U.S. Federal Communications Commission Chairman William Kennard called TV broadcasters "spectrum squatters" who hoard "the most valuable resource of the Information Age" and urged Congress to start charging the stations fees to force them to give up one of the two channels they now occupy.
Kennard, in a speech he gave Tuesday at the Museum of Television and Radio in New York, said Congress allocated a second channel to broadcasters at no cost to allow them to broadcast digital TV (DTV) signals while at the same time continuing to air programs on their original frequency. He valued this free spectrum at US$70 billion and called it "the biggest government giveaway since Peter Stuyvesant bought Manhattan from the Indians for $24."
The broadcasters can operate on both channels until 2006 or until over-the-air DTV serves 85% of the U.S. market. "Given the way that broadcasters are dragging their feet at the moment," Kennard said, "we may not see that level of DTV penetration until 2025."
Edward Fritts, chairman of the Washington-based National Association of Broadcasters (NAB), in a terse statement said, "Despite the best efforts of broadcasters, digital television's potential remains in part unfulfilled because of FCC inaction on several critical issues."
The NAB said 135 stations are currently broadcasting DTV. "It is regrettable that Chairman Kennard has failed the test of leadership. Sadly, he is trying to shift the blame for a faltering DTV transition," Fritts said.
"Congress gave the FCC authority to require all television sets to receive DTV channels, but it has not," Fritts continued. "Congress gave the FCC the authority to establish DTV/cable interoperability rules, but it has not. Congress gave the FCC authority to require cable systems to carry DTV stations, but it has not."
The FCC intends to auction the portion of the airwaves currently used by broadcasters to air digital signals -- channels 60 to 69 -- next spring for advanced, high-bandwidth mobile telephone and data services. But companies that win that multibillion-dollar lottery can't use the spectrum until the TV stations shift their digital service back to their original frequencies in the channels 2 through 13 band. The new mobile licensees may have to pay the broadcasters to speed up that shift.
Kennard said Congress could speed up the process by imposing a "spectrum-squatters fee" on broadcasters, starting in 2006. The fee would include a built-in yearly escalation clause to speed up the process of freeing up additional spectrum needed for the development of broadband mobile networks that can support the wireless web.
The FCC has allocated frequencies at no cost to TV and radio broadcasters since 1934 in return for them serving the "public interest," but in recent years, "broadcasters have increasingly elevated financial interests above the public interest," Kennard said. He cited the "brazen decision" by the Fox network not to air a debate between the presidential candidates and instead to "showcase the premiere of their dystopic sci-fi show Dark Angel." He also criticized NBC, which he said, "passed the buck" to its affiliates on the decision about whether to air the debates or a baseball game.
Tom Wheeler, president and CEO of the Cellular Telecommunications Industry Association in Washington, said Kennard's remarks illustrate the problem the U.S. wireless industry faces. "American citizens and entrepreneurs are on the short end of the spectrum stick," Wheeler said in a statement, pointing out that Japan has allocated 300 MHz for wireless, the U.K. 364 MHz and France 395 MHz while "in the United States, we are stuck at 189 MHz."
An auction of TV channels 60 through 69 would help alleviate this shortage, Wheeler said, but the broadcasters "are finding reasons to hang to these airwaves. . . . Some of those broadcasters are also saying they would agree to sell the spectrum they were given free and promised to return."