September 2015

[Commentary] The news that "Sesame Street" is migrating from PBS to HBO is not the only indicator this summer that an economic divide may be widening within the American viewing public. Audience data indicate that two segments of the US population will be hit especially hard by the upcoming Federal Communications Commission auction selling off television airwaves to wireless carriers: minorities, especially Latinos, and public television viewers. Where these two large groups of Americans overlap will be “ground zero” of this government-engineered shift from free, over-the-air television to a data plan near you.

By “clearing” today’s TV station from the airwaves, or spectrum, the FCC auctions will deprive millions of Americans of the option of receiving free over-the-air (OTA) television from at least some of the stations they now watch. The threat to minorities and public television viewers comes from the fact that both groups rely on OTA more than other Americans. For viewers that are both minorities and public TV viewers, the impact could be devastating.

[John M. Lawson is the president of Convergence Services, Inc.]

The Federal Communications Commission has released a report from an advisory committee on how to encourage competition in the market for set-top boxes. Right now, if you don’t want to rent a cable set-top box from your cable company, you don’t have a lot of options. And it’s kind of a pain. You still need to rent a card from your cable company to run the box. It’s almost like the days when you had to rent your phone from the phone company.

The report comes up with two options for solving this problem. One would let you buy a cable box that could search for, say, your favorite movie. John Bergmayer, an attorney at the consumer group Public Knowledge says cable companies don’t want cable boxes sending you to Netflix. They prefer a second option, that could eventually replace cable boxes with an app. Still, some consumer advocates wonder why, if you do want a set-top box, you can’t just buy one as easily as you’d buy a cell phone or TV for that matter. This is something the FCC is still wrestling with. It’s now in the information gathering phase, accepting comments on the advisory committee's report.

Now that the nation’s largest price cap telecommunication carriers have announced their decisions on broadband Connect America Phase II funding, a portion of locations targeted in the program will be teed up for a reverse auction expected to occur in 2016. Carriers had until Aug 28 to indicate, on a state-by-state basis, whether or not they planned to accept funding to cover some of the costs of bringing broadband connectivity to locations in their local service territories that cannot get broadband today.

While most carriers accepted funding for most states, about 10 percent of funding remains unclaimed. The FCC plans to award that funding through a reverse auction that will be open to the incumbents and to competitors, with funding going to the company that offers to deliver broadband for the lowest level of support.

[Commentary] It is a fundamental truth in economics and finance that lower returns or higher risks decrease incentives to invest. Combining the two spells double trouble. The Federal Communications Commission delivered just such a double whammy with its Open Internet Order when it chose to place new, yet often unspecified restrictions on Internet Service Providers (ISPs). Almost as if on cue, investments in broadband dropped in the US.

What economists observed decades ago remains true today: (1) Limiting businesses’ options decreases investment value; and (2) There is a need to put distance between the short-term political priorities and long-term infrastructure investment planning. If we continue to fail in that, we will shackle our broadband infrastructure.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida]