Who to blame for your dropped calls: Try local TV

December 3, 2010, 8:00 AM UTC

Entrepreneurs and consumers desperately need access to more spectrum; it’s time for the FCC to stop coddling the current hoarders of the airwaves.

Does the U.S. need more Ron Burgundys or more iPhones?

Last summer, when the federal government ordered all local TV stations to begin sending out digital signals, the promised benefits were supposed to be huge. Upon the switch, spectrum once reserved for Good Morning Louisville! or People’s Court reruns would instead carry valuable wireless data, voice, and other information demanded by the modern consumer.

What a disappointment it’s turned out to be. The digital transition pried loose a mere 27% of the old TV airwaves from the grip of TV broadcasters, according to FCC figures, and cell phone users ended up with access to only a fraction of that. Wireless calls could sound much clearer and files download far faster if AT&T (RIMM), Verizon (VZ) and their peers could use the remaining 73%—a simple fact of physics that a growing number of people in Washington now acknowledge. This week the FCC unveiled a proposal to partially fix the absurd situation left by the digital transition by freeing up another chunk of the remaining TV airwaves.

Unfortunately, the Feds are once again rolling out a too-timid fix that accords the broadcasters a special position they don’t deserve.

The digital transition’s failure to take back even a quarter of the TV spectrum was only the latest example in the federal government’s long and ignominious history of coddling local TV stations. Such policies have always been justified by  the importance of providing Americans with “free, local TV.” Their practical effect, however, has been to saddle America with both a second-rate system of free television and a second-rate system of cellular service.

It doesn’t have to be this way.

The British now offer their citizens 140 free channels via a modern technology, a digital satellite, which uses up zero cell phone spectrum. Meanwhile in the U.S., the government’s continued insistence on with promoting local broadcasting has yoked the United States to an archaic distribution system of local stations and ground-based antennas, 20th century technologies that need the same airwaves as cell phones.  In other words, America’s reliance on a patchwork of ground-based TV stations means fewer channels for viewers and fewer airwaves for modern uses.

Some quick background on how America’s airwaves got so screwed up. Congress and the FCC walled off vast expanses of airwaves for local TV broadcasts in the 1940s and 1950s. Then, on top of the rent-free airwaves, broadcasters talked Congress into the idea that cable TV posed such a threat to “free, local TV” that the government should step in to rig the market.  So it was that in 1992 new “must carry” rules gave local broadcasters the legal right to force cable and satellite companies to carry their channels.

The must-carry solution was based on scant evidence of a real problem. As the Supreme Court would later observe: “We must ask first whether the Government has adequately shown that the economic health of local broadcasting is in genuine jeopardy and in need of the protections afforded by must-carry…We are unable to.”

Regardless of their real rationale, the must-carry rules soon had a variety of unintended and bizarre consequences. In the 1990s, the number of homes relying on antennas (instead of cable or satellite service) fell from 40% of the country to 10%.  And yet, at the same time, the number of UHF TV station began to rise. The reason was simple. Thanks to must carry rules, filling the airwaves with TV signals became a regulatory ritual necessary to get on cable. The government was encouraging companies to flood the airwaves with signals that made no independent economic sense.

Supporters defended the rules as a way of improving programming diversity, though that soon proved a difficult argument to make with a straight face. Guaranteed a spot on the cable lineup, many local broadcast stations simply aired infomercials. (Ask yourself: when was the last time you tuned into a local UHF station, either over the air or through your cable box?)

The FCC continues to paper over the fact that the American system of free television actually guarantees no level of service and is wildly inefficient. An FCC spokesman says its wrong to make too much of the early proposal, adding: “We look forward to getting comments from the public on the best ways to make sure that more spectrum is available for wireless broadand and that the American public has access to the news, emergency information and entertainment that broadcasters provide on free over-the-air TV.”

Not surprisingly, Dennis Wharton, a spokesman for the National Association of Broadcasters also objects to this logic.  He says broadcasters followed the rules in upgrading their stations for digital transmissions:  “We spent $10 to $20 billion with the expectation that at some point we would be able to monetize that investment.”  He adds that while the original broadcasters got their TV licenses for free, almost all of today’s broadcasters paid dearly for their licenses.

But just because they paid up doesn’t mean they purchased a unlimited right to the nation’s airwaves. TV station licenses have always been a rent-free loan of spectrum contingent upon those airwaves being used in a way that serves the public interest.

The question here is a simple one.  What serves the public’s interest in 2010—enabling the wireless technologies of the future or protecting the wireless technologies of the the past?

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