Putting A Price Tag On TV Spectrum

[Commentary] Economist Hazlett knows that television broadcasters are sitting on valuable spectrum needed by mobile devices -- so, he says, it is time to make a deal. He realizes that TV broadcasters' real desire is to secure cable and satellite carriage. He believes broadcasters wouldn't give up any spectrum until they know three things: 1) How much will they be paid? 2) How will their lives change? 3) How can they be sure that they won't get whacked by the opportunists in Congress when they catch a clue that broadcasters are prepared to sell out? The first two questions are answered by seeing what the FCC should do. It should split the TV band into seven overlay licenses of 42 MHz each. Then auction all seven. At the same time, it should provide a mechanism to supply the 10 million households not having a cable or satellite subscription with free broadcast video service for five or 10 years. This can be done by vouchers, as with the DTV set-top box subsidies or via a procurement auction. It won't cost more than $3 billion ($300 times 10 million), a small fraction of the spectrum auction receipts. The overlay licenses will embed encumbrances — TV broadcasters. Existing stations would have the right to continue broadcasting, to relocate to another channel assignment or to go off -air. No worries about coverage. The new spectrum owners will pay cable and satellite operators to guarantee carriage. If not, broadcasters won't vacate. So "free" TV service remains, but the delivery platform will be technology-neutral. And broadcasters will be part of the solution, for which they will be compensated. How does something like $30 billion spread across 1,750 full-power TV stations sound?

[Thomas Hazlett is professor of law and economics at George Mason University. He formerly was chief economist of the FCC.]