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Headline Highlights -- Media and Telecom Policy Developments January 2008
Although media attention in January turned understandably to the presidential primaries, the telecom policy world continued to spin. Like the elections around the country, these developments will have a huge impact in 2009 and beyond.
I. DTV Converter Box Coupon Program Launch
On January 1, the National Telecommunications and Information Administration (NTIA) launched a program meant to ease consumers' transition to digital television. On New Year's Day, the NTIA began accepting requests for coupons that will subsidize the purchase of digital-to-analog converter boxes that will allow today's analog TV sets to display the digital TV signals of local broadcasters. Starting February 18, 2009, most broadcasters will cease analog their analog signals.
The NTIA's coupon program, as mandated by Congress, allows each US household to request two forty-dollar coupons -- each of which can be applied to the purchase of one converter box. The converter boxes are expected to cost between fifty to seventy dollars, however EchoStar has announced plans for a forty dollar box to be available this summer. Congress has funded 33.5 million coupons. If requests exceed 22.25 million coupons, the NTIA will have to limit coupons to only households that do not subscribe to multichannel-video services like cable or satellite.
II. 700 MHz Spectrum Auction
Related to the digital television transition is the 700MHz spectrum auction launched by the Federal Communications Commission January 24. Bidders are vying for spectrum to be vacated by current analog television broadcasters in February 2009. The auction is expected to raise in billions and pay for the NTIA's converter box coupon program. This spectrum, considered "beachfront property" because they can go long distances and penetrate thick walls. Auction winners could use the spectrum to offer cell phone or, possibly, wireless broadband Internet access.
Two blocks of spectrum are of particular interest. The "C block" spectrum winner will be required to open its network to any device or software application, as long as the bidding reaches a minimum $4.7 billion reserve price. On January 31, an unidentified bidder exceeded that price, triggering the open access provision of the FCC rules. Free Press, an advocate for this open access rule, said, "This demonstrates that the marketplace will support open networks in the future just as easily as it supported closed networks in the past. Finally, the American public will enjoy the benefits of more competition. This is just the beginning. This auction signals that the Internet marketplace -- and the public polices that shape it -- should now move decisively toward universal openness."
News about the "D block" spectrum has not been as good. The winner of this block must work with public safety agencies to build a wireless broadband network for use by police and firefighters. In order to ensure the winner of the D-block license cooperates with the public safety community, the FCC rules say if it is deemed the licensee wasn't negotiating in "good faith" it could be forced to forfeit more than $100 million and lose all rights to the spectrum it had acquired. Frontline Wireless, once thought to be a leading candidate to win this part of the auction, abruptly dropped out of the auction just weeks before it started. Apparently, potential investors in Frontline were extremely concerned about the vagueness of FCC's rules. Cyren Call, which is representing the public safety community in negotiations with possible bidders for the D-block, informed Frontline in one meeting the winner of the D-Block auction would be required to pay $500 million over 10 years to lease access to spectrum controlled by public safety in order to build the wireless broadband network. Investors thought this was too much.
III. Universal Broadband?
On January 29, the FCC launched three interrelated proceedings aimed at reforming the Universal Service Fund, a web od subsidies that flows between telecommunications carriers to make telephone service more affordable 1) in rural areas and for low-income households and 2) Internet service less expensive for schools, libraries and rural health care providers. In part, the FCC is asking for public comment on recommendations from a Federal-State Joint Board which proposed ways for expanding the availability of high-speed Internet access in rural areas. In its recommendations the Joint Board explicitly said the nation's communications goals should include achieving universal availability of broadband Internet services at affordable and comparable rates for all rural and non-rural areas.
Although the Joint Board and FCC seem to recognize a problem with the availability and affordability of broadband, a NTIA report released on January 30 offered an upbeat assessment of the Administration's efforts to spur growth and competition in the high-speed Internet market. The report concludes that "a reasonable assessment of the available data indicates" that the objective of affordable access to broadband for all by 2007 has been realized "to a very great degree." The report paints a picture of a broadband environment that is becoming increasingly competitive, for which it credits the president's policies. President Bush has promoted polices that created "an environment in which broadband innovation and competition can flourish," the report states. Among them: a freeze on state and local taxes on Internet access; a policy of clearing airwaves for use by commercial providers of wireless broadband service; and continuing efforts to "clear away regulatory obstacles" that might thwart investment in new technologies. Critics of the report include the Benton Foundation, the Center for Creative Voices in Media, and Florida PIRG, FCC Commissioners Michael Copps and Jonathan Adelstein, Free Press, Public Knowledge and Nate Anderson