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ITIF: Broadcasters Should Have to Share Channels, Period

The FCC should require any broadcaster who does not give up spectrum for auction to share channels, which should give the FCC flexibility to decide whether or not to hold a second incentive auction -- broadcasters want only one -- and should essentially have a second DTV transition because the first one was "botched."

Those were among the recommendations in a report by Richard Bennett, Senior Research Fellow at the Information Technology and Innovation Foundation (ITIF).

At a forum on the paper featuring FCC and congressional representatives, Bennett said the paper was meant to be provocative, but also that it was the right policy and it was up to the others on the panel to convince policymakers it was the right approach.

ITIF board members include representatives of Apple, Cisco, Hewlitt-Packard and Quaalcom -- all fans of spectrum, reclamation -- and Blair Levin, who headed up the FCC National Broadband Plan that proposed the incentive auctions.

Bennett laid into broadcasters, saying it was a dying technology and that with only 30 million people watching over-the-air, the spectrum could be consolidated from 300 Mhz to perhaps a tenth of that, and with multiplexing and compression techniques, the 30 or so channels most people are watching could be delivered as a multiple-use network. In fact, the report suggested that the definition of DTV going forward should be that rather than individual licensed channels.

"ITIF recommends a second DTV transition whereby the FCC could force all free TV viewers to purchase a new television set, or the repacking of ‘four major networks' onto one TV channel in each market,:said National Association of Broadcasters spokesman Dennis Wharton. "The first option represents a frontal assault on consumers in a down economy. The second would kill off many religious-oriented and foreign language program offerings using multicast DTV channels, as well as the promise of mobile DTV to millions of consumers. NAB strongly opposes higher prices for consumers and the elimination of diverse media voices in the mobile video marketplace."

Rick Kaplan, head of the FCC's Wireless Bureau, said the report gave the commission something to think about, but did not weigh in specifically on the recommendations

Levin, who was the architect of the National Broadband Plan that proposed the incentive auctions, was on the panel Tuesday. He said he only wished the report had come along before the plan because, for one thing, "it would be nice to have the broadcasters attacking someone other than me."

Levin agreed there should be another DTV transition, but said that should be a migration to an MPEG 4 transmission standard.

He took issue with the incentive auction legislation currently on the table, saying that it should have been simply one line giving the FCC authority and differing to its expertise to work out the details. He said its role as an expert agency was being undercut and that "Every sentence Congress has added is counterproductive." The current version of the bill in the Jobs Act runs 16 pages.

David Redl, Republican counsel for the House Energy and Commerce Committee, who worked on the staff draft of an incentive auction bill, said he thought the bill had given the FCC flexibility, and that if there was one thing it knew how to do, it was to run an auction and make money for the treasury, with the caveat that it had put too many conditions on the failed D block auction.

Current incentive auction legislation in the President's jobs bill would allocate the D Block, rather than try to auction it again, as Republicans want.

Redl also defended putting incentives in the bill for broadcasters to compete to give up spectrum. The incentive auctions would be a double-sided auction, with the government taking spectrum from the broadcaster that gives it up at the best price, then auctioning to wireless companies for billions of dollars more, with the proceeds paying off broadcasters, compensating them for moving and paying down some debt. "We think there should be pressure on the reverse side to make sure it doesn't become simply a way for licensees to extract the most possible from their position," he said. "If there is a reason for them to offer a license in a voluntary incentive auction, we think there should be competition for those dollars to get out of the market and we think that was an important distinction to put in our discussion draft."

Kaplan echoed the need for flexibility, saying that the FCC had gotten "sucked into the political process" in a way he hasn't seen before. He said the more flexibility the commission had in setting up the auction, the better, and that it was not like walking in and holding up a bidding card. "We make adjustments in the course of auctions, which is one way it can help assure getting the most money for the treasury and creating a successful auction, suggesting failure is not an option since it could set the process back years (a process that will take several years even if it is successful).

He said the FCC needed the same flexibility with rules, pointing to the issues that have arisen over its grant of a waiver to LightSquared for a terrestrial 4G wireless service and the FCC's need to respond to them. "We need the flexibility to work our way around," he said.

One of Bennett's provocative points was that the interoperable broadband communications network allocated to and run by public safety is a bad idea as currently constituted. He said the problem is that when it is backed by medal-wearing police and firefighters, legislators were reluctant to challenge them. Other panelists tended to agree with his point, but pointed out that was the political reality they were faced with.

Larry Downes, senior adjunct fellow, at TechFreedom, said that he supported the separate public safety allocation rather than a public-private partnership due to that political reality, not because he necessarily thought that was the right way to go.