If the government ever auctions off spectrum now used for upper TV channels, conventional wisdom holds that the buyers will be cutting-edge wireless companies. But don't count out broadcasters, which make up a handful of the 128 applicants qualified to participate in the sale of a small chunk of the frequencies.
Large station groups LIN and Sinclair, as well as Capitol Broadcasting, which owns pioneering digital station WRAL-TV Raleigh, N.C., have signed up to bid for one auction slated to be held within the next three months. Another company, Total.TV, hopes to gobble up almost all the available spectrum in that auction and others scheduled for next year to launch an over-the-air, pay-TV service.
The traditional broadcasters won't reveal their plans because they fear auction rivals will glean information that can be used to plot bidding strategy. That reticence has prompted speculation, including at the FCC, which is conducting the auctions.
Says one FCC staffer, "Some broadcasters may be aiming to use the spectrum to road-test services without worrying about other things," such as bandwidth constraints and the obligation to carry their traditional TV programming. Once purchased, the new licenses aren't covered by the traditional media-ownership limits that have rankled broadcasters, such as national audience reach or local-ownership caps.
Most wireless bidders applying are small, rural carriers and may not be able to outbid the broadcasters. If the station groups can pick up new spectrum on the cheap, it may not matter whether they have a business plan. They at least have two licenses forever: one in the TV core and the other in the old part of the TV band. If someone else comes up with a great idea, they can either join in or sell the spectrum at a premium.
The spectrum auction has suffered a tortuous history since Congress in 1997 ordered the FCC to squeeze broadcasters off the frequencies used for TV ch. 52-69 and put the spectrum on the auction block by 2002. Since then, the commission has established seven different dates to sell chs. 60-69. The issue came to a head two weeks ago when Congress canceled the June 19 auction of chs. 52-59 and postponed sales for all but a sliver of spectrum. Now the only bidding slated soon is the portion known as the C and D blocks, which contain chs. 54 and 59, and ch. 55, respectively, now scheduled for sale Aug. 27.
Although minimum bids for the Aug. 27 auction total roughly $11 million, final selling prices are wildly unpredictable.
LIN, Capitol, Sinclair and Total.TV all are slated to participate; each has been out front in the digital transition.
LIN, which operates 26 stations in 16 markets, has applied to bid on 135 of 734 C-block licenses for frequencies now used for chs. 54 and 59. Banks Broadcasting, a minority-led company 50% owned by LIN, can bid on another 54 licenses. Each license covers a metro or rural market. The two groups have applied for bid rights for each of the 28 markets where they own stations as well as major metro areas like New York, Detroit and Boston.
Capitol Broadcasting has permission to bid on all 734 licenses around the country. Capitol owns four North Carolina stations, including WRAL-DT, one of the most aggressive DTV stations in terms of the amount of digital programming offered.
Like Capitol, Sinclair, headed by David D. Smith, is vying to buy up all 734 market licenses, viewing spectrum with flexible use as superior to the current DTV transmission standard.
Hoping to one-up the broadcasters by buying up spectrum making up ch. 52-69 is Total.TV. Headed by WebTV founder Philip Goldman, Total.TV aims to create a new multichannel pay service priced significantly lower than cable or satellite TV.