The Man in the Middle on SpectrumThe NAB’s Rick Kaplan wants broadcasters to be treated fairly in the incentive auction process—and says the FCC should not insist on 2014 1/21/2013 12:01:00 AM Eastern
Since October, Rick Kaplan has been executive VP, strategic
planning for the National Association of Broadcasters. His primary task is to
be point person on the trade group's effort to make sure broadcasters are
treated fairly in the Federal Communications Commission's spectrum incentive
auction that will reclaim some of their spectrum-how much is to be
determined-for, presumably, wireless broadband use.
In his first wide-ranging interview in the post, Kaplan
tells B&C that the NAB wants to work with all stakeholders for a
successful auction and wireless band plan, so long as the definition of success
is that broadcasters come out the other side with a business plan of their own.
But Kaplan, formerly head of the FCC's wireless bureau and a
top aide to FCC chairman Julius Genachowski, says there is no reason to rush
the auction, and lots of reasons not to sacrifice accuracy for speed. Those
include that the wireless marketplace has taken care of its short-term spectrum
demands through market forces and is well-positioned in the long-term as well.
Another reason, Kaplan suggests, is that unless the FCC
takes its time and gets the repacking-reorganizing the reclaimed spectrum into
new bands-and border coordination rights resolved, the auction could fail.
Kaplan says that does not mean the NAB is advocating delay,
just that the FCC does not need to risk imploding the process by trying to meet
an artificial 2014 auction deadline that he suggests could prove detrimental to
An edited transcript of the interview follows.
You are essentially the NAB's point person on the
auctions. What appealed to you about the job?
It was an opportunity to work with an industry I have liked
for quite some time [Kaplan played a key role at the FCC on the first DTV
transition]. It was also an opportunity to work for [NAB president and CEO]
Gordon Smith, who is one of the best leaders of any trade association. He wants
NAB to be an organization that is in the mix and not one just trying to prevent
things from going forward, but one that wants to be constructive and to ! nd a
way to make deals and get things done.
That was very appealing to me. That was how I operated at
the commission. And then there are just a lot of cutting-edge spectrum issues
that broadcasters are involved in these days that I worked a lot on at the
commission and find very interesting.
Those cutting-edge issues can cut both ways. Are you
confident that the FCC wants a robust broadcasting business when it is done?
I hope it is an agency of its word. My role in this process
will be to make sure that the FCC lives up to that, and I have no reason to
How specifically can the FCC demonstrate that in its
Great question. I think there are a number of ways. The FCC
has to follow the statute. Congress clearly laid out the statute and the FCC
could not have heard the word "voluntary" more times than about incentive
auctions. So that essentially means that those who want to participate can
participate, and those who don't won't be harmed. Congress did a number of
things in the statute to make sure that's clear. From the reimbursement fund
[$1.75 billion to cover moving/repacking broadcasters and, where necessary,
cable cohosts] to the protection of coverage areas and being able to reach the
same people you can reach today.
Making sure they don't cut corners and that they really
demonstrate a care for the industry will help. Also, I think the FCC shouldn't
focus exclusively on squeezing every last megahertz out of the broadcast
spectrum and just handing it to the wireless carriers. It should look to clear
a nationwide band plan for commercial wireless operations, but also think about
the future of broadcasting and how we're going to continue to innovate, and
about diversity. Therefore, the more it talks about that and the more it thinks
about the auction from more than one perspective, then we'll know they are
putting their money where their mouth is.
You are the FCC's former wireless bureau chief. Aren't
wireless companies running out of spectrum?
The wireless industry problem was more a problem of surprise
in 2009 when the FCC's National Broadband Plan was written than one of pure
There was a huge surprise at the spike in data usage and no
company was ready for it. But, one thing people talk a lot about in Washington,
including the incentive auctions, is market-based solutions.
What should be considered exhibit No. 1 of how the market
can solve problems is that the wireless industry completely transformed itself
over the last few years and I think that chairman Genachowski deserves a lot of
credit for things he did to make that happen.
In the wireless industry now you saw AT&T buy up the
whole [Wireless Communications Service] band and the FCC react with rules that
are good for AT&T to do mobile broadband there. Verizon buys SpectrumCo
spectrum, and now they have a ton of spectrum completely unused and ready to go
for the future. T-Mobile buys MetroPCS and gets spectrum from AT&T and
Verizon, and so now T-Mobile is on its way to being a really healthy, vibrant
contender. And you have Sprint, which already has a ton of spectrum, trying to
buy the rest of Clearwire out and some of U.S. Cellular. So, the market has actually
reorganized itself so that the spike in demand that it saw has actually been
accounted for and in the near term is in very good shape.
That doesn't mean we shouldn't be thinking about long-term
spectrum planning. But there is no reason to rush things that take time, like
incentive auctions. And there are certainly many other opportunities including
federal spectrum. And now you have Dish out there with 40 MHz of spectrum, and
they are going to be a player one way or another. So, there is a good long-term
prospect for spectrum now that we understand the rise in demand.
The NAB is going to be filing its comments on the
auction by Jan. 25. Can you give us a preview?
Sure. First, we are going to be a constructive participant
in this process. We would like to see a successful auction and understand that
it is the will of Congress. And so we are going to do everything we can to
ensure that it is a successful auction, that the FCC can get the nationwide
band plan that it wants to get and at the same time ensure that those who are
not participating are protected, which is probably job No. 1 here.
It is going to be a difficult process because there are so
many moving pieces. So for us, one of the biggest points up front is that this
is a really difficult process and many people at the commission are really
familiar with the DTV transition, which took many years and had many rounds of
comment. We know this process up front won't, because the repacking piece of it
has confidentiality provisions in the statute that make it harder to review and
make it open for public comment. And the repacking is going to be done in the
middle of the auction, so the degree of difficulty is very high.
So, the first message is that we have an opportunity to get
this right, but it's going to be very hard. So let's make sure we're focused on
getting all the proposals, keeping things simple, making things transparent.
What that means is that all these calls for a 2014 auction seem premature. Not
that it can't happen, but all these artificial timetables do is put pressure on
the next chairman of the FCC-assuming chairman Genachowski is not chairman in
2014-to live up to some arbitrary timetable that, frankly, anyone who is really
thinking seriously about it knows it is going to be a very hard slog to get it
to happen if you want it to happen correctly.
And correctly means solving the spectrum coordination
issues with Canada and Mexico sooner rather than later?
Yes, there are two things we are particularly concerned
about being rushed. The first is the border issue. It is less about
broadcasters than about the overall success of the auction. If you take Canada
and Mexico and the border areas, that is not talking about someone living five
miles from the border crossing. The current agreement in Canada covers 250
miles from the border. So, you draw a line 250 miles down from Canada, and 150
miles up from Mexico. So, you are talking Los Angeles, New York, Seattle,
Detroit, Phoenix. Big, big markets that are impacted. And so, if the FCC wants
to hold a successful auction, it is going to have to work through those issues
with Canada to make sure we can do it. We did it during the DTV transition, so
it is doable, but it is going to take longer than a year to work out all those
issues and get channels pre-approved so they can be repacked.
But if the FCC just pays lip service to coordination and
moves forward, it is really cutting out a third of the country in terms of
spectrum it can recover and develop a band plan that is nationwide.
It seems odd for an FCC so focused on getting more spectrum
for broadband to do that, but again, these timetables make that the likely
outcome, not a nationwide band plan that works for the wireless industry, and
truly not one that is good for the long-term health of broadcasting.
And the second issue?
Repacking. All you have to do is pick up the proposal [which
the FCC issued in September] to realize that there is still a long way to
go-and I think the commission would admit this-on the repacking section. There
is a lot of thought to the forward auction and to the band plan, but when you
talk about repacking, we don't know what the [repacking] software looks like,
it hasn't been tested. We assume it is going to be made publicly available so
everyone can play with it. But it is the key driver of the auction and it is
what could thwart the nationwide band plan. And without knowing what that looks
like, that's challenging again, given the context of the DTV transition where
everybody got to look at their contour and what it looked like, got to test it.
We're not going to have that opportunity. So we want to make sure that that is
going to go OK.
We want to make sure we don't get to the end of the auction,
and suddenly there are widespread problems for broadcasters because people are
interfering with the mobile carriers or the mobile carriers are interfering
with broadcasters, because the program wasn't properly vetted and stakeholders
didn't have a chance to participate.
So we think the FCC is going to be good on that. But it is
not there yet, so how can you talk about a report and order in 2013 when the
software isn't complete and hasn't been put out yet for public comment? We're
not saying there can't be a report and order in 2013 and an auction in 2014,
but a lot needs to happen before that and it makes it very unlikely. All those
timetables can put undue pressure on people to cut corners in a way that is
going to harm the auction.
So your message is, don't rush the auction. Or do you
want it delayed?
We don't want a delay. I want to make that very clear. But
our challenge to the FCC is this: If you are serious about having a good
auction that is very good for wireless carriers and protects broadcasters, you
are going to want to take time with, especially, the international issues and
the repacking issues. Because they are key to freeing up the amount of spectrum
you need to have a successful auction and also to live up to the mantra you
started with of having a healthy broadcast industry and freeing up spectrum for
FCC media bureau chief Bill Lake has pointed out to us that,
by statute, the FCC does not have to resolve those border issues before voting
on the auction framework.
To put out a report and order without having made serious headway,
which means getting right to the doorstep of coordinating with Canada, would
put everyone in an odd position. You are not going to know what's going to
happen. And you are going to move forward with a process that may be a failure
from the start or may leave coordination to the very last minute and screw up
the entire auction because you assumed it might work out but it didn't. That
wouldn't seem to be wise.
Spectrum policy is a long-term game. I know Washington can
be about short-term at times, but the way to free up spectrum is to coordinate
internationally and make sure the repacking models are very sound.
Are we correct you recently said that you think the
FCC's proposed station spectrum sharing might not be workable?
I think spectrum sharing should largely be about preserving
the kinds of stations you'd like to still be in the game. I think spectrum
sharing as a general proposition, and this is my personal view, is unlikely to
be widespread. There are a lot of technical challenges. It is likely the
stations would need to be under the same owners because of all the technical
aspects of sharing. And I frankly haven't heard much interest in it.
It's useful when you think about something like diversity in
broadcasting. It's amusing to me to see all the interest around media ownership
and the paucity of diversity in ownership, and these auctions very likely will
wipe out a lot of the ownership and minority programming. This is one of the
greatest threats to diversity. So we have to put our heads together to make
sure we are doing everything we can to not let that happen. And anyone is free
to participate. But if there is a viable option for sharing, maybe that is
where you really explore it. I'm not sure it will work, but that is one of the
things we are thinking about.
And sharing also cuts down on the new services
broadcasters can provide in the digital age?
If you give up half your channel, you have sort of relegated
yourself to not being able to do things like mobile, multiple streams, or whatever
the next thing is in broadcasting. So you are mortgaging your future in that
way. But when you think about diversity, would you rather have a station go
completely off the air? I think for certain policy reasons you want to
encourage them to stay on the air.
What is the status
of proposals to have broadcasting help wireless carriers offload traffic at
These are all things worth exploring and one can imagine in
the future there being a nice partnership between our architecture and the
architecture of the wireless carriers. It seems to makes sense if you are just
thinking about it on paper. Now, there is a difference between "on paper" and
practice, but certainly if you want to reach a lot of people at once and not either
tax your network too much from a wireless network carrier standpoint or blow
through your data plan, from a consumer perspective you are going to want to
find a way to marry the two. And we are certainly thinking about those ways and
those are conversations we are having now.
Should we take any
comfort from the fact that the NAB joined with the wireless industry to ask for
an extension of the auction comment deadline, or was that just a temporary
marriage of convenience?
We want to be a cooperator and try to find solutions. So,
having my background and having worked on the wireless side, I realized very
quickly that there are areas in which we share similar interests to CTIA [the
Wireless Association] or [the Consumer Electronics Association], or [the National
Cable & Telecommunications Association]. If you are all committed to having
a successful auction and one that makes sense for everybody, and I think all
the industries certainly do, you can find a solution that maybe works for
everybody. Not perfectly, and it's not like you walk in and get exactly what
you want, but if you are willing to chat, and we have found a lot of areas of
agreement. So, with CTIA, we started talking about different things with them,
things that affected both of us. We talked about what we thought and how we
could help educate each other. There will be large areas of agreement and some
areas where we go our separate ways. But they were encouraging enough
conversations that we said, "let's keep talking" and give something more robust
to the FCC rather than incomplete comments.
Comments are due
the end of this week, then replies in March. What next? Is this a waiting game?
No. I'm certainly not going to be sitting on my hands here
at NAB. We're going to continue to work with the FCC on the process. My
expectation is there are going to be a lot of outstanding issues after the
replies. Repacking is one key example. They will have to put that out in a
public notice at the very least before a general report and order. There will
be a number of issues on the reimbursement side that are very complicated. The
band plan is a long way from being settled for the FCC and that is going to
take many months to get right. So, there are a lot of pieces that I think the
FCC will probably break off and chew in addition to the big NPRM to get the
ball rolling, but we will be very active both here and around the country to
make sure everyone is educated about the issues and how it is going to affect
Any last thoughts
to educate us?
I think the one thing I would say is that, regardless of
what happened during the legislative process, it should be clear that NAB is
here to be engaged in this process. We really are working to find areas of
consensus with other industries, both specific companies and other
associations, because we think that is the best outcome for everyone. I think
you will see us in the center of a lot of conversations to try and find
solutions to the very legitimate problems the FCC is raising. Our message to
everyone will be: Let's make sure we move expeditiously but get it right, and
if we can't meet a particular deadline, that is actually OK, because the
alternative is to have a failed auction.
E-mail comments to email@example.com
and follow him on Twitter: @eggerton