Once upon a time, the radio frequency (RF) spectrum (ranging from 3 Hz to 3000 GHz) was used exclusively for radio (wireless sound transmission)—when it was used at all. Indeed, from the 1860s (when James Clerk Maxwell first postulated the existence of radio waves) to the 1940s, there simply wasn’t any other practical use for radio waves. Then commercial television began elbowing its way into the RF spectrum, to transmit images together with sounds. After TV came cell phones, which initially wanted RF spectrum for ordinary telephony uses, followed by email, followed by pictures, video, text messaging, and graphics. Today, a horde of untethered devices, ranging from L-Band satellites to RFID-tagged inventory items, all clamor for a share of the RF spectrum in an ever-expanding global communication network.
For broadcasters, the result has been a steadily shrinking spectrum. Frequencies assigned long ago, in a bygone era when the only wireless devices most people possessed were their radios and TVs, have been reclaimed and reallocated for other uses. And since, in an increasingly mobile world, the demand for wireless communication continues to grow apace, in recent times, every MHz of RF frequency spectrum a broadcaster continues to hold has rapidly escalated in value. As a consequence, the choice made by a broadcaster to surrender or retain RF frequencies has become a decision to realize or forego many millions of dollars.
Analog-to-Digital Shift and the 2 GHz Relocation
For broadcasters, the most momentous consequence of the growing demand for wireless spectrum was the mandate requiring that full power stations complete a transition from long-familiar analog to new digital technology by mid-2009, with most low-power stations following by the end of 2011. In addition to any other benefits (including an end to signal-transmission problems like ghosting and snow), this shift to digital technology greatly increased the efficiency of RF usage. Better efficiency not only enabled a long-delayed shift from SD to HD resolutions but also allowed broadcasters to surrender frequency while gaining functionality.
Thus, part of the overall digital transition was the exchange of seven 17/18-MHz wide analog Broadcast Auxiliary Service (BAS) channels for seven narrower 12-MHz wide digital BAS channels. Thus, where the old analog BAS band had run from 1990 to 2110 MHz, the new digital band started instead at 2025.5 MHz. The resulting reallocation gave the lower 30% of the old analog band (1990 to 2025 MHz) to Sprint/Nextel, for incorporation into their adjacent Personal Communications Service (PCS) band (1850-1990 MHz). But this diminution in BAS bandwidth involved no sacrifice by broadcasters. To the contrary, they profited from it—twice over. First, in exchange for the extra bandwidth, Sprint/Nextel agreed to pay for all the equipment broadcasters needed to convert their existing BAS usage from analog to digital, e.g., new digital HD cameras and MPEG-4 encoders, transmitters, and receivers. Second, once equipped with new digital gear, broadcasters were able to do far more with a 12 MHz BAS channel than had ever been possible with an 18 MHz analog BAS channel (e.g., transmit two HD signals across it simultaneously).
Auction of UHF Spectrum
Since 1994, the FCC has sporadically auctioned off spectrum reclaimed either through shifts in transmission frequencies (like the 2 GHz relocation) or consolidation of operations. Most recently, however, they commenced a first-ever “incentive auction” (authorized by Congress in 2012) of 84 MHz, taken from the UHF TV broadcast spectrum. TV stations using these frequencies could voluntarily decide to relinquish them, in exchange for a share of the auction proceeds. The initial auction phase of this spectrum reallocation initiative took one year, starting March 2016 and ending March 2017, with a total of $19.8B raised (setting the market price of 1 MHz of spectrum at just under $236M or, on a national MHz-pop scale, at $0.73). Those UHF broadcasters that volunteered to surrender spectrum are dividing the lion’s share of this revenue (just over $10B), with the government claiming most of the rest of the proceeds (over $7B) for use in “debt reduction.” Except for 14 MHz, all the freed UHF spectrum goes to phone companies, who plan to incorporate the additional bandwidth into new 5G networks.
While $10B might seem generous—even extravagant—compensation for surrendering 84 million Hz out of a total spectrum of 3,000 billion Hz, hopes for this auction were more elevated. The expectation was that what, at first, seemed a frenzied demand for spectrum would drive bidding far higher, past $60B. Far from the maximum amount hoped for, then, $10B was the minimum figure at which broadcasters were willing to part with this much spectrum.
(To be continued in part 2 of this blog)
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