Brace Yourself for FCC-Triggered Digital Earthquake

Posted March 30, 2004 at 2:01pm

Could there be a more misguided, distorted or anti-public-interest policy than our spectrum policy involving broadcasters? Here is the gist of it: To accommodate the 10 or 12 percent of Americans who rely on over-the-air broadcasting for their television (the rest include those who pirate the signals or use cable or satellite), Congress gave broadcasters a double allocation of extremely valuable electromagnetic spectrum — airwaves, in the common parlance — until they could make an expedited but orderly transition from analog to digital television. [IMGCAP(1)]

The intent of the Telecommunications Act of 1996 was that the transition would end by December 2006, at which point the old analog spectrum would be returned to the federal government. Most of it then could be auctioned off for a handsome sum of money, estimated at the time to be up to $70 billion (now much more). A small portion would be made available for public safety frequencies. The money would go into the public treasury.

That policy sounds reasonable — but it’s not. To satisfy that sliver of Americans who don’t use cable or satellite, Congress gave up access to a hugely valuable and scarce public asset for a decade at least. It has turned out to be much more than a decade, however.

The commercial broadcast industry, after assuring Congress that a deadline of 2006 was ample time to make this transition, quickly finagled an out — convincing Congress to allow it to hold onto both blocks of airwaves until 85 percent of television sets receive digital signals. Since most of the TV sets we have are analog and cannot receive a digital signal, that meant, in effect, years of delay past 2006.

With no meaningful, firm deadline for giving up the spectrum, broadcasters have dragged their feet making the conversion, adding to the delay — even as the need for spectrum, for public safety and for the next generation of wireless services has grown acute. Americans have more than 150 million mobile phones, and increasing numbers have wireless connections to the Internet via laptop computers or hand-held devices. But the wireless connections are clogged, since the United States has allocated only about half the amount of spectrum for these purposes as has Europe. Europe and Asia are expanding the uses and the reach of wireless by leaps and bounds, while we are in danger of falling behind on applications of the new technologies.

If rationality had prevailed in 1996, Congress would have auctioned off this valuable spectrum and then taken a small portion of the revenues and provided digital television sets, or converter boxes, to all Americans relying on over-the-air broadcasting. Tens or hundreds of billions of dollars in revenue would have flowed directly into the public treasury and the spectrum could have been available years ago. But broadcaster clout trumped rationality. Now, however, there is a glimmer of hope on the horizon.

In the face of this longstanding folly, brace yourselves for a telecommunications earthquake. The Federal Communications Commission is considering a bold, innovative and clever plan to free up quickly that huge swath of public airwaves and pull all Americans dramatically into the digital television age. Let us hope Congress doesn’t step in the way. Indeed, let us hope even higher: With Congressional involvement, the plan could also advance the causes of homeland security, public safety, wireless communications, public broadcasting and the broader public interest.

FCC Media Bureau Chief Kenneth Ferree wants to redefine what it means to have 85 percent access to digital TV. Ferree’s idea is to convert the digital signal on cable and satellite to analog for those without digital sets or converters, allowing them to have picture and sound even without a digital set. If that were to happen, the 85 percent level could be achieved in most markets by 2006. As for those who don’t have cable at all they can be supplied with converter set-top boxes, which, when mass produced, would probably cost $50 or so. Tax credits or subsidies for those who can’t afford them (the latter worked successfully in Berlin) could solve the problem.

The cost of giving everybody access to digital television would be recouped dozens of times over through revenues from the auction of the analog spectrum turned back (wireless and other interests are desperate to gain access to the prime spectrum the current broadcasters hold). The problems of interference of signals and inability to communicate that plagued emergency responders on Sept. 11, 2001, could be solved by a new grant of dedicated spectrum. And a small fraction of the money raised could in turn be used for a variety of public-interest purposes: creating a trust fund for public broadcasting to move it away from annual appropriations, forming a digital trust to expand local public-interest educational and cultural activities, creating a band of wireless space for public officials in the event of terrorist attacks, and funding a transition for military communications to free them from worldwide interference.

To be sure, the Ferree idea is not problem-free. Among other things, it would need to find ways to make sure that digital signals from commercial and public broadcasters, including their high-definition pictures, have access to cable and satellite systems. Those are relatively easy to solve. More problematic is the reflexive negative reactions of many Members of Congress who have jumped for decades to the tune played by the commercial broadcasters. They need to be resisted. For the first time, a way to expedite digital television, expand needed wireless services, serve the public interest and get a real return to the public for the use of its airwaves is in sight. FCC Chairman Michael Powell and Congress should seize the moment.

Norman Ornstein is a resident scholar at the American Enterprise Institute.