NAB's Kaplan: Auctions Not Needed to Solve Spectrum Demand Problem

Argues that marketplace has moved to handle 'surprise' demand of data from smartphones

By John Eggerton -- Broadcasting & Cable, 12/3/2012 4:36:53 PM

Rick Kaplan, the National Association of Broadcasters' new point person on spectrum auctions, said Monday that he did not think the spectrum incentive auctions were needed immediately and that since they were proposed three years ago by the FCC, the marketplace had done a good job of finding a way to deal with that demand. He also said that a majority of broadcasters would remain in the business after those auctions concluded.

That came in a webcast presented by analyst PwC on "Unleashing TV Spectrum: A New Wave of Opportunity for Broadcasters and Wireless Companies," which looked at the implications of the upcoming incentive auctions.

Asked if he thought there was actually spectrum scarcity and what the impact on long-term spectrum demands of the FCC's incentive auctions would be, Kaplan said there was no question that the demand for data had gone up dramatically over the past several years, citing the iPhone, for one. He said that demand came as something of a surprise, but that the market was quick to react and that, while the auction was a great market mechanism to find out whether spectrum is going to be more valuable in the hands of broadcasters or wireless carriers, "the nice thing about this auction is that you actually don't need it to solve the problem."

Christopher Guttman-McCabe, VP of regulatory Affairs at CTIA: The Wireless Association, said he looked at the same transactions and sees them as an argument for why the broadcast spectrum is needed because of the iPhone, and tablets and mobile education or health or transportation. "I look at the six of seven largest carriers who have done spectrum transactions in the last year and that is a perfect illustration of why you need to get spectrum to market. There is a finite number of these transactions before the supply runs out and we are working from a fixed supply right now in the United States."

Kaplan pointed to recent transactions that he said were the market's way of reacting and resolving that "surprise" data demand. Those included the Verizon/SpectrumCo deal, T-Mobile getting spectrum from Verizon and AT&T and now merging with MetroPCS, and Sprint's majority stake in Clearwire. "The market has reacted quite well to figure it out." He also pointed out that there were a number of other pieces to the spectrum puzzle, including the FCC's opening of AWS4 spectrum and looking at federal spectrum. He conceded it was an "all of the above approach of which auctions were one element. But we're not in the rush we originally thought three years ago."

It was one of Kaplan's first public forums in his new role -- he is a former top FCC staffer, wireless bureau chief and advisor to FCC chair Julius Genachowski -- though he has been up on Capitol Hill to brief staffers, including on the impact of the auctions on minority broadcasters.

Also on the Webcast were Bill Lake, chief of the FCC's Media Bureau; Rebecca Hanson, senior advisor on spectrum at the commission; Kaplan, executive VP, strategic planning, at the National Association of Broadcasters; Guttman-McCabe; Jeff Mucci, CEO and editorial director, RCR Wireless; Daniel Hays and Gordon Castle of PWC.

Asked how the FCC will prevent adjacent-channel interference after the FCC repacks stations that remain after the auction, Kaplan suggested it would be a complicated and difficult challenge.

He pointed out that the first DTV transition happened over many years and one thing complicating this latest move is the statutory requirement -- which he thinks is good -- of bidders not having to reveal their identifies (in case they lose nobody wants to signal they were contemplating selling). The problem is that in the DTV transition the FCC distributed maps to everyone saying "here is your new coverage area, is this right? In the DTV transition there were two rounds of that. Here you aren't going to get that. And the way the FCC is looking at the auction in a compressed timeline, again for reasonable reasons, it is going to be a very hard problem to solve."

He said working out issues as far in advance as possible would be best, for both broadcasters and wireless companies.

Kaplan said it was anyone's guess which broadcasters would participate in the auction, but that "broadcasters did not go to Congress or the FCC because they wanted to sell," and that most broadcasters would remain in the business after the FCC was done.