FCC: Wireless spectrum 10x more valuable for wireless broadband than for TV

The 300+ page National Broadband Plan that the Federal Communications Commission submitted to Congress today contains some logical goals, some ambitious ones, and some that are sure to cause a good deal of conflict between industries.

One of the most contentious issues also happens to be the most important aspect of the broadband plan: the re-allocation of wireless spectrum for the use of mobile broadband.

Last October, FCC Chairman Julius Genachowski said Americans' consumption of mobile broadband has grown so quickly that we are almost at a bottleneck, and that more wireless spectrum is needed for it immediately. The plan, therefore, says that it will increase the 255 MHz - 3.7 GHz spectrum available to "terrestrial broadband services" (a.k.a., non-satellite) by at least 300 MHz in the next five years, and 500 MHz within the next ten.

But where will all of this wireless spectrum come from?

Of the 300 MHz due in the next five years, 120 MHz will be coming from the broadcast television bands.

It's no secret that the radio and television broadcast industry is still sitting on huge chunks of unused wireless spectrum, and the recent transition to digital broadcast freed up a significant amount of spectrum in the 700 MHz band that was auctioned off to mobile network operators in 2008. By re-purposing the wireless spectrum for mobile Internet services, the FCC says it increased its value to about $1.28 per megahertz/pop. Right now, the FCC estimates that the spectrum the broadcast TV industry has is only worth about $0.11 to $0.15 per megahertz/pop.

In short, the spectrum is ten times more valuable for wireless broadband than it is for broadcast television.

This is due to a couple of factors. Firstly, it's because only 10% of the population is estimated to still rely on free over-the-air broadcasts. Secondly, it's because broadcast TV licensing has interference protection built into it, which leaves significant amounts of spectrum intentionally unused.

So to get this extremely valuable wireless spectrum, the FCC is going to try a multi-pronged approach to restructuring the broadcast TV industry:

1. Update the rules on TV service areas, distance separations, and revise the table of spectrum allotments starting at the 6 MHz channel.

2. Fix the licensing framework so two or more broadcast stations can share the 6 MHz channel. (The Commission estimates that two HD video streams or several SD streams can exist within that channel.)

3. Get government approval so broadcasters who have voluntarily consolidated their channels will be able to share the profits of the remaining spectrum that is auctioned off.

If that is not approved, then other methods of restructuring the broadcast industry must be explored, such as by transitioning to a cellular broadcast architecture (smaller, lower power transmitters that cause less interference than the big broadcast towers) or by auctioning off "overlay" licenses where licensees must negotiate directly with broadcast TV stations to clear out the bands.

Some of these alternative methods would be a little more forceful to broadcasters.

"We were pleased by initial indications from FCC members that any spectrum reallocation would be voluntary, and were therefore prepared to move forward in a constructive fashion on that basis," Dennis Wharton, Executive Vice President of the National Association of Broadcasters, said in a statement yesterday evening. "However, we are concerned by reports today that suggest many aspects of the plan may in fact not be as voluntary as originally promised. Moreover, as the nation's only communications service that is free, local and ubiquitous, we would oppose any attempt to impose onerous new spectrum fees on broadcasters."

Now that the value of the wireless spectrum has been clearly proven and outlined, television broadcasters who have faced declining ad revenue and declining viewership could be standing before a huge pile of money. The 700 MHz spectrum block alone garnered more than $19 billion from wireless network operators in 2008 for a little under 100 MHz of spectrum. License holders in the bands to be vacated are holding very strong cards indeed.