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Summary:

Cablevision hopes the Supreme Court will hear its lawsuit regarding the programs it must carry and decide to overturn aspects of those must-carry rules. Such a decision would set off a chain of events that could benefit cable companies and wireless carriers, while hurting local broadcasters.

Cablevision, the nation’s fifth-largest cable provider, has been fighting the rules that require it to carry certain local broadcast stations in areas it serves, and hopes to get the Supreme Court to hear its lawsuit regarding those rules. These so-called “must-carry” rules ensure that the local access channels are watchable on cable in addition to the larger broadcasters like Fox or NBC. However, if the Supreme Court hears the case and sides with Cablevision, then cable providers could dump those less popular stations, and the rejects, finding it hard to stay alive, could end up relinquishing their valuable broadcasting spectrum.

That’s a lot of ifs, but analysts at Stifel Nicolaus believe that if the Supreme Court hears the case it’s likely to overturn aspects of the must-carry rules, setting off a chain of events that could benefit the cable companies and the wireless business, while hurting smaller, local broadcasters. From a note the firm released today on the topic:

We understand that roughly 40% of full-power stations are must-carry, and many of the stations that rely on must-carry for their MVPD/multichannel carriage would probably not survive without it. Those stations tend to be in larger cities, where wireless spectrum needs are greatest. Given the FCC’s search for additional spectrum for wireless broadband, a cable victory could present an important opportunity to reallocate spectrum from broadcasters seeking an exit strategy. In effect, rather than recovering some spectrum from all (or many) broadcasters, it could recover all spectrum from some broadcasters.

Each broadcaster has a 6 MHz chunk of spectrum in each locale that’s generally within a range that’s good for providing mobile broadband. Now 6MHz of spectrum isn’t a lot when compared to the 100 MHz or so that wireless carriers tend to have in large cities, but given the capacity crunch carriers like AT&T are obviously experiencing in places like New York City and San Francisco, getting that broadcast spectrum looks appealing.

However, in order to ensure your iPhone stops dropping calls, a lot of spectrum trading would have to occur because it would be difficult for a wireless carrier to offer devices that work in too many disparate bands of spectrum. For more on this, check out why Google’s Nexus One doesn’t work on the AT&T 3G network. So if a broadcaster goes under in Long Island  it may give up spectrum in a band that’s different from a failed station in New York, creating an environment where third-party investors may have to come in and aggregate the spectrum in order to sell it to an interested carrier.

In other words, any benefits to the wireless industry would likely be a long time coming. However, cable providers would benefit immediately as they could dump the stations and free up capacity for more high-definition channels on their network. Consumers would happily trade “Wayne’s World”-type programs for Comedy Central in HD and the possibility of better mobile broadband. For certain stations, that may be a fair trade, too.

Image courtesy of Flickr user adamsofen

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  1. Ramon B. Nuez Jr. Friday, January 22, 2010

    I hate to say it but I would rather see these local broadcasting stations go away. Especially, if it means that “we” would get back very the valuable broadcasting spectrum. With data hungry devices like tablets and handsets becoming more common – how are companies like AT&T and Verizon going to support it’s customer base?

    As for the local broadcast companies there might be a “second life” on YouTube or Vimeo?

  2. has AT&T or verizon either used any or even have any plans for the 1700/2100 mhz spectrum they already own?

    i am all for freeing up more spectrum but it should come with use or lose stipulations to make sure the public benefits. in my opinion until the extisting spectrum has been used any new spectrum should only be able to be bid on by alternative startup telecos and not hoarders AT&T and verizon.

  3. Having been using wireless to connect online for almost a year I can attest that the Verizon model is to slow you down anytime you are loading video, be it movies or just clips from news sites. You can watch the signal deteriorate every time, even if you are next to the very tower feeding your connection. Seems they have an algorithm that sees your feed source and throttles the connection. As soon as I kill that feed it goes back to full connection status….

    1. If the video is being run within a Flash player then – yes. I believe that the Adobe Flash Media Server uses port 1935. Verizon just looks for increase in traffic on port.

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