November/December 2012
Volume 32 No. 7

November 2012
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Hispanic TV: NAB’s Ace to Deter Telco Spectrum Grab

By Dom Serafini

The U.S. broadband industry needs spectrum –– lots of it. After raking in all available frequencies and even snagging unlicensed spectrum (the white space or unused spectrum that sits between TV channels), the telcos are now going after those frequencies not fully utilized by local TV stations.

Gordon Smith

Gordon Smith

The strategy behind this “spectrum-grab” (reminiscent of the 1889 “land-grab” in Oklahoma) is revealed in a complaint filed by the labor union Communications Workers of America, which claims that telcos are forgoing building costly fiber networks and instead relying on wireless to provide broadband.

However, if this strategy proves correct, it could spell disaster — if not doom — for many of the 1,777 local U.S. TV stations, of which 1,200 are members of the 90-year-old Washington, D.C.-based National Association of Broadcasters (NAB).

In an interview with VideoAge, NAB president and CEO Gordon H. Smith spelled out all the challenges that local TV is facing in the U.S. politically, philosophically and financially. He maintained that, “Naturally, it would be better for the long run [for telcos] to build fiber-optic networks, but they’re more expensive than spectrum.”

On their part, the telcos argue that only 11 percent of U.S. TV HH receive TV signals through an antenna. Plus, local TV stations don’t want to use their sub channels for multicasting and cable doesn’t want to give them extra space to carry them. Indeed, broadcast execs VideoAge contacted refused to talk about their sub channels. Off the record, it was mentioned that they didn’t have the money to program them or didn’t want to cannibalize their main channels. It seems that there are philosophical and conceptual differences about the future of local TV stations among U.S. President Barack Obama, his communications authority –– the FCC –– and NAB. And, according to NAB’s Smith, “the picture is dark.”

In 2010, the FCC recommended the reallocation of 500 MHz of spectrum for wireless broadband use, with 120 MHz coming from the spectrum currently allocated to local TV broadcasting (about 20 channels). Last February, President Obama authorized the FCC to conduct a voluntary incentive auction of broadcast TV spectrum.

But the 60-year-old Smith, a former two-term Republican U.S. Senator from Oregon, is convinced that “the FCC’s goal is to take spectrum from multicasting.” However, he warned, “the most important part of my job is to assure the future of broadcasting and to protect free and local broadcasting.” He continued: “We all agree that local TV stations are important, and their survival is essential. One cannot get local news from networks. Plus, politicians depend on their local TV stations for campaigns. They will never allow the demise of their connection with the community.”

Smith also contested the supposedly reduced need for free-to-air frequencies and pointed to a NAB report stating that more than 20.7 million U.S. households receive television exclusively through FTA broadcast signals. In fact, 3.3 million (26 percent) Hispanic homes are over-the-air only. For the most part, Hispanics continue to rely disproportionately on the free and local TV that local broadcasters provide.

According to the NAB report, broadcast TV provides 14 Spanish-language network options for the U.S. Latino community. And, in addition to broadcasting on primary channels throughout the U.S., Hispanic-focused television is providing a variety of Spanish-language programming on 216 multicast DTV channels. “Ethnic TV works well in large cities,” commented Smith, and the importance of Hispanic local stations is also manifested by “a large and increasing [NAB] membership.”

Said Smith, “Apparently, the government wants to develop broadband without sacrificing local broadcasting, but, at the same time, it is looking to take back the stations’ spectrum, which, in effect, will put local stations out of business, with border stations both in Canada and Mexico affected the most.”

“In my view,” he continued, “the world of tomorrow will include both broadcast and broadband, [but] the big question is where the FCC wants to go.”

Smith proceeded to paint a bright picture: “The future is strong [for local TV stations]. Local programming like news, weather and sports remains essential and free. Stations are making money, especially from political campaigns, particularly in swing states like Ohio, and increasingly they’re multicasting.”

Smith also offered an olive branch to the authority: “The FCC is open to license flexibility,” he said of the possibility of a reverse auction, where stations ask for a price and see if telcos agree. In this case, according to Smith, “some stations may take short-term money and close down, but not many.” The only open question is whether the stations will be able to lease out the spectrum they’re not using.

“All is on the table and the market will determine the stations’ continued viability,” he concluded. But VideoAge pointed out that a Republican president (Richard Nixon) helped create what is now the most powerful TV industry in the world through regulations (FinSyn and Prime-access), asking Smith: Wouldn’t it be better to secure some government protections for something like a local TV station that is considered vital to both the public and politicians, rather than leave its future to a market distorted by short-term interests?

That is something to think about, Smith replied.