to some of the recent charges that the FCC is being less than forthcoming about the manner in which this transition would occur and the impact that it would have on broadcast TV. 

120 MHz is 20 television channels, and they are proposed to come from the UHF band, where most digital television stations now operate.  As part of the digital transition, the television band shrunk from Channel 2 through 69, to today's band which ends at Channel 51.  Most of the band formerly used for Channels 51 to 69 has already been auctioned off to wireless users - including a large swath that had been purchased by Qualcomm for its MediaFlo service that never took off and has already been abandoned, with the channels used by that service having been sold to AT&T, subject to FCC approval.  The FCC's current proposal, which was outlined in a Notice of Proposed Rulemaking (see our summary here) is to have "incentive auctions" to convince some television broadcasters to sell their channels to the FCC and cease broadcast operations, at which point the FCC would re-pack the television band into a much smaller part of the spectrum - theoretically reclaiming TV channels 32-51 for broadband use. These auctions cannot be held until the FCC is granted authority by Congress.  While several bills dealing with such authority have been introduced, none has yet made its way through either House of Congress.

The NAB has recently been reporting on a study it completed questioning whether a re-packing to Channels 2-31 is even possible.  The NAB study is said to demonstrate that, in many markets in the Northeast, and in markets near the Canadian border, sufficient channels in this range do not exist because of the protection needed to other broadcast and wireless users, and due to international treaty obligations (especially to Canada).  According to the NAB study, in Detroit, there would be no room on the spectrum for any of the existing television stations to continue their operations, and in markets like Seattle, Buffalo and Philadelphia, more than half the stations would have no place to go if this reclamation took place.  While the FCC and other repacking proponents have accused the NAB of engaging in scare tactics, they have not thus far specifically refuted the NAB's findings.  The failure to provide specific information about the mechanics of the repacking, after a request to do so, prompted Michigan Congressman John Dingell to write a stern letter to the FCC about their failure to respond to his requests for information (see this article in TV NewsCheck with links to the correspondence between Dingell and the FCC).

Beyond the possible impact in these specific markets identified by the NAB, why are broadcasters concerned?  There are a number of issues that they simply don't feel comfortable with under the various FCC proposals.  These include issues such as following:

  • How would incentive auctions work?  The auctions that are supposed to incentivize television stations to go out of business or to share frequencies with other broadcasters have not been detailed.  As the US treasury is looking to make money from the auctions to help reduce the Federal deficit, how much money will be left over to pay TV stations to give up their channels?
  • How will the repacking work?  Will stations be able to keep their current coverage area and interference protections?  Will they be forced to move to VHF channels, which so far have not been successfully used for digital operations (see our summary of the issues with DTV on VHF channels and a request in this week's FCC Public Notices of a station proposing to move from VHF to a UHF channel because of the difficulties of VHF reception, even after two power increases unsuccessfully attempted to improve that VHF signal).
  • If there is repacking into channels 2-31, who will pay the costs for TV stations that currently operate on channels 32-51 to move?  To make spectrum available nationwide to wireless carriers, the repacking will take place across the country, not just in the major metropolitan areas where the spectrum crunch is most acute.  Many stations, especially those in small markets, are still trying to recoup the substantial sums spent just two years ago to convert to digital, and needing to spend more to change channels could be a burden on many stations.  Will there be money to accommodate these costs from the proceeds of the incentive auctions?

Beyond the technical issues that are involved, other matters are driving the push for spectrum auctions. In the recent debt ceiling talks on Capitol Hill, one potential source of revenue to help reduce the budget deficit was spectrum auctions - presumably talking about the proceeds from the reclamation of parts of the television spectrum.  With the new Super Committee in Congress looking for all sorts of ways to reduce the deficit, one can expect that these auctions will be back on the table in the coming months.  The need for money for deficit reduction and the needs to reimburse broadcasters for their channels and for any government-mandated channel changes may clash in these upcoming talks.

With the impending 10th anniversary of the 9-11 attacks, there is also a press for better utilization of spectrum by first responders.  Some of the television spectrum that has already been reclaimed was to be used by public safety entities but, even though the spectrum has been available for years, it has not yet been deployed - at least partially because of funding issues.  Given the perceived value of the spectrum, and the lack of Federal money to pay for a spectrum buildout, auctions are also seen as a potential funding mechanism for public safety if these reserved channels are retained.  If so, that will put more pressure on the auction proceeds available to fund the buy-out of broadcasters.

Given all of these competing pressures, and broadcasters' practical concerns about their future, there is no telling when and if the repurposing of TV spectrum for broadband will take place.  The digital television transition itself took over 10 years, and in many ways, the issues here are more complex - fitting more stations into smaller spectrum, and figuring out how to compensate them for moving.  Watch for these issues to continue to be debated in the coming months, as the FCC continues its proceedings to design the incentive auctions and TV transition, and as Congress struggles with implementing legislation at the same time that it tries to reduce the Federal debt.  Look for a major struggle ahead. 

 

 

FCC Freezes Channel Changes By Digital TV Stations While Evaluating Reallocation of Television Spectrum for Broadband Use

In another example of how seriously the FCC is considering the reallocation of portions of the TV spectrum for wireless broadband use, the Commission today issued a Public Notice freezing any new petitions for changes in the channels of television stations.  Since the DTV transition, almost 100 stations have changed channels - mostly moving from VHF to UHF channels, as television operators have in determined that VHF channels are subject to more interference and viewer complaints about over-the-air reception.  Many predict that these problems with the remaining VHF stations will be worse when the new mobile DTV devices roll out later this year.  Yet, as the FCC is looking at implementing its plan to recapture portions of the television spectrum for use by wireless broadband, this freeze has now been adopted.  No new Petitions for channel changes will be accepted, though requests already on file will be processed.

The FCC itself has acknowledged the difficulties with the reception of digital DTV signals broadcast on VHF channels, and has asked for public comment on how these difficulties can be overcome, though many engineers seem to feel that, short of repealing the laws of physics, the quest may be an impossible one.  In that same proceeding, the FCC has asked about how it should repack the television spectrum, so that the Commission could provide a contiguous swath of spectrum for broadband users.  These actions are being taken by the FCC even though, so far, there is no legislation authorizing the incentive auctions that would be used to pay some broadcasters to abandon their spectrum.  Without such legislation, the FCC cannot move forward with its plans - thus this freeze may be in place for some time.

It is also interesting that this freeze is implemented across the country, not just in the major markets where the FCC has acknowledged that the principal spectrum crunch lies.   This implies that the spectrum block that the FCC seeks to recapture is a nationwide block, not one isolated to the large markets.  Thus, while small market TV stations may have thought that they did not need to worry about broadband reallocation issues, some stations in rural areas may well face the worst of all worlds - no mobile company may be willing to pay for their spectrum as there is plenty of empty spectrum in these rural areas, but these stations may nevertheless be forced to change channels to clear a nationwide swath of spectrum for broadband use.  Who will be paying for these channels changes?  That, so far, is unclear.

As if TV broadcasters need any convincing, this public notice demonstrates that the FCC is serious about the reallocation of TV spectrum for broadband uses, seemingly to the exclusion of various proposals advanced by TV broadcasters for allowing TV and LPTV stations to themselves provide broadband service.  Broadcasters need to carefully consider their next steps to preserve their spectrum in light of this FCC action.

The Future of the Broadcast Media - As the FCC Meeting Next Week Considers What to Do With the TV Spectrum

After Thanksgiving - everyone's thoughts turn to technology policy.  Well, maybe not everyone, but reading Thursday's New York Times, David Pogue wrote his column celebrating his 10th anniversary in the paper with observations about truths that he has discovered about the technology world.  Many of those same truths apply to broadcast policy, and are particularly relevant with a week coming up in which the FCC may take its first steps toward dramatically reshaping the media landscape as it considers the future of the television spectrum, and potentially repurposing some of that spectrum for wireless broadband.  Pogue's first observation was that new technology does not replace old technology - instead it merely provides more choice to the consumer.  He points out that TV did not replace radio, and that satellite radio didn't replace radio either.  Instead, these services became complements, perhaps eroding the audience of the established technology in some ways, and perhaps making the older technology redefine its mission, but the older technology survived, and remained relevant.  We've written similar observations about the future of radio - it's a technology that reaches masses with no incremental costs for adding new listeners - and is now and, for the foreseeable future will be, the most efficient way to reach large audiences with popular formats.

It is a similar story with other communications media.  And we sometimes over-react to short term trends believing that some audience erosion for a particular technology will result in its doom, when in fact it may just result in some form of re-invention.  In the last two years, we've seen print media go from being left for dead, to being part of one of the most talked about media deals of the last month - the merger between the Daily Beast and Newsweek to bring a print component to a new media darling.  Television, too, is not dead yet - it still the most watched source of video programming, whether distributed over the air or through some multichannel video transmission source, with over-the-air programming about to get a new take as mobile DTV begins its roll-out in the coming months. Recently, there has even been the occasional article about consumers "cutting the cord" - relying on over-the-air TV, supplemented by web video content, to drop their cable or satellite connection.  As Pogue suggests, all these media will continue to survive and offer choices to consumers.  But Pogue does not take into account the potential impact of a fundamental change in regulatory policy that intervenes to disrupt the natural progression of the marketplace.

At next Tuesday's FCC meeting, the Commission will begin its consideration of the future of over-the-air TV, as initially laid out in its Broadband Plan.  While we will see the specifics of the FCC action this coming week, they are rumored to include proposals to encourage the compression of the TV band - encouraging TV stations to move into the VHF band (apparently, despite laws imposed by physics, not by man, which have thus far dictated that these channels suffer from more interference and worse coverage than DTV stations that operate on UHF channels), to share channels (by multicasting programming now appearing on separate channels, perhaps in Standard Definition instead of true HD), and, in some cases, to surrender channels entirely in exchange for some share of auction proceeds from so-called "incentive auctions."   How these changes will be implemented will be seen after the meeting.  Assuming that the changes are voluntary options afforded to broadcasters and not mandates, the changes may assist in the natural evolution of television.  But, if mandated or otherwise forced (e.g. through spectrum taxes on some perceived value of the frequencies), then regulatory changes may artificially affect the natural progression of the media.

Pogue also notes his observation that people often have very personal reactions to technology, and those reactions can color their perceptions about whether change is good or bad - with two people looking at the same change but from different personal biases having completely different reactions to the same change.  We have noted that how a personal bias can affect the reaction to regulatory events, for instance in reaction to changes in rules regarding HD radio, with some detractors being the first to comment on any post we write about that technology, convinced that it will do nothing but degrade the FM band, while others see it as a way to bring new life to radio.  That same observation applies to the changes being considered for TV.  Some, apparently including many at the FCC, see broadband, and wireless broadband in particular, as the way in which people will receive entertainment and information in the future - essentially dooming TV as we have known it for the past 70 years.  Others see a renaissance of over-the-air television being upon us with the new potential of the Digital Television transition being recognized through new opportunities for programmers on multi-cast channels and, with mobile DTV just beginning to be rolled out, for new services that will reinvent the service for the future.  After all, it has been less than 18 months since the digital transition for over-the-air TV was completed.  Another truism we have heard about technology is that people tend to overreact to changes in the short-term, while underestimating those changes in the long term.  Of course, those long-term consequences are the most difficult to predict.  One hopes that the actions of the government in the upcoming week don't reflect the attitudes of a few who overestimate the impact of new technologies and artificially restrict the choices of consumers in selecting their own media future. 

Comments Regarding Transition of Low Power Television Stations to Digital due December 17th

The Commission's recent Notice of Proposed Rule Making proposing a framework and time line for the transition of Low Power Television stations to digital operations -- which we wrote about last month here -- was published in the Federal Register today setting December 17, 2010 as the deadline for Comments and January 18, 2011 as the deadline for Reply Comments.  Interested parties should start preparing their comments now.  One continuing issue commenters should be aware of is the possibility of a television spectrum incentive auction or some other reclamation of television spectrum.  In seeking comment on the timing of the transition of LPTV stations to digital, the Commission has asked whether it makes sense for LPTVs to transition sooner rather than later and possibly face the need to reshuffle if the spectrum is compressed or otherwise reconfigured in the future, or alternatively, if LPTVs wait until the spectrum is settled before a DTV transition is mandated.  Comments on that issue and any others responsive to the Commission's NPRM are welcomed from all interested parties.  Comments can be filed in paper with the Commission or electronically through the ECFS filing system.  The proceeding has been designated as MB Docket No. 03-185.

 
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