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about important developments in the digital terrestrial television market.
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The spectrum debate in the
"Why should people in Kentucky have their local
stations' signal potentially degraded….so urbanites in Manhattan
can have a faster download of the app telling them where the nearest
spa is located?" - Gordon Smith, NAB State of the Industry address
At the NAB Show in Las Vegas earlier in the month, plans
for spectrum auctions were a topic of intense debate. Two representatives
from the Federal Communications Commission (FCC) defended their proposal
for incentive based auctions to allocate frequencies currently used
by broadcasters to wireless broadband providers. Meanwhile broadcasters,
represented by the National Association of Broadcasters (NAB), declared
themselves to be "in full battle mode," ready to protect themselves
from an unwelcome seizure of their spectrum.
Proposed incentive spectrum auction
In March 2010, the FCC presented its National Broadband
Plan  which calls for the availability of wireless broadband services
to reach 98% of the United States in the next 5 years. The plan calls
for the recovery of 120 MHz of frequencies from terrestrial broadcasters
which would then be re-allocated to wireless telecom providers through
a spectrum auction. To encourage broadcasters to voluntarily give up
their frequencies, part of the proceeds raised from the auctions would
be re-distributed to broadcasters.
During his keynote presentation  at NAB, the FCC chairman Julius
Genachowski spoke of a "looming spectrum crisis". According
to Genachowski, 25 million people watch video on cell phones while 55
million tablet computers will be sold in 2011 whose demands on spectrum
are 120 times greater than that of a feature phone. Without additional
frequencies allocated to wireless broadband providers, users will face
spectrum congestion, dropped calls, and higher prices.
Genachowski also defended the proposed incentive auctions which, he
believes, will relieve the spectrum crunch and provide revenue to broadcasters.
Broadcasters who give up their frequencies will be compensated directly,
while broadcasters that choose not to give up their frequencies will
be compensated for any channel changes that it may be necessary to aggregate
spectrum into large blocks for use by wireless broadband providers.
Genachowski clearly stated that broadcasters do not have the right to
keep their current channel location as this would undermine the potential
effectiveness of the auction. However, any move from the UHF to VHF
frequency band should be voluntary.
In a further attempt to convince broadcasters of the value of the
proposed incentive spectrum auctions, the head of the FCC's Media Bureau,
Bill Lake, noted that it was not the FCC's intention to degrade television
services. Rather, such issues should be addressed in the formulation
of the licensing requirements prior to the auction. He also suggested
that it was unlikely that such auctions would take place before 2015.
Broadcasters have voiced their concerns regarding the proposed incentive
auctions. While not opposed to the spectrum auctions so long as they
are voluntary, broadcasters have questioned the impact on those broadcasters
that choose not to participate in the auction and continue to transmit
their services on the DTT platform.
For example, these broadcasters may be encumbered by new spectrum fees,
face increased interference as services are packed more closely together,
and lose current coverage levels. In addition, innovation will be jeopardized
as no capacity will be available for the launch of new services such
as 3DTV. According to one broadcaster, the reallocation and re-packing
of spectrum will result in a "significant financial cost"
to broadcasters while a second digital transition could create viewer
disruption, confusion and dissatisfaction.
During the annual NAB State of the Industry address, Gordon Smith,
head of the organization, evoked his skepticism of the "spectrum
crisis" which he instead called a "capacity crunch."
According to Smith, the mobile broadband industry should invest more
in their infrastructure by building out their networks and improving
the efficiency of their receiver standards rather than purchasing spectrum
from broadcasters. He called on the General Accounting Office to undertake
a comprehensive inventory of spectrum usage.
Broadcasters have been awaiting the engineering models from the FCC that show broadcaster frequency assignments and coverage areas following the auctions. Such information is expected in the next few months and will help broadcasters better understand the impact of the incentive spectrum auctions.
Impact of the proposed AT&T and T-Mobile merger
The FCC must receive congressional authorization before it can undertake
its incentive spectrum auctions and allow broadcasters to share in the
auction proceeds. However, the likelihood of such legislation being
enacted this year is slim. Disagreement on spectrum policy remains between
Democrats and Republicans. In addition, members of Congress will be
reluctant to approve such legislation without a better understanding
of the outcome of the proposal by AT&T to purchase T-Mobile USA
from Deutsche Telekom for $39 billion.
As a next step, the proposed AT&T and T-Mobile merger requires the approval of the Department of Justice and the FCC. Congress is also expected to hold hearings on the merger, with a first hearing scheduled for 11 May. Altogether the review process could take up to 18 months. By then, further delays to the legislation on spectrum auctions are probable since members of Congress are unlikely to risk jeopardizing their relationship with broadcasters by approving such legislation during an election year.
The proposed merger could have further impact on the spectrum debate.
Should the merger receive government approval, AT&T may find that
its need for spectrum diminishes and, as a result, reduce the amount
that it bids for any newly available spectrum capacity. The projected
revenue gain of $30 billion generated from the spectrum auction may
no longer hold. The market price could also be affected by the decrease
in the number of competitors vying for the spectrum, as the total number
of national mobile operators is reduced from 4 to 3 (AT&T, Sprint,
Source: Natalie Mouyal, DigiTAG Project Office
 See http://www.nabshow.com/2011/newsroom/
 See the DigiTAG web letter on this topic:
 See http://www.fcc.gov/Daily_Releases/
 See http://www.tvnewscheck.com/article/2011/
 See http://www.broadcastingcable.com/article/
 See http://www.nabshow.com/2011/newsroom/
DigiTAG aims to encourage and facilitate the implementation and introduction
of digital terrestrial television services using the Digital Video Broadcasting
Project's Standard (DVB-T). It has some 50 members from broadcasting,
network operators, regulatory, and manufacturing organisations throughout
Europe and beyond.
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