Spinning TV broadcast channels into mobile gold

In 2010, the Federal Communications Commission found that mobile spectrum allocations had been taking way too long – 6 to 13 years. With the smartphone revolution and the resulting “mobile data tsunami” stressing networks, it promised to do more, and to do it faster. It would hold an innovative, two-sided auction to free airwaves set aside for broadcast TV decades ago, but now frozen in time and blocking far more valuable uses in mobile wireless.

In the ensuing “incentive auction” TV broadcasters would state prices to go dark. These stations could still transmit programs to viewers, sharing other digital TV stations, as well as cable, satellite, and broadband facilities. The FCC would buy back select licenses. New “flexible use” licenses would be allotted the now-quiet TV frequencies, and sold by competitive bidding. To facilitate, the Commission would assign many of the remaining TV stations new channels, packing their transmissions more tightly and clearing out new bandwidth.

The FCC aimed to transition 120 MHz, nearly 40 percent of the TV band, by year-end 2015.

That deadline had come and gone when the FCC announced bidding results in April 2017. And the bandwidth transition, which shrank to just 70 MHz, will now last until July 2020 under the FCC’s plan.

{mosads}The idea of moving spectrum into flexible use licenses was (and is) golden. So was paying TV stations to cooperate; the alternative was a quagmire. We are still, today, struggling with work-arounds for TV licenses assigned in the late 1930s. Consumers and entrepreneurs deserve better. The FCC’s 2-sided auction, crafted in 2009-10, was an effort to give it to them.

But the Commission called its own process a “Rubik’s Cube.” This complexity nixed any improvement on the 6-to-13-year spectrum allocation lag.

But now, a sublime success can be seen emerging. The owners of the 145 TV stations who have agreed to exit broadcasting are being given just 3-6 months to vamoose. The FCC maps out a 39-month transition, however, for the 987 stations (about half the total stations left) that must migrate, leaving UHF channels 38-51 to slide down to 14-36.  

Prediction: This will not take 3.25 years.

That is because the new mobile licensees — having won their bids and staked their claims — are pushing hard to unleash the resources they have purchased. Economic incentives are reducing travel times.  

The largest auction winner, T-Mobile, paid $8 billion to gain access to about 30 MHz nationwide. The carrier is eager to add bandwidth in its competitive assault on rivals AT&T and Verizon. More than a year before the “incentive auction” ended, T-Mobile inked a deal, and invested heavily, to create antennas, filters and work crews to enable broadcast channel changes. “It’s a no-brainer for T-Mobile to do what we can to help the broadcast industry accelerate the FCC’s repacking schedule,” explained David Mayo, the company’s SVP for Technology.

The instant auction results were announced, T-Mobile opened its checkbook further. It agreed to pay for a large number of PBS TV stations to “operate on new frequencies,” providing continuing service while switching off existing transmissions and paying for new facilities.

“We are thrilled,” said the PBS stations in a statement, “that T-Mobile sees the value that public broadcasting brings to the American people and is helping to ensure that everyone – regardless of income or zip code – continues to have access to PBS.”

It is indeed notable how high-minded T-Mobile became in supporting the pledge drive. Perhaps a copy of Adam Smith’s 1776 “Wealth of Nations” might be the placed in next tote bag giveaway.

T-Mobile’s network is already growing. It opened up 4G operations on its first 600 MHz license (TV Band spectrum) on August 15 in Cheyenne, Wyo. It expects to have 1.2 million square miles of coverage – one third of the entire U.S.A. — utilizing bandwidth from the “incentive auction” by year-end. The market is repurposing frequencies in months, not years.

The regulatory system can still be gamed. Broadcasters have been begging the FCC to delay the transition on the grounds that the 39-month time limit is draconian. An argument broke out over how many tower installation crews could be deployed in the United States: 14 or 50. The right answer: as many as customers are willing to pay for.

Indeed, crews are among the resources that companies like T-Mobile have been creating so as to deploy 4G LTE services on their procured frequency bands. Silly arguments over irrelevant questions are what regulators with no skin in the game engage in while dawdling.

We observe the parties protesting against wireless market reconfiguration and abandoning old channels in a flash when offered a princely sum. The lobbying to delay the government’s transition date is not to deny those deals, but to up their price.

Such political skirmishing serves no beneficent purpose. Overlay rights, as now embedded in the FCC’s newly minted 600 MHz mobile licences, reward the swift. That’s the fast track approach to breaking the logjam.

Moribund airwave spaces remain. These include vast under-utilized bands reserved for public agencies, including the military, as well as the 35 channels of over-the-air TV that, post-incentive auction, will continue to be walled off from the modern wireless world.

Unleashing these frequencies by adopting more of the policies that are rapidly pushing progress on the tail-end of the incentive auction is an opportunity that should not be lost.

Thomas Hazlett is H.H. Macaulay Endowed Professor of Economics at Clemson University, and formerly served as chief economist of the FCC. His book, “The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone,” was recently published by Yale University Press.