Reagan legacy in jeopardy. Government to kill free TV? - congressional legislation

National Review, May 6, 1996 by Alfred Sikes

With the ink on the Telecommunications Reform Act barely dry, Congress has begun to consider a truly ill-advised action that would imperil the competitive balance in the broadcast industry and undermine some of the positive effects of the landmark legislation just enacted into law.

Hearings are being held on a proposal to immediately auction off the portion of the nation's airwaves designated for the transition to advanced television, a step that, if taken, could result in the demise of free television in our nation. If Congress ultimately requires such an auction, it will prevent broadcasters from making an orderly transition from the current system of analog television to advanced, digital television. Should this occur, free television will eventually become obsolete and instead of having the option of buying television services, viewers will be forced to pay cable, or telephone, or satellite companies for the privilege of viewing state-of-the-art TV.

Allowing broadcasters the opportunity to better serve the public by remaining technologically competitive was the goal of a process initiated in the Reagan Administration as it became clear that the industry was on the verge of seismic changes in technology and quality. As part of that process in 1991, and with broad bipartisan support from Congress and the Bush Administration, the Federal Communications Commission, which I then chaired, developed a specific plan to allow broadcasters to transition from the analog to the digital world.

To make an orderly transition possible, we decided to temporarily provide broadcasters the spectrum needed to simultaneously air programming in both analog and digital formats so the public would not face a sudden loss of television service. After the transition period was completed, the broadcasters were to return the original spectrum to the government for auction. If broadcasters are forced to immediately transmit digital signals without a transition period, every TV in America would go dark. Using today's market as a measuring stick, if every TV was then replaced with a new digital set or a converter to translate the digital signal into an analog one, the public overnight would receive a bill for tens of billions of dollars at a minimum.

The existing transition process has proceeded, and succeeded, for nearly a decade. Relying on the assurances of spectrum availability for a transition period, the TV industry responded with the massive allocation of resources needed to bring digital television to life. Since 1985, hundreds of millions of dollars have been spent by business on research and development, plant and equipment, human resources and testing facilities. Unlike Japan, where the government spent billions of yen to initiate what is now an obsolete high-definition TV system, the U.S. government has not spent a nickel.

Not content to leave well enough alone, some in Congress are now challenging the decade-old promises and resulting process as a giveaway of valuable spectrum. in the never-ending search for new Federal revenues to reduce their need to cut spending, they are promoting the idea of an immediate auction of the portion of spectrum that has been temporarily reserved for the transition to digital television.

The impulse is understandable, the policy wrong-headed. Not only should the government keep its promises, but it should also seek an orderly and quick transition from a spectrum-hungry analog transmission system to an efficient, digital one. Talk about a win-win. The public gets much better television services and, in not too many years, a much more valuable block of spectrum to auction. While it isn't possible to put a price on what might be paid today for the patchwork of spectrum now reserved for loan to broadcasters, it is clear that the contiguous block of spectrum to be reclaimed in the future would be much more valuable.

But by far the worst consequence of an immediate auction would be to throw the broadcast industry on the junk pile. In a wide-open auction, broadcasters would face a harsh economic reality. The phone companies and other providers could use the spectrum for immediate returns and the broadcasters couldn't. The broadcasters' first requirement will be to build a new transmission plant alongside its current one and broadcast the exact same programming, but in digital code. While in time broadcasters will be able to develop new digital services that will not interfere with their first requirement, TV, those new services and associated revenues will not come quickly. And, failing to win the auction, broadcasters would find themselves figuratively tethered to an analog signal that will look increasingly antiquated. In a high-tech world, low tech loses.

At its end, the current process will leave broadcasters no more spectrum than they now have. In fact, advances in digital compression will lead to more efficient spectrum utilization. For that reason, those who see a giveaway to broadcasters have got the issue exactly backwards. Altering the plan in favor of an immediate auction would actually be a taking of the broadcasters' right to exist. How ironic it is that as the government seeks to dismantle barriers that have prevented cable television and telephone companies from operating in new communications arenas, auctions would be used to erect a barrier that would bar broadcasters from providing the free services they have delivered for decades. Government policy should not undermine free broadcasting in favor of pay services offered by cable, phone and satellite companies.