CEA Study: Reallocating Broadcast Spectrum Could Yield $1 Trillion
Consumer Electronics Association submits economic study to FCC on value of spectrum reallocated for broadband wireless
By John Eggerton -- Broadcasting & Cable, 10/26/2009 9:44:24 AM
That is the upshot of a study submitted Oct. 23 to the FCC by the Consumer Electronics Association, which asked economist Coleman Bazelon to come up with a model for the value and use of the 300 megahertz of spectrum assigned to broadcast TV.
"The vast majority of programming from over-the-air broadcasters is viewed on subscription services such as cable and satellite," says Bazelon in the report. "Increasingly, the over-the-air portion of broadcasting is becoming less economically relevant to broadcasters. Consequently, the large amounts of radio spectrum allocated to broadcast television could be reallocated, in whole or in part, to wireless broadband uses."
Bazelon calculates the market value of that TV broadcast spectrum at about $62 billion, minus about $12 billion to pay off broadcasters for the spectrum they actually occupy, or about $9 billion if the 10 million over-the-air households are given lifetime subsidies for multichannel video service.
Another option, he says, is to allow some broadcasting to continue on reduced allocations, freeing up about $48 billion in spectrum, but costing only $6 billion to compensate broadcasters.
The pay-off, he argues, is between $500 billion and $1.2 trillion in cost savings, increased usage for existing wireless services, and new services that can't be offered without abundant spectrum. He also points to the social and economic activity of "ubiquitous, affordable broadband connectivity."
CEA said it did not endorse the study's results or analysis, and conceded those results and analysis would generate criticism. It said, instead, that it was offering it up as an example of the kind of analysis that the FCC should consider.
Saying there was a "crisis" in available high-speed broadband, CEA told the commission it should not wait for Congress to pass two spectrum inventory bills, but should instead work with the Obama administration "in the absense of a formal congressional mandate" to inventory and assess efficiency of spectrum use.
But CEA also says that an inventory by itself is not enough: "At the same time that an inventory is undertaken, the FCC and the Administration must also seek a consensus on how to identify and reallocate spectrum for wireless broadband and other higher uses."
It is interesting that nowhere in this study is the fact that the consumers that are currently relying on over-the-air services are making a choice. Most of them have the option of a subscription service but they choose not to subscribe. Cost of the subscription may not be the deciding factor for them. While it sounds noble to then say we'll subsidize this minority of viewers with a lifetime subscription, it then disenfranchises the majority that are paying. Virtually everyone has the choice of free reception versus subscription based. Is the intent to give everyone the free subscription choice or are the ones who currently pay just going to be stuck paying for service that is free to others?
By the way, on page 20 of the report they list the VHF band as channel 2-14. This is incorrect as VHF is 2-13.
William T. Hayes - 10/26/2009 12:34:54 PM EDT
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