TV broadcasters still operating analog facilities on channels 52-69 after 2006 may become subject to heavy spectrum fees.
By now all broadcasters are familiar with the notion of spectrum auctions and the sizeable dollars that such auctions are able to generate for the federal government through the sale of spectrum. But the proposed federal budget for FY2003 provides for $500 million in spectrum leasing fees projected to be collected starting in 2007.
There is no real mystery about why the government might want to become a rent-charging landlord. For years the government has assumed, rightly or wrongly, that it would be able to auction off channels 52-69 once the conversion to DTV and the resulting clearing out of that portion of the current TV band were completed. The projected completion date for that process is 2006. Meanwhile, the auction of spectrum, including television channels 52-69, is predicted to raise more than $25 billion for taxpayers during the next five years.
However, the government''s ability to effectively auction off the 52-69 spectrum hinges on its ability to clear that spectrum of its current users. And what better way to encourage the current tenants to vacate than by upping what it will cost them to stay put? Hence, the plan to start collecting rent from holdover analog broadcasters on channels 52-69 starting in 2007.
Keep in mind that the federal budget is merely a proposal and almost certainly will be significantly amended before passage by the Congress. Nevertheless, the president''s proposal affords some insight into what eventually may occur as the contest for the 700 mHz spectrum heats up.
Ownership rules bashed by Court of Appeals
In a decision handed down in February, the U.S. Court of Appeals for the D.C. Circuit ordered the FCC to repeal its cable/broadcast cross-ownership rules and to reconsider its rule capping a single company''s nationwide audience reach to 35 percent of TV households.
The court held that the FCC had failed to support its conclusion that the cable/broadcast cross-ownership ban was necessary to promote diversity and competition. A follow-up order implementing the court''s order is expected, unless the FCC decides to appeal the decision to the Supreme Court. That is unlikely.
Similarly, the court ruled that the FCC had not adequately explained why the 35 percent national cap was necessary and in the public interest. Again, the court ruled the FCC had not given sound reasons for its conclusion that the cap was necessary to preserve competition and diversity. The 35 percent cap will remain in effect until these deliberations are concluded.
As of the end of February, a total of 12 applications had been filed with the FCC by channel 60-69 television stations proposing analog operations on their digital allotments as a means of clearing the upper-700 mHz band for auction to wireless and public safety users. All of these applications request waivers of the traditional separation rules for analog assignments.
These applications will be considered by the full Commission because they raise important public interest trade-off issues. On the one hand, channel 60-69 broadcasters are not likely to vacate their analog channels and make the upper-700 mHz band available for wireless operators unless they have an alternate analog channel to use until the DTV transition. On the other hand, the Mass Media Bureau is reluctant to waive interference protections needed to accommodate the analog proposals. This is the case even though some of the applications propose less interference than they already have been authorized to cause if they were operating on the same channel in the DTV mode.
Harry C. Martin is an attorney with Fletcher, Heald & Hildreth PLC, Arlington, VA.
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