Today Tech Knowledge filed the following comments at the Federal Communications Commission in support of a request for relief from interim performance requirements for the 2.3 GHz Wireless Communications Service. The complete comments as filed can be downloaded in PDF format HERE. (Note, the HTLM version of the comments printed below does not contain the footnotes provided in the PDF version available at the link above and filed at the FCC.) Read More
Few industry analysts seemed surprised when Sprint’s new CEO announced “after thorough analysis” that the company won’t participate in next year’s auction of TV broadcast spectrum (known as the “incentive auction”). Analysts already knew that Sprint “has the spectrum it needs to deploy its network architecture of the future.” As a senior telecommunications analyst for Bloomberg Intelligence said in response to the news, “Sprint really has a lot more spectrum than its rivals, so they don’t have that pressing need to get more.”
The announcement is an embarrassment to the Department of Justice (DOJ), which apparently didn’t know (or didn’t care) that Sprint was flush with spectrum for the foreseeable future. When the Federal Communications Commission (FCC) was developing its auction rules, the DOJ urged it to “ensure” that both Sprint and T-Mobile would “win” spectrum in the auction. The DOJ believed Sprint and T-Mobile had to win “low-frequency” spectrum in the auction in order to compete against Verizon and AT&T in the mobile marketplace. The FCC agreed with the DOJ’s expert opinion and decided to “reserve” the auction’s best spectrum for bidders other than AT&T and Verizon.
Though it’s no surprise, it’s now obvious the country’s federal experts on competition and antitrust matters were wrong in their analysis of Sprint’s alleged need for low-frequency spectrum in order to compete. The agencies were blind to Sprint’s effort to leverage Washington to its business advantage even though Sprint used the same tactics just a few years ago in the last major spectrum auction. As FCC Commissioner Ajit Pai recently noted, “Sprint’s decision not to participate in the incentive auction highlights the folly of the FCC’s attempt to pick winners and losers before the auction begins.” It’s been less than a year since Sprint told the FCC that it would be “unable to make up much, if any, ground” competing against Verizon and AT&T if the FCC didn’t expand its existing spectrum reserve so that Sprint could acquire additional spectrum. It was only after the FCC completed its spectrum reserve proceeding that Sprint announced it doesn’t need the spectrum after all. Read More
A video is available HERE for a Congressional Internet Caucus Advisory Committee panel addressing the future of Wi-Fi that was moderated by Fred Campbell on September 25, 2015.
Fred Campbell’s latest article in Forbes discusses the regulatory implications of LightSquared’s emergence from bankruptcy. The complete article is available HERE.
Remember the Solyndra scandal? Solyndra was a shaky solar panel company backed by the Department of Energy through a process “infused with politics at every level.” When Solyndra finally collapsed, it left taxpayers liable for $535 million in federal guarantees.
Solyndra pales in comparison to what’s at stake with LightSquared, another shaky company that went bankrupt after betting on billions of dollars in government benefits. The Federal Communications Commission (FCC) initially doled out government benefits to LightSquared in 2010, when a trio of agency bureau chiefsillegally granted LightSquared a nationwide cellular license in a spectrum band allocated for satellite communications. LightSquared wanted to convert the satellite frequencies into far more valuable cellular spectrum, “much as a developer would use a change in zoning to make land more valuable,” but its plan backfired when a host of other government agencies and companies proved that LightSquared’s proposed network would interfere with the Global Positioning System (GPS). Read More
This week the Federal Communications Commission (FCC) is voting on procedures for an upcoming auction of spectrum (or airwaves) that will expand wireless broadband services to Apple and Android devices. Like bidders on eBay, it’s natural that spectrum bidders want to win big while paying as little as possible. It’s not natural for eBay or any other auctioneer to help some bidders win big by discriminating against other bidders, yet that’s what the FCC decided to do last year when it ruled that Verizon and AT&T can’t bid against T-Mobile or other bidders for nearly half of the spectrum expected at auction.
The FCC’s decision to shelter T-Mobile from competition for such a large portion of the spectrum for sale counts as a big win for T-Mobile before the auction even starts. But a bidding preference for nearly half of the spectrum still isn’t big enough to satisfy T-Mobile, who’s demanding an even bigger handout. The company claims it can’t buy the spectrum it needs unless the FCC gives it an additional unfair bidding advantage for more than half of the spectrum. Read More
Congressional debates about STELA reauthorization have resurrected the notion that TV stations “must provide a free service” because they “are using public spectrum.” This notion, which is rooted in 1930s government policy, has long been used to justify the imposition of unique “public interest” regulations on TV stations. But outdated policy decisions don’t dictate future rights in perpetuity, and policymakers abandoned the “public spectrum” rationale long ago. Read More
The FCC is set to vote later this month on rules for the incentive auction of spectrum licenses in the broadcast television band. These licenses would ordinarily be won by the highest bidders, but not in this auction. The FCC plans to ensure that Sprint and T-Mobile win licenses in the incentive auction even if they aren’t willing to pay the highest price, because it believes that Sprint and T-Mobile will expand their networks to cover rural areas if it sells them licenses at a substantial discount.
This theory is fundamentally flawed. Sprint and T-Mobile won’t substantially expand their footprints into rural areas even if the FCC were to give them spectrum licenses for free. There simply isn’t enough additional revenue potential in rural areas to justify covering them with four or more networks no matter what spectrum is used or how much it costs. It is far more likely that Sprint and T-Mobile will focus their efforts on more profitable urban areas while continuing to rely on FCC roaming rights to use networks built by other carriers in rural areas. Read More
THE MISSION TO KILL BROADCAST TELEVISION STATIONS
Analyzing Pay-TV’s Bid to Control the Video Marketplace
Cable and satellite TV distributors (MVPDs) have secretly declared a regulatory war on TV stations. MVPDs have marched into battles over the obscure regulatory territories of “retransmission consent”, “compulsory copyright licenses”, “broadcast exclusivity agreements”, and “basic tier” using a free market flag as their standard. But that flag is merely a cynical smoke screen for their real mission: To kill broadcast television stations altogether.
It is no coincidence that the “reforms” MVPDs seek are entirely one-sided. MVPDs want to repeal regulations that make free over-the-air television possible without repealing regulations that require TV stations to provide local programming to consumers for free. Eliminating only the regulations that benefit broadcasters while retaining their regulatory burdens is not a free market approach — it is a video marketplace firing squad aimed squarely at the heart of broadcast television.
Advertising revenue is the primary motive for this war. The compulsory copyright license prevents MVPDs from inserting their own ads into broadcast programming streams, and retransmission consent prevents them from negotiating directly with the broadcast networks for available advertising time. If these provisions were eliminated, MVPDs could negotiate directly with broadcast networks for access to their television programming and appropriate a substantial portion of TV station advertising revenue, which was approximately $19.6 billion in 2013.
Adopting the MVPD version of video regulation “reform” would not kill broadcast programming networks. They always have the option of becoming cable networks and selling their programming and advertising time directly to MVPDs or distributing their content themselves directly over the Internet.
The casualty of this so-called “reform” effort would be local TV stations, who are required by law to rely on advertising and retransmission consent fees derived largely from national broadcast network programming for their survival. Policymakers should recognize that killing local TV stations is the ultimate goal of current video “reform” efforts before they make piecemeal changes to the law. If policymakers intend to kill TV stations, they should not attribute the resulting execution to the “friendly fire” of unintended consequences. They should recognize the legitimate consumer and investment-backed expectations created by the current statutory framework and consider appropriate transition mechanisms after a comprehensive review. Read More
The Supreme Court hears oral arguments today in a case that will decide whether Aereo, an over-the-top video distributor, can retransmit broadcast television signals online without obtaining a copyright license. If the court rules in Aereo’s favor, national programming networks might stop distributing their programming for free over the air, and without prime time programming, local TV stations might go out of business across the country. It’s a make or break case for Aereo, but for broadcasters, it represents only one piece of a broader regulatory puzzle regarding the future of over-the-air television.
If the court rules in favor of the broadcasters, they could still lose at the Federal Communications Commission (FCC). At a National Association of Broadcasters (NAB) event earlier this month, FCC Chairman Tom Wheeler focused on “the opportunity for broadcast licensees in the 21st century . . . to provide over-the-top services.” According to Chairman Wheeler, TV stations shouldn’t limit themselves to being in the “television” business, because their “business horizons are greater than [their] current product.” Wheeler wants TV stations to become over-the-top “information providers”, and he sees the FCC’s role as helping them redefine themselves as a “growing source of competition” in that market segment. Read More