This week, the broadcast industry is meeting in Las Vegas to showcase Adobe (s adbe) products, new sites and new services. However, amid this collegial gathering of industry folk,s a $33 billion fight is brewing — or maybe it’s only a $27.8 billion fight, depending on whose numbers we use. The fight is nothing short of an entertainment battle royale, with TV on one side and the iPhone (s aapl) on the other.
Actually, mobile phones, tablets and any other device we want to connect to the cellular network are on the iPhone side, but in a battle royale, it helps to have one protagonist and one antagonist. The issue is who will have access to the 133 MHz of spectrum currently used by broadcasters to deliver TV programming, and how that transfer of airwaves will take place if the broadcast industry can’t stop Congress and the Federal Communications Commission from its spectrum land grab. It’s a contentious issue over a wonky subject, and so like all debates that require some technical knowledge, both sides are flat-out misleading people. So here are five questions (and answers) about this issue, for those who want to separate the truth from the spin.
What’s the Issue Again?
Way back in 2005, Congress told broadcasters they would need to move off of their analog broadcasting systems and switch to digital because it was a more efficient way to divvy up spectrum. This switch to digital meant people had to buy a converter box or a new TV. The upside of this whole shebang was that the federal government auctioned off some of the 700 MHz spectrum vacated by the broadcasters to AT&T (s t) and Verizon (s vz), so they could improve cell phone service. This allows the operators to offer 4G wireless and netted the federal government $19.59 billion.
But wireless operators have become a victim of their own success, and now people can’t make calls. As more people buy tablets and iPhones so they can watch Netflix (s nflx) or tweet, service is only going to get worse, because all those apps are made up of bits transmitted via the airwaves. And each airwave, or megahertz, can only transport a limited number of bits. But there are so many Netflix and Facebook bits going over the air that the FCC is worried that we’re going to run out of spectrum before 2013.
To keep that from happening, the FCC and Congress want to use some of the megahertz the broadcasters currently use to deliver TV to people — not all of it, just some of it — because most broadcasters are not using all of their airwaves to deliver TV shows, and those that are could probably change the way the deliver their bits to deliver TV shows in less spectrum. The consumer isn’t likely to notice the difference, but it could cost broadcasters more money. And broadcasters already spent $15 billion to transition to digital, and in doing so, gave up a quarter of their spectrum.
Are We Really Running out of Spectrum?
The answer is no. While the FCC says we will run out of spectrum by 2013, the real truth is that their estimates don’t take into account technologies like femtocells, Wi-Fi offload and more efficient networking technologies that can cram more bits into a single megahertz. Folks inside the FCC argue the panic may not be entirely real, but justify the freak out because otherwise Congress would never act to appropriate more spectrum in time. It is true that we’ll need more spectrum.
Who Owns This Spectrum Anyway?
Technically, the government does. It granted broadcasters access to use this spectrum because it viewed broadcasting as a public good and theoretically could take it away at any point in time, but that’s not going to happen since broadcasters have built out a huge industry that many Americans still rely on for their entertainment and news.
What Is an Incentive Auction?
The incentive auction is the FCC’s attempt to offer broadcasters a peace offering: basically an auction whereby the broadcasters who give up spectrum will get to share in the proceeds of the auction, which the feds think could net $27.8 billion, and the CTIA and Consumer Electronics Association believe could be worth $33 billion. But to offer these auctions congress will have to pass a law — a law the NAB is fighting with all of its might.
Won’t This Take PBS Stations for Rural Viewers so People in Cities Can Play Angry Birds?
At a speech during NAB conference, CEO Gordon Smith said “Why should people in Kentucky, for example, have their local stations’ signal potentially degraded…so urbanites in Manhattan can have a faster download of the app telling them where the nearest spa is located?” But spectrum is geographically constrained. So having a lot of spectrum in New York means New York broadcasters will have to give up their airwaves, not the folks in Rochester.