Air War

It’s a battle that has it all: power, money, entrenched interests, and a fair share of snark. It’s the spectrum war, where two of the major sets of players in the media business—the broadcasters and the telecoms—are battling over how to divide a path to consumers that the TV guys have controlled for decades. The broadcasters are the ones carrying the scars, having already been forced two years ago to surrender 25 percent of the airwaves they held, when the federal government’s long-planned, long-delayed conversion from analog to digital TV finally went through. In this fight they, and their representatives at the National Association of Broadcasters, have been cast as the old guard, desperately trying to ward off change despite the fact that, thanks to the spread of cable and satellite, only about 40 million out of their 300 million-strong American audience comes to them exclusively via the airwaves these days. It’s almost an accident that the telecoms are the new wave here—after all, the two biggest companies, Verizon and AT&T, have roots reaching all the way back into the 19th century, when Ma Bell was born. But as mobile phone guys they’re the upstarts, embodying the future with their explosive growth and cool toys (the iPhone and iPad, the BlackBerry, the Internet itself). Their futuristic sheen makes them the favored industry of the moment for Obama, as well as at the FCC, where chairman Julius Genachowski has been a friend of the president’s since their days working together on the Harvard Law Review. The split control of Congress between Republicans and Democrats gives the TV guys leverage for fighting back. So does the fact that broadcasters, via their local affiliates, are a media power in every congressional district—and can use that power to lobby voters whenever they want. Genachowski is now pushing for a way to divert another significant chunk of spectrum—about 40 percent of what the TV guys still control—to new uses, auctioning it off as part of a plan to build up the country’s broadband capacity. The telecoms want that spectrum because it’s the only bandwith rich enough to handle the services they’re delivering—and, of course, because it’ll help them make more money. So far, broadcasters have used their lobbying power to control the debate and shut down any attempt by the Feds to simply revoke their rights to the spectrum in question. The FCC’s response has been to promise to share a portion of any auction’s proceeds (which may total as much as $28 billion) with those broadcasters who voluntarily give up what the wireless industry wants. Whether that will work is a big question. Broadcasters claim they need the spectrum for additional channels and mobile digital TV service they’re developing. “As long as it remains voluntary, we’re fine with that,” said CBS CEO Les Moonves, at last month’s NAB annual conference, “because we are not going to volunteer.” The Insider Gordon Smith, president and CEO, National Association of Broadcasters The former Republican senator from Oregon knows how to play the Capitol Hill game, and he does it in his own, even-tempered, deliberate style. Not one for theatrics (unlike his main opponent, Gary Shapiro of the Consumer Electronics Association), Smith has led broadcasters in systematically building a case for his members through good, old-fashioned lobbying grunt work. As bills in Congress gain traction, NAB has ratcheted up its debate, casting doubts on whether there is a spectrum “crisis” or even a “crunch” by claiming that many companies calling for more spectrum are “hoarding” it. So far, that’s worked—Smith hasn’t had to bring out his big gun, which is having his members use their own airwaves to lobby. The Snark King Gary Shapiro, president and CEO, Consumer Electronics Association Known for his aggressive, take-no-prisoners rhetoric, the head of the CEA, who’s been in his job for 20 years, delights in pushing the broadcasters’ buttons. He’s called broadcasting a “buggy whip” industry and broadcasters “spectrum squatters.” His latest gambit: an online “spectrum crunch clock” that, like deficit tickers, grows bigger over time to suggest that dollars are lost every minute from underused spectrum—which, of course, should be deployed to wireless broadband providers. “Broadcasters know they’re going to give up their spectrum. It’s inevitable. Broadcasters are hedging their bets. They’re posturing to get the largest possible percentage they can,” he told Adweek. Obama’s Man Julius Genachowski, chairman, Federal Communications Commission The president’s law school buddy has been dogged in promoting the National Broadband Plan, and his speeches on it are relentlessly (even boringly) consistent. Genachowski’s ties to the White House are formidable, which gives his policy goals extra momentum, especially because he can often get them added to Obama’s own remarks. What worries many broadcasters are Genachowski’s personal connections as the onetime chief of staff to former FCC Chairman Reed Hundt; the latter admitted last year in a speech that the regulator had already decided to “favor the Internet over broadcast.” Not that Genachowski retains any great affection for at least one of the telecoms—an industry insider who has spoken to him in private about the company’s spectrum lobbying says Genachowski calls AT&T “the biggest thugs in town.” The Deep Pockets Jim Cicconi, senior executive vice president external and legislative affairs, AT&T At just about any panel on spectrum management, chances are AT&T’s head lobbyist Cicconi, a Republican who worked in the Reagan and Bush I White Houses, will be there. And legislators listen when the representative of one of the biggest spenders on the Hill ($15.4 million in overall political donations last year) talks. The company even used its proposed $38 billion acquisition of T-Mobile as an opportunity to make the argument for more spectrum, positioning the deal as a short-term solution. “The only reason it isn’t compelling for broadcasters [to give up spectrum] today is they were given it for free and there is no incentive to do anything but hang onto it,” Cicconi said recently. The Democrat Senator Jay Rockefeller, D-W.Va., chairman, Senate Commerce Committee The powerful chairman of the Commerce Committee is pushing to get his bill on the issue done before the 10th anniversary of Sept. 11. His stated goal is to give away a block of spectrum (called the D Block) to first responders linked to that date, but the bill also authorizes the FCC to conduct auctions for any additional spectrum acquired from broadcasters. He’s held two hearings already as he crafts his bill; markup is expected shortly. In a bow to the NAB, he’s vowed to keep the auctions voluntary. “Some [broadcasters] say, ‘The government’s going to move in and the FCC is going to take away our spectrum.’ That’s not going to happen,” he told reporters in a recent press call. The Republican Rep. Greg Walden, R-Ore., chairman, House Subcommittee on Communications & Technology A former owner of five radio stations, Walden has said, “I know a thing or two about spectrum.” That doesn’t mean he’ll be a pushover for the broadcasters, but it does mean they have a sympathetic ear. Walden holds a lot of sway with the House leadership, which wants to use spectrum auction proceeds to reduce the deficit—and that includes selling off the block that Rockefeller wants to give away as a set-aside for first responders. Having just held the first of three hearings, Walden is looking to introduce his own legislation in July.

Performance Marketing

Air War

It’s TV vs. phones in Washington’s explosive broadband battle

Katy Bachman

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Katy Bachman