The rollout of cutting-edge wireless services such as mobile Internet depends largely, if not entirely, on finding a new home for hundreds of TV stations.
Although the government plans to entice broadcasters to give up spectrum now used for 52-69 with the lure of early buyouts, that payoff is expected to attract only a third of those station operators, those on ch. 60-69.
How to convince the other two-thirds—whose financially strong stations make a buyout almost impossible—to vacate their channels quickly will be a major headache for FCC Chairman Michael Powell unless Congress gives him a little breathing room and delays the 2002 auction deadline for that spectrum.
"Clearing that spectrum quickly is hopeless," says James Burger, who tackles DTV issues for Washington law firm Dow, Lohnes & Albertson. "It can't happen until after the transition to digital."
Finding more spectrum for so-called third- generation, or 3G, wireless services bedeviled the Clinton administration, and the Bush White House isn't finding the task any easier.
Since 1996, the primary source of 3G spectrum was expected to come from the government's moving TV stations off the upper parts of the UHF band and condensing them onto channels 2-51. The vacant spectrum would then be auctioned by 2002. But that plan is almost hopelessly complicated by the transition to digital transmissions, which gives nearly all TV stations two channels—one DTV, the other traditional analog—at least until 2006 and probably long after.
Most of the stations are located on channels 52-59, where 323 full-power outlets are either operating or have applications pending and allotments granted. They are controlled by some of the country's biggest station groups, including the Big Four networks.
Although the FCC has proposed allowing the wireless companies that covet the spectrum to offer broadcasters cash for early exits, the uncertain prospects for 3G services make it virtually impossible for them to find enough capital to buy out owners on 52-59, which include Viacom, ABC, Fox and Scripps-Howard (see table above).
And many of those stations are in some of the country's most crowded, and lucrative, markets: New York (five stations), Los Angeles (six), Philadelphia and San Francisco (three each).
None of the broadcasters on channels 52-59 have voiced any willingness to leave the frequencies early and no analysts have made any real estimates. By contrast, loose guesses for buying off broadcasters on the less successful, less populated channels 60-69 run to more than $1 billion. The FCC may get some time to maneuver. Recognizing the pending tangle, the Bush administration in its 2002 budget proposed delaying the 52-59 auction until 2006 and the 60-69 bidding until 2004.
Although the wireless companies up until now have been pushing the government to stay on target, they appear to be acquiescing now that European companies such as BT and Deutsche Telekom have delayed their 3G rollouts and struggle to justify the $115 billion spent on 3G spectrum in Europe. Qwest and other wireless companies in comments to the FCC avoided the thorny issue of entrenched broadcasters and limited their suggestions to technical suggestions for dividing the auctioned spectrum.
"Venerable companies may be facing collapse because of getting ahead of themselves on 3G," FCC Chairman Michael Powell told senators last week.
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