FCC Considering Spectrum Swap Between Broadcasters, Carriers

(MoneyWatch)  A Washington, D.C.-based market research firm says Federal Communications Commission (FCC) staff is talking with TV broadcasters about buying back some spectrum that it would then lease or auction to wireless carriers, with the broadcasters getting in on the action.

This makes a lot of sense, particularly given the concerns the Obama Administration has expressed over the paucity of wireless spectrum, and how that scarcity hovers over the burgeoning wireless industry as mobile Internet usage explodes. According to Blair Levin, the person in charge of crafting the FCC's national broadband plan, "The record is very clear that we're facing a looming spectrum gap."

Paul Gallant, senior vice president at the Washington Research Group, said in an email to clients that "Just yesterday, President Obama's senior advisor for technology told a public-private advisory panel that finding new capacity for wireless broadband is a top White House economic policy goal."

Moreover,

given [FCC] Chairman [Julius] Genachowski's repeated emphasis of the need for more mobile broadband spectrum, the shortage of obvious new sources, and broadcasters' control of especially high-value airwaves, we think the FCC is likely to pursue reallocation of broadcast TV spectrum, with the first step being a Public Notice in mid-November.

Such a deal would free up significant bandwidth for wireless carriers and allow broadcasters to cash in on spectrum that they don't use to full capacity.

How would it work?

According to Gallant, the deal would entail local TV stations giving up some of their current spectrum ("at least half, and perhaps all but the amount needed to air a standard definition TV signal") in exchange for a share of the proceeds from an auction or lease of the spectrum to wireless carriers.

Indeed, a study by the Brattle Group that was commissioned by the Consumer Electronics Association argues that the 294 MHz of broadcast spectrum is worth about $12 billion today as TV service but a whopping $62 billion as wireless broadband.

According to Gallant:

This would be a positive development for Sinclair, Hearst Argyle, CBS, LIN, Gray, ION, Scripps, and Gannett. Putting 200 MHz (or more) of prime spectrum into the market would also be a medium-to-long term positive for wireless infrastructure companies including SBA Communications, Crown Castle, American Tower, Alcatel-Lucent, Tellabs, Ericsson and Ciena.

[Image source: courtesy of Peter Standing]