Electromagnetic spectrum is a scarce public good. There is only so much of the stuff and we have to, some how, figure out how to share with various competing industries and elements of Society. In the Uited States, the biggest user of spectrum is the US military. They earn a healthy swath of otherwise extremely valuable real estate for the purposes of national defense communications and research. This blog post is not to criticize them or the FCC for providing for the needs of the department Or that admirable goal.

This blog post is all about the use of this scarce public good for entertainment. 

I’m not saying that entertianment is bad, just the use of spectrum as a network to broadcast whether you’re watching or not in densely populated areas of the country, is bad.

At the time of the formation of the Federal Communications Commission, that part of the US federal government charged by Congress to manage spectrum and its competing users and uses, the broadcast industry was radio stations which were all about public information. News. Weather reports. Public safety issues. Entertainment, in the form of radio plays and talent shows, gave way to recorded music and variety shows. With the advent of television in the 1950s, the scarcity of other network options (the distribution mechanisms for getting content into the eyes and ears of the audience), meant that broadcast TV and radio were the only viable option.

That has changed a great deal since the 1950s. Now, a TV station has at least five methods to get their mix of locally produced news and nationally syndicated shows to its local customers: the broadcast signal licensed to them by the FCC, the Internet through their own website, the cable TV network, the satellite service providers and the telephone company that offers fiber to your home, if you live in a sufficiently dense part of the country. Three of these networks pay the TV station to carry their signal, while the Internet and the spectrum user do not. 

In 2008, the FCC mandated a shift in spectrum such that the local TV industry traded in the license that they had been using for decades with certain propagation properties, for another swath of spectrum that was to be used only for digital High Definition broadcast. The FCC, through our taxes, subsidized viewers with converter boxes and other technologies to enable older TVs to properly present HD TV content on less than HD TVs. 

Now, only 30% of the country’s 117 million TVs are actually getting TV signals from that spectrum. Most are subscribers of cable or satellite or fiber services.

Since the TV companies get paid by the distribution networks for the 70% of viewers that see their content on cable, fiber or satellite, I think they should pay to participate in auctions for the spectrum they had been licensed at no charge. I guess, the bigger question is, why did these companies get spectrum without paying for their license? 

if they were auctioned off, the FCC can discover the most economical use of the public good in a fair and non-arbitrary way.

aereoTo add insult to injury, and for some unknown reason, the TV companies are really upset with a startup that I admire and have signed up for service with. The company is Aereo.com, which has sprouted in New York City and is expanding next week to Boston. The premise of the service is simple: if you live in their serving area, you rent an HD antenna from their data center which streams the shows you watch and the channels you can get over the Internet directly to your iPhone, iPad or Android device. If you have an iPad and Apple TV, you can use the iPad to choose the show, and then mirror the signal onto the TV that the iPad is connected to. It’s an HD signal and includes a DVR function to record my favorite shows and stream them to me at my leisure.

I suppose they would like to force Aereo to pay a fee to them for something that the FCC says they have to give away freely. I suppose CBS thinks that Aereo is some kind of network, when instead they are simply a DVR and antenna rental company. I could understand if CBS had to pay big $$ for the spectrum, but since they didn’t it is dangerous for them to insist of payment for adding value to a public good. The FCC just as well might insist on TV company license fees or an auction. 

Frankly, I don’t understand why Aereo should be a legal target, but in support of their technology and idea, I have cancelled my DirectTV service and will be subscribing to Aereo next week. For $80/year, I get all the local TV I want on my devices regardless of where I am, so long as I continue to reside in or near Boston.


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