Editorial: The Second Digital Transition

At first glance, Jan. 12 would appear to be the day that the TV station industry divided itself into two distinct groups. Or picked one of two different roads that diverged—those stations that applied to participate in the broadcast spectrum incentive auction, and those that did not.

But the real “fish or cut bait” date is March 29. That is when stations must decide whether or not to participate in the auction, so the division is not yet set in stone. Then, even those who participate won’t necessarily succeed in giving up spectrum, with some of those remaining in the business.

And even participants may only be moving channels or sharing spectrum with others.

Following the auction, stations inside and outside the process will be united in the years-long repack, akin to a second digital transition, when they will be competing for tower crews and moving vans while they compete for eyeballs and advertising dollars. So the two roads have yet to diverge—though for those stations getting out of the business altogether, the road will ultimately be closed.

The National Association of Broadcasters last week was mostly staying positive, hoping for a hitch-less auction and suggesting there would be robust participation by TV stations.

Clearly there are arguments for all levels of participation, from declining the FCC’s invitation to sell spectrum all the way through to cashing out.

With billions in play, there is a fiduciary responsibility to at least kick the tires, though the conclusion could well be that the best long-term play is to stay in the business and leverage new technologies and opportunities.

Michigan State University, alma mater of the late FCC chairman Jim Quello, one of broadcast TV’s strongest defenders, last week chose not to participate in the auction and go for the $200 million-plus opening bid price on its spectrum. The university decided instead to double down on its public service mission and to potentially capitalize on its spectrum in a changing digital distribution age.

Michigan State president Lou Anna Simon talked about the importance of free access to media compared to paid access via cable and other media. She said that the best way to meet the needs of the community “clearly requires that we be on the air,” a point the NAB has been making throughout the process as the FCC has beaten the drum for seeking the best and highest use of the spectrum.

MSU rejected the idea of channel sharing, Simon said, because it limits how the university can leverage new technology. She added there were ways to use the spectrum much more effectively, including for research, that has her faculty “lined up” to participate.

The FCC has talked about re-auctioning the broadcast spectrum for its highest, best use, but clearly some broadcasters think their mission of entertainment, news and public service fits that definition.

We were a bit surprised President Obama did not even mention the transition in his Jan. 12 State of the Union speech. The application deadline for TV stations to apply had come only hours before, and the president has emphasized the importance of freeing up spectrum for wireless broadband, even making it one of the laundry list of proposals in a previous State of the Union speech.

But that first DTV transition did go relatively smoothly, and we join NAB in hoping this one will, too.