Vacant spectrum: a divorce settlement with 'if's'

Originally published in Current, March 11, 1996
By Steve Behrens

Some of the biggest "if's" in Rep. Jack Fields' bill surround the value of the vacant noncommercial TV channels that he proposes to auction off as pubcasting's settlement in its divorce from the U.S. Treasury.

Fields released portions of a study ordered up from the National Telecommuications and Information Administration, which estimates that the 343 vacant channels would be worth between $202 million and $2.3 billion, depending on bidders' uses for them.

But while the reserved noncommercial channels may still be vacant, many already have been spoken for.

About half of them, along with all of the vacant commercial channels, will be required to move forward with plans for broadcasters to switch to digital (advanced TV) transmission, says Victor Tawil, v.p. of the Association for Maximum Service Television (MSTV), an industry organization.

This was the case in both the FCC's original 1992 plan for ATV allotments and in the 1995 industry plan that MSTV worked on, he says. Both plans aimed to scrape up enough 6 MHz channels so there would be an ATV transition channel for each TV station now in operation.

Though Congress may now choose to auction off the ATV channels rather than go through with the FCC's transition plan, many of these "vacant" channels could be claimed for that purpose as well.

Those complications aside, the vacant channels would ordinarily be "negligible" in value, according to APTS President David Brugger.

But, before auctioning the channels, Fields is proposing to enhance their value in two ways, each of which adds "if's" to the proposal:

• Each vacant channel would actually amount to two channels, the legislation provides, since it would be accompanied by an ATV channel of its own, assuming that Congress ends up permitting the FCC to grant ATV channels as planned.
• The bill would empower the FCC to relocate frequencies to more populous areas to recover the "full value of the spectrum," presumably while protecting existing stations from new interference.

The NTIA study released by Fields to support his plan has more "if's." The value of the channels will be highest if the rural ones can be relocated closer to metro areas, if 36 percent of them can be sold with accompanying ATV channels and if even a fifth of them get snapped up as affiliates of the new Warner Brothers or United Paramount networks.

If these things happen, the 343 stations would have a market value of $2.3 billion, the study estimated. Fields would put no more than a billion of that into the trust fund. If the channels stay put in the hinterlands and none joins a network, the package would be worth $202 million. Other mixtures of circumstances would yield intermediate proceeds.

The idea of moving the vacant rural channels toward greater concentrations of eyeballs came from Fields after NTIA had done a first draft of the study, says Kristan Van Hook, a policy analyst at the agency. Staffers' second draft then came up with higher auction values, with a page full of caveats about possible interference problems.

One such note raised a particularly discouraging difficulty: While the NTIA analysts assumed on one page that the vacant channels would have "very little economic value" if accompanying ATV channels weren't auctioned along with them, they noted in a caveat on another page that in cases where they would move channels, "it is unlikely the ATV channel will be able to be relocated."

Though the NTIA study gave detailed attention to only a sample of 18 channels, it did turn up a few vacant public TV channels that are already located in major markets--Phoenix, Wichita, Kansas City and Portland, Ore.

Many of those that are farther out of town could be made more saleable by moving them closer to viewers, NTIA staffers found. Channel 25 in the Des Moines market gained 27 percent in population coverage by being moved 44 miles closer in. But moving Channel 39 nearer to Phoenix increased its potential audience 20-fold because a mountain would no longer block its signal.

By relocating these channels, however, the funding plan runs into a political "if." Residents of some of these outlying areas and smaller cities may not accept the notion that the frequencies reserved for noncommercial educational use in their communities can be sold off for commercial use just because they hadn't been put into operation by 1996.

 

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