The Public Be Damned/ How Spectrum Sales Turn Sour

 ** U S A [and non]. HOW SPECTRUM SALES TURNED SOUR WIRED March 5, 2002 by Joanna Glasner


Even in an era of rampant privatization of public assets, it's not easy to grasp the concept that rights to cross sections of air are routinely sold off to the highest bidder.


Certainly airwaves -- or the ability to use them -- aren't the sort of tangible goods, such as old equipment, confiscated property or even rights to mine on state land, that the government has traditionally sold at auction.


But when it comes to raising money for the U. S. Treasury, the numbers speak for themselves. Since 1994, spectrum auctions

-- in particular, auctions of airwaves for wireless telecommunications

-- have constituted the most profitable asset sale ever conducted by the U. S. government.


In the last eight years, the Federal Communications Commission has raised more than $40 billion from spectrum sales, including bids that have been accepted but not yet paid, to fund the U. S. Treasury.


Despite the auction's financial success, however, the mechanics of the bidding process have come under fire. Fueling the criticism is a high- profile dispute between the FCC and NextWave Telecom, a bankrupt firm that is contesting the agency's decision to resell licenses it failed to pay for on time....


http://www.friendscb.org/articles/Wired/wired020305.htm


** U S A. Commentary --- THE PUBLIC BE DAMNED

Several developments on the U. S. broadcasting scene are cause for grave concern. Some weeks ago, a Federal court told the FCC that its cap on cable system ownership was arbitrary and indefensible at the stipulated -I think it was about 35%- figure. Some weeks later another court ruled that the FCC could not forbid a corporation from owning more than one television station in a market unless there were at least eight stations in that market. While the court ruled that the FCC could indeed set limits, these could not be arbitrary or capricious.

The problem now is, on what basis do we find a national standard to limit the number of stations per market, or cable systems nationwide? The FCC has a major problem given it here by the courts. This is not a matter that can be objectively determined; we are not dealing with the boiling point of water. Any number the FCC chooses will be hard to justify using the court`s decision- why 50 percent and not 66 percent? Why two stations in a market rather than three? or four? Why limit ownership to caps with six stations? Why not four?

There is already speculation on how the caps on TV stations per market will affect radio. Radio is a sad example of how deregulation has changed a once vibrant business whose stations were, outside major cities at least, largely owned by individuals, married couples, and small corporations. Now, almost every important radio station in every city of size is owned by one of a handful of megacorporations. The largest is Clear Channel Communications of San Antonio; it owns over
1,200 stations and, despite, the bad economy, a decline in advertising, and diminished revenues, continues to purchase stations. One professional website reports that Clear Channel pulled in over one billion dollars in revenue last year; its nearest competitor pulled in only $400 million.

It is not just a question of a handful of companies controlling the major stations. It goes far beyond this. Many conglomerates have in fact reduced once independent stations into relays of a flagship station in a distant market. ``Voice tracking`` is spreading - a star announcer in a distant city records all the local announcements, weather forecasts, public service announcements, and even song intros and outros for all the regional stations owned by the same conglomerate. Computers splice all this together seamlessly so that the local station sounds as if the corporate owner is right there in the listeners` city and involved in the community, when in fact the only presence in that community is the local sales staff.

Then, the other week, the FCC decided on a new requirement to fulfill the instructions of Congress to remove television channels 51 through
69 from television broadcasting. The FCC will expedite matters by requiring all applicants with pending applications for a television station on channels 51 through 69 (some of which are almost 10 years old) to amend their existing applications within a few weeks to (1) pledge that they would operate such stations, if granted, as digital television stations (DTV), or (2) they will find another, vacant analog channel below channel 50, which they must find themselves. If as in many cases, there are several applicants with competitive applications, they must all agree on a new vacant analog channel or all their applications will be dismissed. But there is more; such channel finds must meet the FCC`s stringent requirements of protection against interference to existing stations, authorized and under construction, analog and digital. Class A community stations must also be protected.

One FCC Commissioner, Michael J. Copps, was upset. He argued that the FCC was demanding more than was necessary in requiring that new stations in channels 51-59 be digital, that in fact such assignments were temporary anyway, in light of the law passed by Congress. He said that the FCC was foreclosing on any analog operations before more vacant channels opened in the bands of channels 2 through 50 as present licensees converted fully to DTV and turned their old analog channels back to the FCC. In fact, he said, his preliminary study of the list of affected applicants showed that this new requirement would eliminate a first television station to at least a dozen communities.

Two consulting engineers have told me that this Federal push into DTV is something nobody wants- but the Feds. To which I add PBS, which is eagerly converting to DTV through NTIS PTFP funds and dedicated funds through the Department of Commerce and Congress; and of course, technology junkies. Nobody else seems to want DTV. Nobody.

Truth to tell, for everyone else, DTV has become an expensive burden. No station has shown a profit yet with DTV; station owners have invested millions in building a second, digital station. But the public has shown very little interest in DTV; even in markets where all the stations have DTV operations up and running, DTV set sales remain small. Understandably this is so, given the astronomical prices for sets, from $1,400 to $8,000. Television stations in small markets, ranks 101-210, will have a very hard time paying for DTV conversion because their ad revenues are much smaller than big cities but the price of conversion is basically the same, at least a million dollars a station. The TV industry has released figures showing that stations in the 10 biggest markets pull in a combined $62.6 million in ad revenues, compared to only a combined $11.1 million for markets 61-70, and $6.9 million for markets 101-110. The 35 smallest markets pulled in a mere $3.7 million, all stations combined. The situation is so critical that some small owners have said DTV conversion will drive them to bankruptcy.

The American public is not aware what is being foisted on them by the Federal government. All existing television sets, except for those small numbers of new DTV sets, will become completely useless in a few years, except maybe to watch old VHS tapes of movies, weddings and family events. All sets. And the high cost of new DTV sets will preclude having a second set in the bedroom, or the wife having a small set in the kitchen to watch as she prepares meals, or dad to have in the garage when he does woodwork. Then, the question arises, what will become of these millions of existing, perfectly good but perfectly useless analog sets? Most will wind up in the landfills, a thought that should drive any environmentalist wild, if only they knew about it. But few people anywhere seem to know anything about it. Say DTV and they think about the new channels being offered by cable systems, which few want anyway, as cable systems are sorrowfully learning. For that matter, sales of digital hookups to computers via phone lines or cable systems are flat and one large provider is thinking of getting out of the business. No, the public does not realize that the present system of television is being destructed by a government intent on handing over the vacated television channels to giant wireless technology businesses.

Recall that 22% of the population does not subscribe to cable television or satellite television, that this percentage tracks well the percentage of poor U. S. households; that the percentage of black households not subscribing to cable or satellite TV is higher, and that of Hispanic households even higher. For the poor, African- Americans, and Hispanics, broadcast television is often their sole option.

But all this does not deter the government. The Bush administration is thinking of levying large fines in the form of ``spectrum rental fees`` on stations that do not convert to digital quickly and return their analog channels. The Congress has held hearings at which they berated television executives for not converting faster. One Congressman, Billy Tauzin of Louisiana, has said that if owners do not convert, they will be made to do so. But it is clear to everyone that DTV is failing (and not just here, but in England; one news source has quoted a BBC official saying that this year will make or break DTV in England). FCC Chairman Michael Powell has formed a task force to find out why and what can be done about it, which is a more rational approach than that of the White House or Capitol Hill.

One wonders in all this where the interests of the American public are being considered. Instead of locally owned radio stations with roots in the community, we get relays of faraway stations so as to enhance the profit margins of megacolossal corporations and make Wall Street analysts happy. We see the Federal courts, which ought to be the last bulwark of the public`s rights, abetting this development in cable, broadcast television and, soon, radio. We see a Congress that mandated such ownership changes and channel shrinkage under the Clinton administration continue to promote them under the present, and a present White House administration that continues the course full steam ahead. We see a Congress intent on pulling even more TV channels away from stations (recall that the TV band once ran from channels 2-
83) and giving them to lucrative cellular phone and wireless technology interests. And that, in the final analysis, is where the action is, where the money is, where the real reason for this madlong push towards a digital world is going. Forget all the political garbage about the benefits of an interconnected digital world, of untold increase of benefits for everyone when radio, television, cable, and computers are all connected in one big digital world. The real reason is to benefit the cellular and wireless technology businesses. All else is buzz. Hype. Bull. Politics.

Courts, Congress, and the FCC- the American public is being ill served by them in matters of mass media. The attitude is, the public be damned. (Michael Dorner, editor, Catholic Radio Update