NAB 2010: Gordon Smith Is Not Impressed

NAB chief tackles FCC spectrum plans on eve of Las Vegas confab

By John Eggerton -- Broadcasting & Cable, 4/12/2010 12:01:00 AM

National Association of Broadcasters President Gordon Smith says he will be looking for assurances from FCC Chairman Julius Genachowski and top broadband advisor Blair Levin that their spectrum reclamation plan will be voluntary. Having now examined the FCC's national broadband plan, Gordon does not like what he sees. He compares the FCC to The Godfather, and its "voluntary" proposal to one that can't be refused.

Smith also takes aim at former FCC Chairman Reed Hundt and his revelation that Hundt was always out to replace broadcasting with broadband as the national medium, calling it "alarming" and "deeply disappointing."

Smith says he is pushing for a 10-year renewal of the satellite bill, and can live with letting DISH back into the distant signal business. But he insists that he can't live with the FCC picking winners and losers among industries.

On the eve of his first NAB convention atop the trade group (a show that features a Genachowski keynote), he talked with B&C about these topics and many others, including the future of broadcasting in an increasingly broadband world.

Let's talk about the FCC's proposed spectrum reallocation plan now that it has been officially unveiled.
We had hoped that it would actually be what it was advertised to be, that it was in fact voluntary because, if there is a problem, broadcasters would like to volunteer to help solve it. But, in fact, it's not voluntary. If you read the fi ne print, it is voluntary only in the sense of The Godfather movie.

We assume it is an offer that you want to refuse, so what is your alternative?
I think if the problem is really rural America, broadcasters can find the ways and means to help broadband providers get all the access they need. But, ultimately, it really is an urban problem. To get the technical space they are demanding, you have to close down stations. And when you start taking 120 MHz away, as experts explain it to me, you essentially take away the deal of the digital transition that broadcasters made with Congress. That included multicasting and mobile video, and now even 3D content.
These are all things that I think the American people counted on when, in the sum of millions of dollars, they bought new televisions to enjoy the future of broadcasting.

Some mobile video backers have suggested that broadcasters can have it all-HD and mobile included-while still giving up that 120 MHz.
I simply hope they are right. That is not what technical experts tell me in great majority.

You are not saying that broadcasters won't be able to give up any spectrum, so long as it's voluntary.
If it is voluntary, there is an opportunity for broadcasters to be partners in this. Congress has already given the spectrum space to the broadcast industry to monetize. We can help do that more efficiently than the government can through compulsory reallocation.

The FCC chairman, Julius Genachowski, is going to be delivering his own keynote at the convention. What would you want to hear from him?
Obviously, we are very honored that the chairman would come. He is welcome and he will be among friends. But sometimes friends have a disagreement, and I hope he will simply see the light as broadcasters see it and give us the assurance that this will be done in partnership and not through compulsion.

Washington is all about broadband these days. Do broadcasters have a role in the grand broadband plan?
Sure. It is in helping to facilitate broadband. But we see it not as an either/or proposition, as Reed Hundt sees it. We think broadcasting is an essential part of the communications mix in America. Free, local, emergency, news, weather, sports; these are all broadcast features. It is essentially the public option that is available to the disadvantaged, and is a generator of great content that is essential to American communities.
If you compromise that space, you compromise some of the qualities that help America stay connected in the most efficient way possible, and that is one-to everyone.

Do you think the FCC can get all the spectrum it needs without taking any away from broadcasters?
I do. I think if history is any teacher, it will show once again that technology solves the problems of efficiency, or inefficiency.

You mentioned Reed Hundt, a former FCC chairman. What do you make of his master plan since the mid-1990s to replace broadcasting with broadband?
Frankly, I was rather offended, as a former member of the Senate Commerce Committee, that his secret musings were never shared with the elected representatives of the American people as it relates to such a profound policy change. I think it was alarming and deeply disappointing, and every member of Congress should be offended by it.

Have you gotten assurances from Genachowski and broadband advisor Blair Levin that that was not their plan as well, given that they were top staffers under Hundt as chairman?
No, I have not gotten those assurances, but I intend to ask.

What happened to the satellite bill?
Frankly, it has been tripped up by collateral issues many times now, but I do believe this Congress will get it to the president in the coming days.

There are two different versions, a five-year renewal and now a 10-year, the latter apparently to make it deficit neutral. Do you have a preference?
I think that the 10-year would be terrific and would help Congress with its budgetary scoring. In this day and age, with technology moving the way it is, 10 years will go by very quickly.
The bill is not perfect, but it is worthy of passage. Our preference is for 10 years, but we appreciate whatever the Congress ultimately decides to do as long as it gets to the president.

Why 10 years?
For the simple reason that this is one of those issues that takes up a tremendous amount of time of Congress and the association. The principles contained in this reauthorization are good enough to last 10 years.

And you are OK with how it is structured for DISH getting back into distant signals?
Again, it is not perfect.

And that is one of the imperfections?
Yes, but having been a legislator for 16 years, I can tell you that I have never voted on a perfect bill. But those who will vote for this are voting for a very good bill.
There have been a lot of retrans impasses that have drawn attention in Washington. Would it be politic for broadcasters to leave their signals on cable?
I think these are private market-based discussions. They have been settled in the thousands while the interruptions have been very few. I would not want to see Congress try to dictate the terms of how private negotiations are engaged in and concluded.

So, there is nothing wrong with the retrans system as it is currently constituted?
Well, again, I don't know that anything is perfect, but retransmission as it is operating is working extremely well and it is allowing important content to be paid for. When you compare what cable pays for its own content versus what it pays for our broadcast content, which is the most viewed, broadcast content is widely wanting in what it receives.

The D.C. Court suggested in its decision on the 30% cable cap that there was no longer a justification for imposing special obligations like must-carry on that carriage regime/negotiation. I assume you would not agree with that.
Yes. I think the Supreme Court is right on that score. Ultimately, time will resolve that. But my sense is that the D.C. Circuit missed it on that, and that the Supreme Court will right that. [Cablevision has asked the Supreme Court to hear its challenge to must-carry, a rule it narrowly upheld twice before in the 1990s-Ed.]

With broadcast and cable in a pitched battle over retrans dollars, how is it going to work having a combined Comcast/NBCU in both NAB and NCTA?
It will be an interesting cross-pollination. I think they are also going to be members of the Motion Picture Association of America.

So, do you see any problems?
There are certainly problems that we can manage. I think both associations will welcome them.

The Third Circuit has lifted the stay on loosening the newspaper-broadcast cross-ownership ban. Does that help broadcasters any?
Yes, I think it does. It will take time for that help to show up. I think what it will do is allow economies of scale between newspapers and TV and radio outlets.

But there may not be much certainty. The FCC could try to undo it in its quadrennial review.
I do think the FCC is sensitive to rulings of the judiciary and has some institutional pride.

The FCC is contemplating the future of journalism. Where do broadcasters fit in those contemplations?
I think independent journalism is hugely important to America and vital to a free society. Whatever encourages the economics of that space I think should be supported, and we support it.
What about suggestions that the government could underwrite public media as a way to address concerns about journalism's economic future?
I think that is when the fox is financing the henhouse, and I don't think that that is smart. There is a place for public media, but I think to damage private journalism for the sake of public journalism that is financed out of the treasury, I think that is a really poor choice.

How concerned are you about the FCC possibly financing a public media initiative with spectrum fees, as the broadband plan suggests if not quite proposes?
We would be in earnest opposition. I recall as a former member of the budget committee that spectrum fees were a ubiquitous pay-for in a pay-go environment. But they never make it, and I don't believe the broadband plan will give the impetus. It is just an easy grab when you are introducing a bill that requires money.

Steve Waldman, who is heading up the FCC journalism inquiry, said it is not the FCC's responsibility to save any particular industry. Do you think that is right?
Yes, but nor is it proper for the FCC to pick winners and losers. And I think the FCC does have a responsibility to free and local-the public option, if you will-and if it does away with broadcast, what does it regulate? It currently doesn't regulate cable content or other broadband Internet content, but perhaps that is its objective, to ultimately regulate the Internet.

Do you think that is the FCC's objective?
Who knows. I think it is implied in the broadband plan.

There is still no federal shield law. Why can't Congress ever pass one?
It will eventually pass. First Amendment rights measured against national security concerns are hard delineations to make, but eventually Congress will find the right line to draw.

Let's say we have enough money to buy a cable system, or launch a pure-play online video delivery site or buy a TV station. What would your argument be for becoming a broadcaster?
I think you would have to have a real coupling of public service and entrepreneurial energy, and if you have that, you ought to be in broadcasting, because broadcasting merges business with public service in a way that is valuable to the American people.

But is it the right investment for our dollar?
I think broadcasting's future is beginning to grow again because with the digital transition, if broadcasting preserves its seed corn-in other words, its spectrum-it will have new revenue streams and products to offer, including mobile and 3D content delivery.

The advertising stream is rebounding, and retransmission, which is a fair payment for great local content. All of those things I think would suggest that you could do very well with broadcasting, and my source on that is Les Moonves.

What if the FCC forces broadcasters off some of their spectrum?
It is much more uncertain, and that uncertainty is unfortunate, because the values that broadcasting serves are valuable still. We see a trend emerging in America, which is also happening in Europe, that people are cutting their cable cord because the digital age allows broadcasting to deliver the best picture, a great variety of content, and all for free.