The Great Airwaves Robbery

Policy Paper
Nov. 1, 2001

Last December Sen. John McCain described the 1996 “loan” of a second TV channel to broadcasters – for the stated purpose of facilitating the transition to digital and high-definition television – as “one of the great rip offs in American history. They used to rob trains in the Old West, now we rob spectrum.”

But even critics of the first Congressional giveaway could not have anticipated that within five years the FCC would allow broadcasters operating on channels 60 to 69 to capture for themselves as much as two-thirds of the $10- to-$30 billion that may be bid by wireless providers at the public auction now scheduled for next June 19. In an effort to create incentives for the 21 broadcast companies with stations on channels 60-69 to clear the band – thereby freeing it up more quickly for commercial wireless and public safety services – the FCC took the unprecedented step of completely delegating to the two affected industries the power to negotiate the share of the public auction proceeds that will be paid to the broadcasters instead of to the Treasury.

“Allowing industry to negotiate private marketplace deals that dictate the governance and the transfer of spectrum and to earn profits on the spectrum through such arrangements is outrageous,” Senate Commerce Committee Chairman Ernest F. Hollings wrote to FCC Chairman Michael Powell after the ruling. “Under the law, the FCC is also required to reassign channels 60-69 through an auction. When Congress enacted these statutory provisions, it did not envision that the FCC would hand over its authority to manage spectrum to industry and to the marketplace,” Hollings wrote. The FCC’s decision, announced September 17, also allows these same broadcasters, organized as the Spectrum Clearing Alliance, to delay indefinitely the conversion to digital TV that rationalized their receipt of a second six MHz broadcast channel in the first place.

In short, thanks to a misguided industrial policy, the most precious public asset of the information age – the electromagnetic spectrum, or airwaves – is being held hostage by incumbent licensees demanding a payoff for something they got for nothing in the first place. And due to a combination of Congressional inaction and the pressing need to find frequencies for the wireless phone industry and public safety, the FCC seems all too willing to write a blank check for ransom.

For the complete document, please see the attached PDF version below.

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