United States frequency allocations: the radio spectrum by Lisa George

2. The Programming
Consequences of the Broadcast
Incentive Auction
Lisa George & Matthew Baker
Hunter College
Presentation: Florence School of Regulation, Communications & Media,
Scientific Seminar

3. Outline
• Spectrum policy background
• Broadcast incentive auction
• US Public Television
• Program Consequences
• Questions
• Preliminary insights

5. Spectrum Allocation in the US
• President’s Council of Advisors on
Science and Technology, 2012
• “[T]he fragmented partitioning of
Federal spectrum leads to inefficiency,
artificial scarcity, and constraints on
current and future Federal and non-
Federal uses”
• Emphasized spectrum shortage, need
for 1,000 MHz as soon as possible
• Emphasized spectrum sharing as the
best way to accomplish this goal

6. Repackaging Options
• TV spectrum close in frequency
bands to mobile spectrum.
• Broadcast TV required substantial
interference bands (“guard
bands”).
• Digital TV needs less, though TV
broadcasters have increased
utilization.
• Options
• Reassign bands for single-use
• Open common white-space for use
subject to interference rules
• Partial clearing
• Partial clearing with re-packing Vidya Muthukumar, Angel Daruna, Vijay Kamble, Kate Harrison, and Anant Sahai,
“Whitespaces after the USA’s TV incentive auction: a spectrum reallocation case study,”
Wireless Foundations, EECS, UC Berkeley.
https://people.eecs.berkeley.edu/~vidya.muthukumar/incentive_auction_whitespaces.pdf.

7. Auction Design

8. Timeline
• 2010 National Broadband Plan introduces idea of incentive auction
for TV band
• 2012 Congress authorizes incentive auction of broadcast 2012
• 2012 FCC rulemaking outlines three-part auction with repacking
• 2014 Broadcasters sue, eventually lose.
• 2015 FCC finalizes rules, issues initial prices
• 2016 Clock phase (reverse and forward auction)
• 2017 Assignment phase (repacking) March 6-31, 2017
• 2017-2020 Transition to new frequencies

10. Auction Design – Broadcasters (Reverse)
• Starting prices
• Bid to relinquish license (go off-
air);
• Bid to relinquish current channel
in order to share a channel;
• Bid to relinquish a UHF channel to
move to either a high VHF (7 to
13) or low VHF (2 to 6) channel;
• Bid to relinquish a high VHF
channel to move to a low VHF
channel.

11. Auction Design – Wireless (Forward)
• Band plan consists of paired uplink and
downlink bands in 5+5 megahertz
blocks across 416 market areas called
Partial Economic Areas ("PEA").
• Participants bid in “clock phase’ for
generic blocks of spectrum in two
quality categories in each geographic
market.
• Winners of generic blocks may then bid
for frequency-specific blocks in a
separate “assignment phase.”

12. Results
Wireless bids: $19.6 billion
Broadcaster claims: $10 billion
(Initial offerings $48 billion)
Some examples:
Central Michigan University WCMZ sold
for $14 million (initial allocation $421
million)
University of South Florida WUSF-TV sold
for $18.7 million (initial allocation $349
million)
WBIN Boston $68.1 million
Tribune Media: $190 million
Gray Television: $91 million
Fox: $350 million

13. Results

14. Results
• Winning broadcasters announced early April
• What we know
• Many “low bidders” in the initial allocations were public television stations
• Off-air stations announced so far are public/university stations
• Substantial benefits and costs for public TV
• Potential loss of universal service
• Channel sharing, relocation likely provide capital in excess of cost

15. Programming Consequences
• Auction Questions
• How will station exit affect equilibrium program choices?
• News
• Entertainment
• Public programming
• How will station exit affect equilibrium revenue & viewing?
• Related Questions
• How to value public broadcasting?
• Corporation for Public Broadcasting & President’s budget
• Today – Reduced form investigation
• Project – Structural estimation

16. Meanwhile…

17. Public TV in the US
• $460 million appropriations
• 171 noncommercial licensees operate 363 public TV stations in US
and territories.
• 87 are non-governmental, not-for-profit organizations (“community
licensees”)
• 58 are public or private colleges or universities
• 20 are state government agencies, boards or commissions
• 6 are local educational authorities or municipal governments.
• 62 licensees operate approximately 565 translators in 35 states (rural
service)

18. Public TV in the US - CPB

19. Public TV in the US

20. Estimating Pubic TV Impact -- Data Overview
• Television ratings
• Weekdays for 4 weeks in February 2010
• Viewership shares averaged over half hour blocks, weekdays 5:00 to 8:00 pm
• Nielsen Media Research
• Local and cable stations, top 100 markets
• Advertising revenues: Kantar Media
• Weekdays for 4 weeks in February 2010
• Advertisement level data averaged over half hour blocks, weekdays 5:00-8:00pm
• Kantar Media
• Local stations only, top 100 markets
• Station characteristics
• Warren Communication Television and Cable Factbook
• Program characteristics: Nielsen, Kantar, IMDB.

21. PBS News Competition – Advertising Revenue
PBS
News EntertainmentNetworks
News 12.2 13.2
Entertainment 14.9 16.5

22. PBS News Competition – Advertising Revenue
PBS
News EntertainmentNetworks
Local News 11.5 9.1
Entertainment 15.8 20.6

23. PBS News Competition, 5:00-8:00pm
A news broadcast on PBS
reduces local station
revenue on local news
broadcasts by 22% on
average
A competing news
broadcast on PBS reduces
local station revenue on
other programming by 9%
on average
Effects larger for big 4
(Station-level data, 100
Markets, Market & Timeslot
FE)

24. PBS News Competition, 5:00-8:00pm
A news broadcast on PBS
reduces local station
revenue on national news
broadcasts by 9% on
average
A news broadcast on PBS
reduces local station
revenue on other
programming by 22% on
average

25. PBS News Competition - Viewing
PBS
News EntertainmentNetworks
News 0.013 0.030
Entertainment 0.010 0.017

26. PBS News Competition - Viewing
PBS
News EntertainmentNetworks
Local News 0.012 0.019
Entertainment 0.010 0.017

27. PBS News Competition - Viewing
A news broadcast on PBS
increases local station
entertainment viewing by
7% on average
A news broadcast on PBS
reduces local station local
news viewing by 14% on
average
Effects larger for big 4
(Station-level data, 100
Markets, Market & Timeslot
FE)

28. PBS News Competition - Viewing
A competing news
broadcast on PBS reduces
local station reduces
national news viewing by
8.6% on average
A competing news
broadcast on PBS does not
reduce local station viewing
on other programming
Effects similar for big 4
(Station-level data, 100
Markets, Market & Timeslot
FE)

29. Structural analysis overview
• For welfare analysis, we need:
• Model of viewing
• Model of advertising
• Model of station competition for
viewers and advertising
• Results should illustrate how:
• Viewership, broadcast type, and ad
revenue change together.
• Broadcast decisions affect viewer &
advertiser surplus.
• Station profits adjust to
counterfactual broadcast choices.

30. Conclusions/Next steps
• Broadcast auction will induce exit, including public TV
• Budget proposals would induce exit of public TV
• Reduced form regressions show that public TV news impacts private
market in revenues, viewing
• Show how programming choice, revenue and viewing changes with:
• Public station exit
• Public station news exit
• Spectrum station exit
• Compare
• Viewer-maximizing outcome
• Revenue-maximizing outcome
• Identify public programming with largest welfare impacts