Reallocating DTV band spectrum

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Reallocating DTV band spectrum

  1. 1. Reallocating DTV Band Spectrum <ul><li>Thomas W. Hazlett </li></ul><ul><li>Professor of Law & Economics </li></ul><ul><li>George Mason University </li></ul><ul><li>[email_address] </li></ul><ul><li>IIC </li></ul><ul><li>Washington D.C. * December 2, 2009 </li></ul>
  2. 2. Killer App of 2009 12.2.09 Spectrum Reallocation
  3. 3. Killer App of 1952 12.2.09 Spectrum Reallocation
  4. 4. Not a fair fight? <ul><li>Think again. </li></ul>12.2.09 Spectrum Reallocation
  5. 5. TV’s Spectrum Warehouse 12.2.09 Spectrum Reallocation Year TV Channels MHz Regulatory Event 1939- 1953 81 486 TV Allocation Table of 1952 with UHF supplement 1968- 1982 67 402 50 MHz reallocated to cellular 1985- 2009 49 294 108 MHz reallocated with ‘09 analog switch-off
  6. 6. Latest CEA data <ul><li>91% MVPD penetration (of TV HHs) </li></ul><ul><li>9% of HHs antenna-only </li></ul><ul><ul><ul><li>10.24 million HHs </li></ul></ul></ul><ul><ul><ul><li>least interested HHs in video broadcast content </li></ul></ul></ul><ul><ul><ul><li>holding 294 MHz hostage </li></ul></ul></ul>12.2.09 Spectrum Reallocation
  7. 7. Mobile Tsunami? <ul><li>Yes. </li></ul><ul><li>But it’s already swamped the beach. </li></ul><ul><li>Value (294 MHz)  Mobile >> $1 Trillion </li></ul><ul><li>Value (294 MHz)  broadcast TV < $3 Billion </li></ul><ul><ul><li>Shifting content delivery to efficient platforms </li></ul></ul><ul><ul><li>Product still available, broadcasters still alive </li></ul></ul><ul><ul><li>Tornado warnings continue </li></ul></ul>12.2.09 Spectrum Reallocation
  8. 8. While the FCC Slept… <ul><li>Bureaucratic inertia </li></ul><ul><li>Auction revenue gimmickry </li></ul><ul><li>Unlicensed Nirvana </li></ul><ul><ul><li>TV Band “white spaces” </li></ul></ul>12.2.09 Spectrum Reallocation
  9. 9. “ The property approach made sense in 1960, but is now questionable.” (Werbach 2004) 12.2.09 Spectrum Reallocation
  10. 10. Broadband ISP Subs (FCC data) 12.2.09 Spectrum Reallocation Technology June 2004 June 2008 % of 6.08 Total DSL/trad wireline 12,805,320 30,903,660 23.3 Cable Modem 18,592,636 38,190,355 28.8 Fiber 130,928 2,346,328 1.8 Satellite 0 869,450 0.7 Fixed Wireless 0 808,375 0.6 Mobile Wireless 0 59,690,619 44.9 Totals 31,950,574 132,813,984
  11. 11. Spectrum Occupancy Metrics (Shared Spectrum) 12.2.09 Spectrum Reallocation
  12. 12. FCC Mobile License Auction Prices, 1995-2008 12.2.09 Spectrum Reallocation
  13. 13. Virtually no White Space (per FCC rules) (Jackson-Robyn 2007) Sept. 18, 2009 Tragedy T.V. 12.2.09 Spectrum Reallocation
  14. 14. WSD’s designed to protect existing TV broadcasts <ul><li>That’s why we need markets. </li></ul><ul><li>TV broadcasts would be efficiently cleared by overlays. </li></ul><ul><li>Licenses granted exclusive control of bandwidth, with encumbrances – </li></ul><ul><ul><li>existing TV stations grandfathered </li></ul></ul><ul><ul><li>potential other regulatory constraints </li></ul></ul><ul><ul><ul><li>not recommended </li></ul></ul></ul>12.2.09 Spectrum Reallocation
  15. 15. Hazlett Plan 12.2.09 Spectrum Reallocation
  16. 16. Overlays Reallocate <ul><li>Market trades enabled </li></ul><ul><li>TV stations move to more efficient positions </li></ul><ul><li>Content flows network-neutral </li></ul><ul><li>“Must carry” solved by contract </li></ul><ul><li>“Free” TV delivery can be subsidized in least-cost manner </li></ul><ul><ul><ul><li>Reverse auction </li></ul></ul></ul><ul><ul><ul><li>Direct consumer subsidy </li></ul></ul></ul>12.2.09 Spectrum Reallocation
  17. 17. Cost to Non-MVPD HHs to Satellite 12.2.09 Spectrum Reallocation Households Unit Cost Aggregate Cost 10 million $295 $2.95 billion
  18. 18. $40 Set Top Box Vouchers – 2 per home 12.2.09 Spectrum Reallocation
  19. 19. Note: U.S. spent $2.2 bil. to subsidize the Killer App of 1952 12.2.09 Spectrum Reallocation
  20. 20. Dr. Evil Hold-Up? Spectrum Reallocation 12.2.09 To release DTV spectrum for productive use, I demand 1 GAZILLION DOLLARS!
  21. 21. Politically Possible? <ul><li>“ Blair Levin…. said TV stations were not in immediate danger of losing their spectrum. But political forces could shift if cable and DBS penetration climbs above 90 percent, if Japan and Europe race ahead of the U.S. in the advanced wireless­data market and if lawmakers need to patch big holes in the budget with spectrum­auction revenue.” </li></ul><ul><li>-- Ted Hearn, Could TV Stations Lose Their Spectrum? Multichannel News (June 18, 2001) </li></ul>12.2.09 Spectrum Reallocation
  22. 22. Thank you. 12.2.09 Spectrum Reallocation

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