Television broadcasters are taking the stance that it never hurts to ask when it comes to compensation for giving up their 600 MHz spectrum resources
Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
I know a lot of people of the mindset that it never hurts to ask. When it comes to my job, I tend to follow this mantra as any self-respecting journalist would claim, but in terms of the “real” world, I am a bit more reserved. (Luckily, I have a spouse who has no problem asking anyone just about anything.)
This “it never hurts to ask” mantra floated in my head this week as the first stage of reverse auction bidding tied to the Federal Communications Commission’s plans to convert 600 MHz spectrum licenses from television broadcasters to the commercial telecom space resulted in broadcasters asking for some money … all the money.
Television broadcasters basically said that in order for them to give up the 126 megahertz of spectrum in the 600 MHz band the FCC want’s to then turn into 100 megahertz of spectrum available for wireless carriers, it would take … oh … about $86 billion.
Or to put it another way, television broadcasters are asking for more money generated by all previous spectrum auction’s combined.
I guess it never hurts to ask?
https://youtu.be/vAvCMQ_ok1c
Many industry observers were expecting television broadcasters to indeed ask for quite a bit of compensation for handing over licenses they were given in the first place, but few thought television broadcasters would ask for all the compensation.
And in doing so, at least one trade group representing television broadcasters downplayed the compensation amount by simply stating “broadcasters have done our part; now it’s up to the wireless industry to demonstrate the demand is there for low-band spectrum.”
That “demonstrate the demand” comment is my favorite, and shows television broadcasters are indeed of the “why not ask” mindset. Of course, recent spectrum auctions have shown that when it comes to wireless carriers, that mindset is not a bad first move.
The past four spectrum auctions alone generated nearly $80 billion in total winning bids, and one of those auction’s had just one real participant. Basically, when it comes to spectrum, wireless carriers really can’t help themselves.
Since the first stage of the reverse auction concluded, the FCC has been pretty quiet on its next move. FCC Chairman Tom Wheeler was more than happy to tell everyone the government agency planned to shoot for the moon in attempting to clear the maximum 126 megahertz of spectrum from broadcasters, but now that the price tag for such a plan has been affixed, it looks as if Wheeler has found himself in a bit of a spicy pickle.
This pickle is further spiced by the current election cycle, which could potentially see a change in administration and thus leadership at the FCC, as well as the overhanging mandate from President Obama that 500 megahertz of new spectrum be allocated to commercial services by 2020. Television broadcasters are well aware of these dynamics, and I guess are feeling pretty smug behind their financial demands.
While I would never say never, I highly doubt there is enough interest in 100 megahertz of 600 MHz spectrum to generate in excess of $86 billion in total bids. And, I am sure the FCC knows this. Thus, we are likely looking at the FCC conducting a second stage of reverse auction bidding designed to bring down the total clearing price tied to a smaller amount of spectrum being made available for the forward auction.
Are television broadcasters asking for too much? Probably. But, then again it never hurts to ask. Now, we wait for how the FCC will respond.
Thanks for checking out this week’s column. Here’s a quick extra to get you through the weekend:
–As somewhat noted in last week’s column, it’s often the small things that maintain my excitement in covering the mobile telecom space for now more than 16 years. Sure, the big announcements like mergers and acquisitions that include more zeros than other numbers, and wireless spectrum auctions also involving all the zeros in the alphabet are exciting, but I find more excitement in the smaller deals.
Thus, I just had to put in a word about news this week from AT&T that its Thanks customer appreciation program was set to offer some appreciation in the form of a free movie ticket. While the offer is sort of ho-hum, it does sort of mime one that was offered up by T-Mobile US through its Tuesdays customer appreciation program.
Verizon Wireless is also getting in on the “let’s take T-Mobile US’ lead on a customer appreciation offer,” announcing this week it would be handing out cash to current customers referring new customers to the carrier. And by cash, I mean cash cards, which are sort of like real cash, but not really. Though I guess this form of compensation is easier to turn into real cash than T-Mobile US tying its compensation to company stock.
Basically, we need to give T-Mobile US full props for laying out how the wireless industry should run customer rewards programs, and smaller props to AT&T Mobility and Verizon Wireless for recycling.
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