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  • Rick Kaplan 9:12 am on May 23, 2014 Permalink  

    The Point of Being a Ninja Is to Avoid Attention 

    As my 8-year-old works to navigate the travails of making friends in second grade, one of his most unfortunate emerging strategies has been to do silly things to get his peers’ attention. He took that approach to a new level this week when he spent some quality time with the school principal after dumping chocolate milk out of the school bus window on a dare.

    I was reminded of that incident when, in another second-grade moment, CEA’s CEO Gary Shapiro dumped his chocolate milk out of the window with a silly and misguided missive in The Hill (“Broadcasters’ madness hurting the public,” May 21).

    Mr. Shapiro’s innovative thesis is that NAB “implor[es] the federal government for all sorts of favors while completely ignoring what the public wants and needs.” As Exhibit A, he suggests that broadcasters have “done all [they] can to delay implementation of voluntary spectrum auctions,” and that “the NAB has dragged its feet since the law passed and is seemingly discouraging broadcasters from participating in the auction.” Mr. Shaprio’s Exhibit B is broadcasters’ suit against Aereo, an Internet service that takes free, over-the-air broadcasts and converts and repackages them and sells them to consumers for a fee.

    At the outset, Mr. Shapiro’s high-level thesis is absurd. He conveniently ignores the incredible and life-saving coverage broadcasters recently provided in communities hit hard by severe weather events. I may be way off base here, but I think what the public “wants and needs” is information that helps them stay informed and stay safe. These are services radio and television broadcasters provide across the country on a regular basis, and they are unequaled.

    In fact, if CEA really cared about the public interest, it would lean on its wireless carrier and device members to take the simple step of unlocking the FM chips already in their phones. Then, when the wireless alert system is activated to say “check your local media,” a consumer could simply hit a button and have instant access to a local radio station that provides critical information.

    With respect to the voluntary broadcast spectrum incentive auction, Mr. Shapiro is completely out to lunch. His initial claim, that broadcasters are doing all they can to delay implementation of the auction, has zero basis in fact. Indeed, he does not, and cannot, point to a single instance where NAB has attempted to delay the auction.

    NAB has been constructively engaged in the auction process at least as much as any other entity, and has consistently provided concrete solutions for every problem we have identified. We have faithfully lived up to our public statements that we will do what we can to give the voluntary incentive auction the best chance for success. At the same time, it is essential that the auction remains faithful to Congress’s intent of keeping it voluntary, and NAB will work to ensure that broadcasters who want to remain on the air and continue serving their communities can do so without any repercussions.

    What Mr. Shapiro also overlooks is how NAB played a major facilitating role in what is likely to be a $10-$15 billion auction this year of AWS-3 spectrum. As the FCC scratched its head to figure out how to auction largely valueless unpaired spectrum to meet a Congressional mandate, NAB, along with the Department of Defense worked quickly to develop a sharing framework that enabled the FCC to pair that spectrum. NAB gained nothing from that endeavor. We simply recognized that there was a significant public good to be gained by sharing our spectrum with DoD, and found a way to make it happen. NAB has clearly done its part.

    Mr. Shapiro’s second auction claim, namely that NAB is “seemingly” discouraging broadcasters from participating in the auction borders on libel. How are we “seemingly” doing this? Are we “actually” doing it or “seemingly”? I don’t even really understand his point, beyond its goal of attempting to poison the well with an irresponsible suggestion.

    That comment is akin to us saying that because CEA vigorously opposed basic laws and regulations that made electronics accessible to disabled Americans, “CEA seemingly doesn’t care about Americans with disabilities.” Or that, “CEA’s members seemingly exploit children overseas for cheap labor.” Or that, because its members manufacture millions of shiny new objects that end up polluting our oceans and landfills every day, “CEA seemingly supports devastating the environment.”

    I’m not saying these things are true, but hey, it may seem like they are.

    The other nonsensical point in Mr. Shapiro’s piece is his attack on broadcasters for taking Aereo to court. His argument is that, because broadcasters are supposed to provide their content for free, broadcasters can’t and shouldn’t prevent someone else from taking that content and selling it for profit. That makes no sense and is wholly inconsistent with his own advocacy on behalf of his members. I am confident that his members would not support the notion that they should pour a ton of investment into new technologies only to have their competitors steal it and sell it as their own.

    As Mr. Shapiro knows all too well, there are very good reasons why the law provides copyright and patent protection. Those protections are not merely there to coddle multi-national electronics manufacturers, but to protect the innovations of America’s broadcasters as well.

    NAB has an unofficial internal rule that we only respond to Mr. Shapiro’s comments once for every three or four of his outbursts. This is because, like my second-grader, if you react to something an attention-seeker does, it encourages them to keep doing it. And perhaps this blog is the equivalent of laughing at my son’s milk-scapade. But given the importance of the issues discussed, and the forum in which Mr. Shapiro elected to express his views, we believe it makes sense to correct the record.

    As I explained to my second-grader, there are appropriate and inappropriate ways to get people’s attention. In my son’s case, getting attention from others is best done through his intelligence, thoughtfulness and appropriate sense of humor. In Mr. Shapiro’s case, it’s attempting to stick to the facts, and also taking a good, long look in the mirror before penning another piece in The Hill.

     
  • Rick Kaplan 1:20 pm on April 29, 2014 Permalink
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    I Suppose It’s Worth A Try (When You Are On a Roll…) 

    There is overstating and then there is overstating.

    Last week, NAB proposed to the FCC commissioners some changes to the 600 MHz band plan included in the draft incentive auction order currently under review at the Commission. Specifically, NAB asked the FCC to shelve its planned 6-to-11 megahertz duplex gap that would be shared between wireless and unlicensed services, and instead adopt NAB’s “Plan B” and use a flat 10 or 11 megahertz duplex gap, of which 4 or 5 megahertz would be reserved exclusively for wireless microphones. NAB believes this is both fair and essential, as licensed wireless microphone users will be foregoing the current two exclusive 6 megahertz channels in favor of only 4 or 5 megahertz vital to providing breaking news coverage in local communities throughout the country.

    In response, New America Foundation’s Michael Calabrese blasted NAB’s proposal, saying that it “would be a death sentence for unlicensed broadband and innovation post-auction.”

    That statement almost made me feel badly. Were we essentially recommending an end to unlicensed innovation as we know it? Would our proposal lead to no more WiFi, garage door openers or cordless phones? Are we proposing to kill off baby monitors, and putting infants at risk across the nation? What have we become?

    After some serious soul-searching, my grandmother’s famous chicken soup (good for the soul) and a long hard look in the mirror, I looked to the facts to see if Mr. Calabrese was really on to something.

    Fact #1: In March, the FCC massively expanded the spectrum designated for unlicensed services by allocating more than 100 megahertz for that purpose in the 5 GHz band.

    Fact #2: Just last week, the FCC launched a proceeding to free up as much as 150 megahertz more spectrum for unlicensed services, this time at 3.5 GHz.

    Fact #3: In the draft incentive auction order, the proposal for the 600 MHz band is likely to render the duplex gap unusable for unlicensed services. It envisions scenarios where the duplex gap would be anywhere between 6 and 11 megahertz. Any plan allocating less than 11 or 12 megahertz between LTE uplink and downlink will, according to the unlicensed community, render that spectrum far less valuable.

    Fact #4: The FCC’s draft incentive auction order opens up channel 37 and a new guard band that will give unlicensed users brand new nationwide bands, including, for the first time, spectrum in major markets such as New York and Los Angeles.

    Fact #5: Under the draft incentive auction order, not only do wireless microphones lose well over half of their shared spectrum, but licensed wireless mic operators lose all 12 megahertz that are designated for exclusive use. Thus, if approved, wireless microphones will have gone from more than 60 megahertz of exclusive spectrum to zero in just five years. If there is any kind of “death sentence” in the draft order, it’s clearly just for wireless microphones.

    Unlicensed spectrum advocates – primarily Google and Microsoft – are on a serious roll in the spectrum department. In proceeding after proceeding, they keep racking up more free spectrum. And I completely subscribe to the theory of when you are on a roll, you should keep shooting. Mr. Calabrese’s play is really no more than a “heat check” for the spectrum world and Mr. Calabrese, along with Google and Microsoft, is probably feeling a lot like the Golden State Warriors’ Steph Curry right now.

    Thirty-foot jump shots aside, it is clear that absolutely no innovation is lost under NAB’s “Plan B.” In fact, the unlicensed community will exit 2014 having earned massive allocations of spectrum, including new nationwide spectrum blocks in the 600 MHz band. Thus, NAB’s proposal does nothing to drive a stake through the beating heart of unlicensed broadband innovation.

    On the other hand, it is hard to overstate the harm the current draft order would do to wireless microphones and the essential public service they help deliver. These devices – an innovation themselves, for what it’s worth – help broadcasters on a daily basis cover breaking news and weather in local cities and towns across the nation. When the president followed developments in the Boston bombing tragedy, he watched multiple local Boston broadcast TV stations to get well-informed, up-to-date, on-scene reporting. In order for that to happen, broadcasters relied on wireless microphones to deliver the news as it was breaking.

    Some unlicensed spectrum advocates believe the TV white spaces database to be some kind of panacea. It is not. FCC rules require that devices check the database only once every 24 hours. Thus, broadcasters can only be sure to be free from interference from unlicensed devices sharing their wireless microphone channels if the world is kind enough to inform them of breaking news a day in advance. And even if the FCC finally amends its rules to permit more frequent checking – which it should have done at the outset – in times of crisis wireless networks often go down, rendering the database useless. That is exactly what happened in Boston following last year’s horrific bombing.

    In a more temperate moment, Mr. Calabrese also noted that his coalition “strongly supports the NAB’s position that the FCC should continue to reserve two vacant broadcast channels for priority use by licensed wireless microphones.” He states that “[t]hese channels could be designated post-auction in each market and therefore would not in any way reduce the Commission’s flexibility during the auction.”

    To be clear, NAB’s “Plan A” that Mr. Calabrese refers to involves retaining today’s two exclusive channels pre- and not post-auction. This is because a post-auction reservation means essentially nothing in all of the major markets. In most of the top 100 markets, following the auction there will be no spectrum whatsoever available for reservation. Repacking and reallocation will take care of that.

    Now I understand the eagerness of many companies – especially major tech companies and wireless carriers – to feed off of the broadcaster carcass in the upper 600 MHz band. The Chicken Little approach, however, won’t get it done. Facts will. And the fact is that wireless microphones need some small exclusive home in their 600 MHz band in order for newsgatherers to keep providing the kind of on-scene up-to-date information for their viewers. There is a place for nearly everyone in the incentive auction, and both NAB’s Plan A and B for wireless microphones reflects the best and most appropriate balance.

     
  • Rick Kaplan 2:03 pm on April 9, 2014 Permalink
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    The Missing Piece of Chairman Wheeler’s Broadcast Vision 

    At the annual NAB Show in Las Vegas on Monday, NAB President and CEO Gordon Smith publicly called for the Federal Communications Commission (FCC) to develop a National Broadcast Plan. He suggested that this plan, inspired by the National Broadband Plan, should outline the FCC’s vision for how the government can help drive, or at least not impede, innovation and investment in broadcasting.

    Broadcasters have been craving a coherent and holistic FCC vision for their industry for quite some time. Rather than be subject to piecemeal and often contradictory regulations and expectations, broadcasters yearn to understand where the agency sees them as part of the overall telecommunications landscape. Are broadcasters “special” because they are the lone voice of localism and diversity, and therefore will be regulated as such? Or is the FCC going to measure the relative value of the industry on how it competes with the wireless and cable industries, and thus level the playing field by freeing up broadcasters from their shackles of unparalleled regulation?

    FCC Chairman Tom Wheeler responded in a speech Tuesday to Smith’s call by setting forth his high-level vision for broadcasters. The chairman should be commended for sharing his long-term view of the industry. It’s essential that broadcasters understand how their regulator perceives their role within the overall telecommunications landscape.

    The chairman explained that the broadcast industry is at a crossroads, saying, “We are at an inflection point where broadcast licensees can move from being the disrupted, to being the disruptor.”

    He is right on the money. Broadcasters have the potential collectively to be a major disruptor. They can provide the increasingly vital competition to the heavily consolidated – and ever consolidating – cable and wireless industries.

    The chairman is off target, however, with respect to the manner in which broadcasters can most significantly be disruptive. In his mind, broadcasters should aim to become another Netflix; in other words, they should focus on delivering their content over the Internet. He asked broadcasters to focus on “digital,” meaning they should focus more on their Web properties than broadcasting over their own wireless networks.

    I don’t know about you, but a future that gives even more power to the incredibly consolidated and exceedingly powerful cable and wireless industries – one that puts them as our gatekeepers – sounds like a future that ultimately only disrupts broadcasters, and not the overall ecosystem.

    In my view, with the right policies and flexibility in place, broadcasters can leverage their exceptional local content and, perhaps most notably, superior transmission system, to truly shake up the wireless and cable grip on the marketplace. Broadcasters even have a terrific opportunity to serve as a driver of the over-the-top industry (as opposed to a mere client), by allowing cord-cutters to receive free broadcast TV while supplementing with over-the-top content.

    The chairman’s own words brought our differing visions into stark focus:

    “[Broadcasters] possess the two most important components of a successful digital strategy: compelling content – specifically, the most important content: local content – and the means to promote it.”

    What is most notable about this passage is what is missing. Most TV broadcasters in attendance assumed that the chairman would note that the two best broadcast assets are local content and a unique and spectrally efficient architecture. The omission of the latter is important because it demonstrates that the chairman does not see, as many broadcasters do, a game-changing value in our one-to-many architecture. At no point did he acknowledge this competitive advantage. The only value of our architecture in his mind was as a wireless sandwich board, advertising how great our over-the-top content is.

    It is not lost on many broadcasters that the chairman’s vision happens to fit nicely into two of his three highest priorities: the spectrum incentive auction and the open Internet. First, if broadcasters buy into his vision of them as over-the-top content providers, they don’t really need their spectrum and therefore they should participate in his incentive auction. Second, if broadcasters become over-the-top content providers, they should be concerned about broadband providers slowing down their service or demanding payments for delivery to consumers, and thus should line up in support of the chairman’s controversial drive for robust rules governing the Internet.

    To what degree the chairman’s vision is truly comprehensive or instead a clever way of convincing broadcasters to support his legacy items is anyone’s guess. At this point, it’s frankly too hard to judge.

    Either way, forward-thinking broadcasters truly understand the value of their transmission system and the value of their spectrum. They also know that spectrum value will only increase. That’s why broadcast companies have spent over $50 billion in buying and selling stations for years. Despite the chairman’s not-so-subtle warning that the incentive auction is a “once-in-a-lifetime opportunity,” broadcasters get that their spectrum values will not drop anytime soon.

    Indeed, many broadcasters are looking to do far more with their spectrum, whether it is higher quality video (4K and 8K), robust delivery to mobile devices or new IP-based solutions for emerging needs such as machine-to-machine technologies. They are also looking to help address the challenge of delivering wireless video; that pesky issue that causes wireless networks to slow down and even fail altogether. And broadcasters can do this for consumers for free; i.e., video delivery over a broadcaster’s transmission system that won’t eat into expensive wireless data plans.

    The chairman’s remarks demonstrate that broadcasters have their work cut out for them. Unlike the chairman, they don’t, and likely never will, view themselves as mere content companies or websites. Obviously their digital properties are a strong compliment to their core businesses. In fact in most markets the most viewed local websites are already broadcast television and radio websites. And local broadcasters continue to find new ways to go over-the-top with their network partners. But the industry also possesses a unique and spectrally efficient delivery system that should not be overlooked. In fact, the FCC can’t overlook it. Our architecture – both radio and television – has to be a key component in addressing our nation’s spectrum needs in the future.

    A National Broadcast Plan would look at the ways in which our transmission system could make a meaningful difference in spectrum policy and services to which all Americans have access. A meaningful National Broadcast Plan would not shrink broadcasting into a mere Web service, but grow it into a real competitive force against wireless and cable. If all we do is ride on their backs, we will ultimately always be beholden to them. For a chairman whose watchwords are “competition, competition, competition,” his remarks conspicuously overlooked meaningful intermodal competition in the delivery of video content.

    Broadcasters want to be a major part of the future, and not just in the way in which they’ve been an integral part of the past. Broadcasters – both radio and television – want to continue to morph technologically to help address the need for competition, localism and diversity. We cannot do that by surrendering spectrum and putting ourselves and our viewers at the mercy of the wireless and cable industries. We must be a true competitive force, and we need the FCC to have the vision and courage to be a partner in allowing us to do so.

     
  • Rick Kaplan 2:00 pm on January 28, 2014 Permalink
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    What to Expect When You Are Expecting 

    For those interested in the voluntary broadcast spectrum incentive auction, this should be an interesting week at the Federal Communications Commission (FCC). At the FCC’s monthly meeting, the Commission’s staff will lay out its timeline and project plan for the upcoming auction. This update should be helpful, as all stakeholders seek to get a better handle on what to expect next. Most of all, we hope that the staff seizes this opportunity to go beyond a discussion of dates and timelines – auction timelines have garnered the bulk of the headlines so far – and delve into their current thinking on the substance of the auction and its components. This week’s meeting comes nearly 500 days after the incentive auction Notice of Proposed Rulemaking (NPRM) was adopted, and the FCC has since collected approximately 350 ex parte submissions and 375 written comments on the subject. The time certainly is ripe for the staff to let the public in on its proposed approach to a variety of hotly contested topics. 

    To be more specific, here are some things NAB would like to see emerge from Thursday’s meeting:

    • The staff discusses its latest thinking on the 600 MHz band plan.
    • The chairman announces that he is forming an “expert user group” of outside stakeholders who are willing to commit the time and resources to evaluating the auction and repacking software once it has been created. This group will test the software to ensure the final product will produce the intended results, without unpleasant surprises.
    • The staff provides a substantive update on its latest work on the international front. The report will not merely list the number of meetings with Canada and Mexico; but rather, will detail how the staff intends to proceed if it has no agreement in place with one or both countries. The chairman indicated in a House hearing last month that he does not expect to have such agreements. Assuming that it is even lawful to proceed with the auction without these agreements (and NAB believes it is not), how will a lack of meaningful coordination affect the auction and the amount of spectrum recovered across the country?
    • The chairman announces that the Commission will move certain parts of the incentive auction order sooner, rather than later. Discrete pieces of the order, such as which broadcasters will receive protection in the repacking, the process for relocating and protecting translators and low-power TVs and the eligibility constraints, if any, placed on forward auction bidders, can and should be decided now, helping the process move more swiftly overall.
    • The staff announces that it will release the long-awaited Public Notice on co-channel interference.
    • The staff of the Office of Engineering and Technology announces that it has dropped its proposed incentive-auction-specific changes to OET-69, and instead will focus all of its energy on ensuring the accuracy of the repacking model. The proposed changes, as well as literally 12 different versions of the TVStudy software (in less than a year), have only served to introduce uncertainty into the process and threaten to slow down the auction process considerably.
    • The staff discusses its plans for wireless microphones, in light of the fact that the NPRM suggests displacing their operations although offers no solution as to where this critical service might find a home.

    It would also be a welcome sign to see the chairman publicly affirm that the Commission, under his watch, will in no way take actions to harm broadcasters in unrelated proceedings to encourage participation in the auction. Not only would such actions be unlawful, they would be bad policy. If there was ever a time the Commission needed to develop trust with broadcasters, that time is now. Our participation in all phases of the auction is essential to its success. We are eagerly watching and waiting to develop a true partnership with the Commission as it seeks to execute the first spectrum incentive auction in history. 

     
  • Rick Kaplan 12:40 pm on January 13, 2014 Permalink
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    Spectrum Reflections: It’s Time for A Moment of Reflection, CCA 

    CCA, please tell us you are kidding.

    In December, the Competitive Carriers Association (CCA), a trade association that represents most wireless carriers with the exception of Verizon Wireless and AT&T, filed comments at the Federal Communications Commission (FCC) in response to the FCC’s proposed rulemaking to eliminate the so-called UHF television discount. The filing would be downright funny if it wasn’t so desperate, specious and irresponsible.

    The UHF discount proceeding is a pure broadcast television issue. By way of brief background, the broadcast television ownership rule prohibits a single entity from owning stations that reach in the aggregate more than 39 percent of total television households nationwide. The “UHF discount” allows stations broadcasting in UHF to count toward that cap only half of the TV households in their markets, as opposed to all of the households for VHF stations. The FCC has proposed to eliminate that discount.

    The issue has absolutely no impact on the wireless industry. So why would CCA file? Was it a mistake?

    CCA’s comments prodded the FCC to “examine . . . rules applicable to broadcast stations and take action to eliminate remaining regulatory distortions. . . . [T]he Commission should carefully consider how the existing rules and proposed reforms would affect broadcast stations’ incentives to relinquish spectrum in the upcoming 600 MHz incentive auction and adopt reforms in light of that vital consideration.”

    In plain English, CCA expressly asked the FCC to strong arm broadcasters into participating in the wholly unrelated voluntary broadcast spectrum incentive auction. CCA’s theory is that if the FCC takes actions that affirmatively harm broadcasters, more broadcasters will participate in the voluntary auction, and then CCA’s members will have access to more spectrum than they would have otherwise. 

    Underlying CCA’s advocacy is the notion that broadcasters benefit from regulations that “distort” the market. Presumably CCA is not referring to all of the obligations imposed on broadcasters (that are not imposed on the wireless industry), such as children’s programming mandates, indecency regulation and captioning requirements, just to name a few. 

    I don’t know whether to laugh or cry. Maybe both.

    Let’s have a good laugh first. CCA apparently neither understands the regulatory regime under which broadcasting is governed nor the concept of irony.

    First, no industry is more heavily regulated by the FCC than broadcasting. Unlike any other industry, the FCC’s regulations govern many facets of broadcasters’ operation. The very structure of our industry is dictated by the federal government. For example, as noted above, in terms of ownership, Congress set a cap on how big any one television group can get: no entity can reach more than 39 percent of the U.S. population. There is no corresponding rule in the wireless industry. Indeed AT&T and Verizon Wireless produce maps claiming to cover more of the country than the other. The government has also imposed a number of mandates on broadcasters to which no other industry is subject. Broadcasters have to produce a certain amount of children’s programming for example. CCA’s members, on the other hand, just have to throw up a tower and let whatever comes across – and we sure know what can come across – reach the end user. Speaking of the Internet, unlike wireless companies (including those that got their spectrum “for free”), the FCC has imposed decency standards on broadcasters. Cable channels don’t even have the same obligations. Broadcasters are also subject to accessibility regulations far beyond what CCA’s members could fathom. So it is safe to say that broadcasting is not an industry propped up by regulation – unlike small wireless carriers (a point to which I will return) – we are primarily saddled with government regulation.

    Second, unlike broadcasters it is CCA’s members that depend on government regulation.  Government intervention is their oxygen. In a largely deregulated wireless industry, CCA pays visits to the Commission time and time again, imploring the FCC to give its members preferential treatment. In fact, in the incentive auction proceeding itself, CCA is virtually begging the Commission to give its members a leg up on AT&T and Verizon Wireless. CCA also routinely seeks forced interconnection among wireless carriers, so that its members can free ride on the investment of others who have invested billions to build their networks. It asks the FCC to subsidize its members through the Universal Service Fund so they don’t have to invest. And it routinely seeks to force other carriers to interoperate with its members so they can ride off the bigger carriers’ backs on equipment orders. CCA is an association that has never met a regulation it hasn’t liked. It relies on, and affirmatively seeks to increase, government intervention in the marketplace.

    This characterization is not simply my opinion; all it takes is a quick walk through CCA’s recent filings to discover its government-prop-us-up mission. Just over the past year, CCA has fervently advocated in favor of the following market interventions:

    • Revision of the spectrum screen to impose government-mandated limits on the amount of spectrum commercial carriers may aggregate;
    • Adoption of auction rules that limit the amount of spectrum large carriers may  acquire, as well as bidding credits and other mechanisms to favor other carriers, and license areas tailored to the desires of CCA’s membership;
    • Forced provision of data roaming arrangements;
    • Mandated interconnection obligations for  incumbent Local Exchange Carriers following the IP transition, including the full panoply of Section 251 and 252 requirements;
    • Forced interoperability of handsets;
    • Revision of the USF rules to increase subsidies for rural wireless service providers;
    • Conditions on the merger of AT&T and Leap, including divestiture of spectrum in markets where AT&T exceeds the spectrum screen, as well as forced offering of roaming arrangements on the same terms and conditions carriers previously negotiated with Leap; and
    • Conditions on the Verizon-AT&T spectrum swap, including an interoperability mandate.

    Now for the part that’s no laughing matter.

    Somewhere along the way, CCA – and they are not alone in this – conveniently overlooked Congress’s clear direction that the incentive auction must be voluntary. “Voluntary” means that no broadcaster, by any means, can or should be coerced into participating in the auction. CCA is asking the FCC to violate the law by forcing broadcasters, through regulatory arm twisting, to give up their spectrum. If the FCC turns up the heat enough, says CCA, then broadcasters will have no choice but to “volunteer.” That is a big no-no, although CCA seems not to care about staying within the bounds of the law.

    If CCA were the only organization heading down this road, I likely would not be writing this post. For if a tree falls in a forest…well, you know the rest. But there are others out there with similar motives. And it is time to shine light on an issue that needs to be crystal clear. The FCC cannot, under the law, take any action designed to harm broadcasters with an eye towards encouraging participation in the auction. The lone incentive for participation is the market-based auction itself, and the compensation broadcasters are offered to relinquish their licenses.  Anything else is unlawful, and it is no laughing matter to push the FCC to violate the law.

    The voluntary broadcast spectrum incentive auction can be a success. The Commission does not need to cheat in order to make it so. NAB, as always, stands ready and is committed to doing what we can to see the Commission succeed in its auction and to do so in a way that adheres to the law.

     
  • Rick Kaplan 1:10 pm on December 18, 2013 Permalink
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    Spectrum Reflections: The Impending Sprint-Mo and the Auction Oh-No 

    I have to imagine that AT&T and Verizon Wireless (and their troops in Washington, in particular) are taking some pleasure in the recent stories suggesting that Sprint and T-Mobile are once again contemplating a merger. The potential for such a union adds a new level of intrigue in the campaign these four wireless heavyweights have been waging over whether the Federal Communications Commission (FCC) should limit the amount of spectrum any one carrier can acquire in the FCC’s upcoming voluntary broadcast spectrum incentive auction.

    For more than a year, AT&T and Verizon Wireless, aka “the big guys,” have been slugging it out with Sprint and T-Mobile, aka the “not-quite-as-big guys,” over whether the FCC should impose caps on the amount of spectrum the big guys can acquire in the voluntary broadcast spectrum incentive auction. The not-quite-as-big guys have been arguing that, if the FCC does not limit the amount of spectrum the big guys can acquire in the incentive auction, the not-quite-as-big guys will be frozen out, and the already expansive gulf between the big guys and not-quite-as-big guys will expand. The big guys respond that an “open auction” – one without restrictions – will yield the largest payday for the U.S. Treasury, as any artificial limits could hamper the auction’s overall success. As one might imagine, the not-quite-as-big guys disagree with this analysis, and what has followed is a massive subsidy of the economics profession in the United States, as each side has enlisted countless economists to support their respective worldviews.

    The recent revelation concerning Sprint and T-Mobile has now fueled a new element of the wireless competition debate. Namely, how does this potential merger affect, if at all, the auction eligibility rules the FCC has been designing with today’s wireless industry in mind?

    To illustrate the specific challenge this merger poses, let’s assume that the FCC is contemplating rules that would ensure that each of the top four wireless carriers has a reasonable shot at acquiring spectrum in the incentive auction. What happens, then, if those rules are enacted, and Sprint and T-Mobile subsequently reach a deal to merge, but prior to the auction itself? Or, what happens if the two companies participate in the auction independently, benefit from competitive rules designed for them, and then merge with spectrum assets they wouldn’t have had access to had they merged pre-auction?

    The plot has certainly thickened.

    The National Association of Broadcasters (NAB) has not taken a formal position on whether the FCC should enact any rules within the voluntary broadcast spectrum incentive auction to foster competition in the wireless industry. While competition in the wireless industry is certainly a good thing for broadcasters (e.g., Sprint’s deal to activate FM chips in cell phones when the big guys passed on the public safety opportunity), we haven’t studied carefully the effects of various rules imposed in an auction and their likelihood of success.

    For the Commission, the rumors of a Sprint/T-Mobile merger seriously raise the stakes for the wireless competition issue; one that has already had more airplay than any other. One way to think about the added complication of the potential merger is through the eyes of those designing the rules. Any competitive rules being considered by the FCC necessarily have some “ideal” number of national carriers in mind. For example, the Commission could determine that no bidder should win more than 25 or maybe 33 percent of the licenses in each market area. The former (25 percent) is likely based on a desire for at least four carriers, while the latter (33 percent) for at least three. If the Commission chooses four (i.e., a 25 percent cap on each carrier), but then Sprint and T-Mobile merge post-auction, the new “Sprint-Mo” could walk away with 50 percent of the licenses in a given area, potentially undermining the Commission’s long-term competitive aims.

    One may argue that this alleged problem is overblown, as a newly merged Sprint-Mo (pre-auction) could give even smaller carriers a shot at spectrum in the auction. One could also assert that a post-auction merger would likely result in serious spectrum divestitures, thus benefitting small wireless carriers. But, time has shown that most small carriers cannot survive the capital-intensive wireless business long-term, and they ultimately end up either relying on significant government intervention to survive (e.g., data roaming, interoperability, special access reform, the Universal Service Fund, auction rules to their benefit), or more likely, they simply sell out to the big guys in the end, anyway. This is likely why the Department of Justice focused almost exclusively on the nationwide providers in the competition analysis it submitted to the Commission last April.

    The challenge for regulators is that the commercial wireless industry is consolidating at a rapid rate, therefore providing a moving target. It is difficult to employ effective competitive auction rules if you have no idea what the industry you are trying to keep competitive will look like when those rules take effect (i.e., in an auction at least 18 months away). This is not to suggest, in any way, that the FCC should not be looking closely at how to foster a competitive wireless marketplace, and even do so in the context of this auction. Rather, I’m merely highlighting the high degree of difficulty in getting it just right.

    The major concern for AT&T and Verizon Wireless is that Sprint and T-Mobile may have a chance to end run the process. If they are savvy, they may be able to achieve favorable auction rules, win convincingly at auction and then merge. The FCC would then be in the tough position of having to either deny that merger or exact major divestitures, the latter of which (divestitures) has historically been a disaster. On the other hand, if approved, the resulting Sprint-Mo would be a spectrum powerhouse, having navigated the regulatory wireless morass in a way that only DISH Chairman Charlie Ergen has managed to so far.

    And speaking of Charlie, let’s not forget that his 40 – oops, soon to be 50 – megahertz is still out there, lonely, fallow and perhaps waiting for a call from Sprint-Mo as well.  

    It should be a fun first half of 2014. Happy New Year!

     
  • Rick Kaplan 10:04 am on December 17, 2013 Permalink
    Tags: ,   

    Representing Broadcasters and True Incentive Auction Success 

    At last week’s Senate Commerce Committee hearing on “Crafting a Successful Incentive Auction,” the executive director of the Expanding Opportunities for Broadcasters Coalition (EOBC) sounded the alarm that the Federal Communications Commission’s (FCC) upcoming incentive auction was on the path to complete failure. The reason? The FCC is allegedly not moving fast enough to inform broadcasters exactly how much money the agency plans on shelling out for their spectrum licenses and that the agency may be considering reverse auction rules that approximate the actual value of spectrum licenses. He concluded that anything that gets in the way of paying broadcasters handsomely for their spectrum licenses is going to lead to auction catastrophe.

    Let me ease your minds: There is no cause for alarm. The sky is not falling. Broadcasters are patient, digesting what emerges from the FCC and recognize that this is a long, complex process.

    The National Association of Broadcasters (NAB), along with the Association of Public Television Stations (APTS), represents the true interests of all broadcasters. Our aim is to serve America’s local broadcasters and to expand their opportunities in the 21st century, whatever they might be. We have members who will continue broadcasting for decades to come and others that may look to the incentive auction as an opportunity to exit the business after a long history of serving their communities.

    The EOBC, while apparently made up of companies that hold licenses in the broadcast band (its membership list is a closely guarded secret), does not represent broadcasters. In many respects, this group seems to stand in stark contrast to what is in the best interests of broadcasters and broadcasting. Its mission is singular: to capitalize on regulatory arbitrage. Its aim is to make sure that its members are paid as much money as possible and paid as quickly as possible for their spectrum licenses. 

    While there is nothing wrong with having one’s own interests at heart, we must take the comments of this coalition in that context. This context explains why, as opposed to NAB, APTS, as well as the representatives of wireless companies and associations, cable companies and associations and public interest groups, the EOBC is not concerned with the resulting 600 MHz band plan, how international coordination impacts the future of television, interoperability, co-channel interference, or any other issue beyond how much they get paid and how quickly. The day their checks are cashed, their engagement in this auction ends; the EOBC has no interest in the subsequent repacking or consumer welfare.

    The FCC staff is working hard to solve dozens of challenges in this extremely complicated auction. The agency is not close – nor should it be at this point – to determining starting prices in markets or even to confirming which markets are eligible for auction. These are very difficult questions among many others that need to be sorted out over time.

    If done right, the FCC will make it as easy as possible for willing broadcasters to participate in the auction. In practice, this means ensuring that broadcasters understand the rules of the road and that their participation does not require an army of economists or mathematicians. There should be low barriers to entry. The process will take time, and in all likelihood will require the cooperation of those such as NAB and APTS, that truly represent broadcasters. These broadcast advocates want to weigh the potential benefits of participation, not just quick-hit investors looking to turn a quick profit because of the government’s unique offer to buy back licenses.

    NAB has been engaged with the FCC to ensure the auction’s success and viewer protection from start to finish. Success for us includes, but goes far beyond, those looking to profit on their licenses. So, when Congress, the FCC and the public ask where broadcasters stand, and how can we ensure success for the auction – both for participants and non-participants – they should look to NAB and APTS. These associations represent America’s television broadcasters – not just companies that happen to hold licenses – and are focused on both the short- and long-term success of the industry. 

     
  • Rick Kaplan 11:47 am on June 25, 2013 Permalink
    Tags: , , , Genachowski, , Spectrum Act, Wireless   

    What Consensus Really Means and the Importance of Driving It 

    In December, the U.S. House Energy and Commerce Committee conducted an oversight hearing on the Federal Communication Commission’s (FCC) implementation of the Spectrum Act, and specifically the Commission’s work on the upcoming voluntary broadcast incentive auction. One of the most instructive moments of the hearing occurred during a series of questions posed to then-FCC Chairman Julius Genachowski by Rep. Ed Markey (MA-5). The congressman repeatedly asked Genachowski varying versions of the following questions:

    So again, do you have a process that’s totally fair to the broadcasters and to the wireless industry that’s in place? Have you had them in your office simultaneously with their engineers to talk about the issue so that you can hear and your experts can hear the differences which they have?

    . . . .

    Do you ever have a meeting yourself with the engineers in the room with the other, you know, from all industries you’re sitting there with you? Are engineers hearing the disagreements?

    The congressman was pushing the chairman to see if he and/or his staff were taking an active leadership role and directly engaging with industry to tackle this extremely complex proceeding. In effect, he was urging the FCC to drive consensus – to bring stakeholders together to see if there is a sweet spot where those most affected by the auction can find value and buy into the process. Thus, rather than passively perusing the filed comments in a back room and then eventually one day producing a final order seemingly out of thin air, he was suggesting that the FCC should be getting everyone in a room and driving towards a decision.

    Had that happened yet at that point? No.

    Has it happened in the more than six months since the Commission was urged to do so? No. (That is, unless we count a lone public workshop that was followed up in record time by a Public Notice unsurprisingly having little to do with what was actually achieved at the workshop).

    In the absence of a staff process designed to drive consensus through openness, transparency and engagement, however, diverse industries and public interest groups have assembled on our own to work through the various challenges presented by the auction and attendant broadcaster repacking. These conversations have led to a great deal of progress, and even consensus on some major issues.

    Have we found unanimity? Of course not. To be clear; reaching consensus is not the same thing as unanimity. Certainly everyone doesn’t have to agree for a general consensus to emerge. Our work has moved the ball far down the field on typically contentious issues. And we believe strongly that the Commission staff should have adopted, and should be adopting, a “get in the room together” approach so we can achieve an expeditious and successful conclusion to the pre-auction process.

    Industry and public interest progress is nowhere more apparent than the general consensus that emerged concerning the defining feature of the band plan offered in the original incentive auction Notice of Proposed Rulemaking, which widely separated the wireless uplinks and downlinks and placed in between them high-powered broadcast operations. By sitting down together – outside the traditional and somewhat opaque FCC comment process – every company and organization invested in the outcome of the auction (except literally one) agreed that the proposal was an engineering nonstarter. This conclusion was facilitated by broadcast, licensed wireless and unlicensed wireless engineers conferring, sharing information and working towards what would best serve the public interest.

    Last Friday, the FCC posted a blog entitled, “A Band Plan that Serves the Public Interest,” which along with some previous staff remarks, appears to imply in response to growing criticism over the staff’s proposed plans, that only the Commission, and not industry or the public interest community, has the public interest truly in mind. Nothing could be further from the truth, especially in this instance where what is at stake is delivering high quality broadcast and wireless signals to consumers. Indeed, a band plan in the public interest is most likely to result from a process that engages stakeholders in a meaningful fashion and thoroughly examines all of the thorny issues involved.

    We do not appear, however, to be headed in that direction. Most notably, in its unyielding quest and determination for reclaiming variable amounts of spectrum in different markets, the inherent interference consequences of a variable approach are simply being ignored. The staff steadfastly refuses to study the issue with any rigor, model it or even ask a single question about it.

    With respect to the challenges of variability, NAB has itself adopted a “getting everyone in the room” philosophy, even without the incentive auction staff leading the way. At stake is significant co- and adjacent channel interference that affects broadcast and wireless operations and arises under most variable band plans. The problem in the most basic terms is this: If Market A (e.g., New York) clears less spectrum than adjacent Market B (e.g., Philadelphia) and therefore Market A continues to have broadcast operations on channel X (e.g., channel 46) while Market B moves to wireless operations on that same channel, the wireless and broadcast operations on that shared channel will interfere with one another. There is no doubt this is a serious issue. And even though the Wireless Bureau dismissed the problem without any analysis (in a nonsensical footnote in its Public Notice), following the bureau’s Public Notice, AT&T, Verizon Wireless, Qualcomm, Ericsson and others have joined in to second the notion that further work on the subject is required.

    We understand why variability could be of great benefit to the Commission’s auction designers at Stanford, but its potential positives do not necessitate that we should turn a blind eye to inconvenient engineering realities. As we’ve learned from a number of interference missteps in the not-so-distant past, including the frustration on the part of the wireless industry with the interference between channel 51 and the 700 MHz A block, even if you look the other way and pretend there’s nothing to see, interference will come back to bite you where it counts one way or another.

    Even though we’ve identified a serious concern, we are not arguing that we are at the end of the variability road. We are merely stating that we’ve identified a potentially fundamental problem and, at the very least, this must be the beginning of the road. It’s not enough to say, as the blog post did, that “[b]y implementing a band plan that supports variation between markets, we would not be forced to limit the auction to the amount of spectrum available in the least cleared markets.” While true, that completely neglects the question precedent of whether, from an engineering perspective, variability is possible or even wise.

    Once again, rather than cross our fingers and simply hope that we don’t end up on the wrong end of an uninformed and therefore arbitrary decision, we’ve actively engaged with stakeholders across industries on the issue. We’ve laid out everything we know about co- and adjacent channel interference, not only in filings at the FCC, but in data we’ve openly shared throughout the commercial wireless and unlicensed industries.  We have one aim: to figure this issue out, one way or another, so that the Commission can truly have a successful and timely auction.

    We have also laid out an alternative plan should the interference inherent in variability not be worth its benefits. Our nationwide non-variable plan incorporates three relatively easy steps:

    • After setting a spectrum acquisition target (e.g., 84 MHz), lay out the various nationwide repacking scenarios to determine in what areas the Commission must have volunteers and how many it needs.
    • Determine how much revenue will likely be raised from a forward auction from the target amount of nationwide spectrum.
    • Use those anticipated (and soon to be realized) funds to pay broadcasters in areas where the spectrum is actually needed, and repack broadcasters to the nationwide spectrum target in markets where no volunteers are needed.

    This proposal helps the Commission maximize its use of the information it has up front – where it will, and will not, need participants under various scenarios – and then focus its financial incentive efforts on the areas where volunteers are truly needed. If this is done correctly, we believe the Commission can develop a great wireless band plan that clears the same robust amount in every market (international coordination notwithstanding), and leads to a harmonious balance between broadcasters and wireless operations in the new 600 MHz band. Furthermore, it eliminates the co- and adjacent channel interference threat that looms large under most variable scenarios.

    We remain committed to driving a process that is best for the public interest and thankfully the Acting Chair and Commissioners have each made clear that they recognize the need for engagement and balance among industries. By engaging with all stakeholders, we’ve been able to find large areas of general consensus on a number of issues, which should help the Commission move expeditiously in this process. We will continue this push, all with the aim of creating a band plan and auction that serves free, over-the-air broadcast viewers as well as licensed and unlicensed consumers, otherwise known as the public interest.

     
  • Rick Kaplan 11:36 am on May 21, 2013 Permalink
    Tags: Auction, , , ,   

    Working Toward an Effective Band Plan 

    Today AT&T, the National Association of Broadcasters and Verizon jointly posted the following blog:

    The TV broadcast spectrum incentive auction proceeding raises some of the most difficult engineering challenges the FCC has ever faced.  One thing is clear:  a successful auction must start with an effective band plan.  A band plan must seek to mitigate interference challenges to the greatest extent possible while offering blocks of spectrum best suited for deployment by U.S. wireless carriers.  Otherwise, it will drive down the value of the spectrum and likely undermine the auction’s success.

    With that in mind, broadcasters, wireless carriers and equipment manufacturers have spent an enormous amount of time, energy and expense reviewing and commenting on the optimal framework for the 600 MHz band.  Hundreds of pages of comments have been filed, two industry consensus letters have been submitted and the FCC just recently convened a day-long workshop to discuss this issue.  The result is growing consensus for adoption of a “down from 51” framework that seeks to maximize paired allocations and build guard bands only to meet engineering necessity.  This approach reflects the best collective engineering judgment of the companies most affected by the auction, including those that will spend billions of dollars to purchase 600 MHz licenses at auction and billions more to develop and deploy the spectrum in U.S. wireless networks.

    Despite these significant advances, on Chairman Julius Genachowski’s last day, a Public Notice was released seeking comment on two alternative band plan frameworks, one reversing the uplink and downlink allocations and one featuring time division duplex (TDD).  The first has absolutely no support in the record and the second adopts a technological approach contrary to the one proposed by the majority of U.S. carriers.  A fair reading of the Public Notice suggests that the FCC feels the consensus approach constrains its ability to adjust the band plan to meet market-by-market variations.  We believe, however, that this notice will consume resources better spent on dealing with other critical and as-yet-unanswered questions in this proceeding, such as how co-channel interference concerns could undermine the variability of any band plan and how the FCC plans to conduct an effective re-packing.

    Each of us of course will respond to the notice, but we don’t anticipate any fundamental shift in positions we’ve already taken in the record.  In the meantime, we are concerned about the apparent disconnect between the FCC and the various industries that will be critically affected by this auction.  Nothing about this auction will be easy, and, if we are to succeed, we must all work together to find solutions best designed to respond to broadcast industry concerns while meeting wireless industry requirements.

     
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