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Spectrum, Comcast-NBCU Deal Dominate Hearing

Confrontation over merger spurs committee talk 12/19/2009 02:00:00 AM Eastern

Nobody in the broadcast and wireless industries was fooled last week by the ratcheted-down rhetoric at a Capitol Hill hearing on spectrum. The battle lines remained clear in a momentary calm before the firestorms.

In his first Hill appearance as president of the National Association of Broadcasters, former Senator Gordon Smith was the only witness to be pushed to complete his testimony as he laid out the case for broadcasting.

“Broadcasting and universal broadband do not represent opposite choices or an either-or proposition for policymakers and the public,” Smith said. Instead, he argued, both are an important part of a communications ecosystem, suggesting it was better for the government to let all flowers bloom rather than pull up broadcasting by the roots and hand it to the wireless industry.

Besides, broadcasters are already aggregating and sharing their spectrum for wireless broadband, Smith said at the hearing, which focused on bills to inventory and speed the eventual reclamation and auction of spectrum.

Smith pointed to a company called Sezmi, which he said will be introducing a service that “seamlessly blends over-the-air broadcast and broadband video options.” He added that the company has already negotiated lease agreements with local broadcasters to “aggregate spectrum in local markets” to deliver video that could “overwhelm a traditional IP network.” The company says it launched its first test of the service in Los Angeles last month.

Smith also said that using fixed devices (mobile unlicensed hardware)—a practice that the NAB has long opposed—in the TV white spaces could help deliver broadband to rural areas, as well as for backhaul. “Because the broadcast bands are used less intensively in rural markets, with appropriate technical protections fixed broadband services can operate in this spectrum without undermining consumers' access to free over-the-air digital television or new mobile DTV services,” he said.

Figures as high as $60 billion have been thrown out for the value of broadcast spectrum if it were re-auctioned. This is only about 6.4% of the “beachfront” spectrum that the wireless folks covet, according to the Association for Maximum Service Television, and 8.8% when ENG/fixed-link spectrum for broadcast and cable is included.

But Smith said that calculation is not just dollars and cents. “Unlike many commercial wireless services, in the television broadcast service, licensees already operate under a host of regulations to ensure that their use of the spectrum is fully utilized to maximize its total value,” he said. “In the broadcasting context, 'total value' is not a strict financial measure, but rather one that encompasses the broader public policy objectives such as universal service, local journalism and public safety.”

Smith has said that serving the public interest is the price broadcasters pay for the spectrum.

Steve Largent, president of wireless association CTIA, avoided turning the proceedings into a referendum on the relative value of broadcasting versus broadband. Largent's focus was on getting more spectrum, “wherever it comes from.”

But while the proceedings lacked any confrontation over spectrum, the Comcast-NBC Universal deal came in for criticism from one Republican legislator who had a big bone to pick. Rep. Steve Buyer (R-Ind.) said the committee needs to consider “the impact that this type of merger is going to have on a multimedia platform and advertising model.”

Smith added that some of his members have concerns about the impact on retransmission consent of the proposed Comcast-NBCU merger. Smith believes it's likely there would have to be government conditions on the merger if it is to go through.

“We should take a really good look here at Comcast-NBC,” Buyer told House Communications Subcommittee Chairman Rick Boucher (D-Va.) before turning to Smith, a witness at the hearing, to press him on the issue. Boucher has already said there would be at least one hearing next year, and reiterated that to Buyer.

Buyer said he had concerns about broadcasters, consolidation and what kind of new business model the merger would represent. He said his concerns included the need for a new advertising model for all of the programming delivery platforms, as well as the ability to “mine and profile” people for targeted advertising purposes, not only on the Web but, potentially, TV.

“As I try to think about the future and how vertical integration [affects] this kind of deal,” he said, combining a distributor the size of Comcast with the ability to control content “almost turns the present business model inside out.”

Smith said some of his members support the deal, while others are “very concerned about it…we have networks and affiliates. They have most issues in common, but this is one where there needs to be an accommodation, an understanding and a legal structure put in place that allows both to survive.

“The NAB has not taken a position at this juncture,” he added. “We are going to watch and see what kind of conditions develop.”

According to Boucher, the subcommittee will focus “very carefully” on the deal.

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