Air War

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

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.

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