FCC budget allocates $500M for broadcasters, but disagreements remain

President Obama's budget proposal for the 2014 fiscal year sets aside $500 million for the FCC to help TV broadcasters modify their infrastructure to deal with changes that will come with incentive auctions of TV broadcast spectrum, which will be repurposed for wireless broadband.

However, as FCC Chairman Julius Genachowski prepares to step down in the next few weeks, there are signs that significant tension still remains between the FCC and the National Association of Broadcasters.

The incentive auctions, and a large portion of Genachowski's legacy, depend on robust voluntary participation from broadcasters to reach the goal of freeing up 120 MHz of spectrum for mobile broadband. However, broadcasters have remained fairly chilly to the idea, though Genachowski was at the NAB conference in Las Vegas this week to try to bridge the divide. 

"The opportunity to free up a significant amount of spectrum for all of our smartphones and tablets is a big, big deal," Genachowski said at the NAB show, according to Reuters. Yet, he said, the auctions are "not a zero-sum game where any time the mobile industry wins, the broadcasting industry loses. This could be the single biggest opportunity in front of us to grow the content economic pie for everyone."

"Mobile is an exciting, new platform for exactly what broadcasters do, which is produce great national and local content," Genachowski added, according to CNET. "If you look back, cable was initially resisted by broadcasters. But ultimately, it's been a boon for the broadcast industry. And given the new economic models, the same thing could happen to mobile."

Under the FCC's proposed rules for the auctions, which are currently scheduled to begin next year, broadcasters will submit bids to relinquish their 6 MHz pieces of spectrum in a reverse auction where the FCC will pay them. The process is voluntary for broadcasters, but many worry that broadcasters might not give up their spectrum based on their previous resistance to the auctions.

After broadcasters give up their spectrum, it will be "repacked" so that broadcasters that do not give up their spectrum can stay on the air--which is what the $500 million in the budget is intended to help with. Then the FCC will conduct a traditional "forward" auction in which wireless carriers will bid for the freed spectrum.

NAB President Gordon Smith was feisty in his response to Genachowski's entreaty. In an interview with Variety, he said Obama, in selecting Genachowski's successor, should give "fair consideration" to selecting someone who "understands the irreplaceable architecture for broadcasting and the demand currently for more broadband. There is a balance there, there is a tension there that needs to be satisfied."

Of Genachowski's stance on that "balance," Smith said: "He certainly gave lip service to it, but I think his strong bias was to the world of broadband. I always tend to look at what people do and not just at what they say, and we have a lot of pressure on us to surrender our spectrum. But once you surrender your spectrum, you don't get it back. And you surrender an industry that the American people can count on, especially in emergencies."

Phil Weiser, a former senior adviser for Obama on technology and innovation who is now dean of the University of Colorado's law school, told the Washington Post that a "two-sided auction" has not been done before.

"The FCC did a fabulous job with the initial spectrum auctions, reflecting a lot of thought and care about how to conduct them," he said. "In this case, the FCC will also have to make a number of important decisions about how the two sides of the auction will be carried out. Because there is no longer free and open spectrum that the government has that it can give out, it is extremely important that the FCC develops this new model and implements the two-sided auction successfully."

On that note, Obama's budget also sets aside $7.5 million in funding for the National Telecommunications and Information Administration to study spectrum usage patterns in 10 major metropolitan areas. Under the program, the NTIA will explore ways to potentially repurpose some government spectrum for commercial uses, which is also a big goal of the FCC.

The budget proposal also calls for the FCC to set user fees for spectrum licenses, which would total $4.8 billion through 2023. However, Obama has included that language in past budgets and Congress has not included it. The fees are opposed by carriers and broadcasters alike.

For more:
- see this WSJ article (sub. req.)
- see this Washington Post article
- see this Reuters article
- see this CNET article
- see this Variety article

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