Canadian telcos’ access to 600 MHz may rest on reluctant U.S. broadcasters

Only about 60 of 1,200 over-the-air, American TV broadcasters have expressed an interest in auctioning off their 600 MHz spectrum, said the U.S. National Association of Broadcasters (NAB), signalling that mobile operators' access to the spectrum could be limited. Dennis Wharton, a spokesman with the NAB, a Washington D.C.-based lobby group, said in an interview that the vast majority of American broadcasters want to hang on to their 600 MHz spectrum licences, putting into question whether they intend to take part in an upcoming “incentive auction” in the United States. “If there’s a stampede of TV stations preparing to go out of the business, we have not heard the hooves,” said Wharton, whose group represents about 1,200 conventional broadcast stations, two-thirds of the U.S. total. “People are on our board of directors who represent hundreds of TV stations have looked us in the eye and said, ‘There’s no way I’m going out of business.’” In Canada and the United States, the 600 MHz spectrum band is used for over-the-air television signals on channels 32 through 51. Like the 700 MHz band, most of which in Canada and the U.S. has been freed up for mobile use, the 600 MHz band is superior for carrying signals over longer distances and through buildings and walls. In a spectrum outlook document released in March, Industry Canada identified the 600 MHz band as one the department would consider making available for mobile providers as it looks to meet demand for mobile Internet usage and allocate another 300 to 415 MHz of spectrum to mobile wireless over the next four years. Due to a 2008 bilateral agreement with the United States, Industry Canada said, any plans to repurpose the 600 MHz frequencies will depend on their use in the U.S. and the outcome of an American “incentive auction,” expected in 2014. In that auction, the U.S. Federal Communications Commission (FCC) aims to purchase some of the 600 MHz spectrum from conventional TV broadcasters, which would sell it voluntarily. Wayne Stacey, a broadcasting spectrum consultant with Wayne A. Stacey & Associates in Ottawa, said in a telephone interview that the greatest threat to the reallocation of the 600 MHz band would be if U.S. broadcasters do not to turn over their spectrum to the FCC. “They first have to figure out whether there’s going to be enough offered up to make the whole exercise worthwhile,” he said. “If it turns out that it just doesn’t work in the U.S., period, then I guess there’s not much further point in proceeding here.” Stacey said the FCC will need to purchase at least four or five over-the-air channels in every U.S. market to free up between 30 and 40 MHz of spectrum for mobile use. Anything less, he said, is not likely to be worth the cost that American operators would incur to build out 600 MHz mobile networks. Scott Bergmann, assistant vice-president of regulatory affairs at D.C.-based trade group CTIA-The Wireless Association, said the FCC could clear some 600 MHz spectrum for mobile by pushing broadcasters onto lower spots on the dial in markets where there are unused channels. He said the FCC now allocates 294 MHz of spectrum to broadcasting in each market, while a typical market has about 18 TV stations each using 6 MHz of spectrum for a total of about 120 MHz. Bergmann said the rise of mobile broadband use in the U.S. and its ties to the country’s digital economy give the FCC a “powerful economic incentive” to allocate more spectrum to mobile operators, including that in the 600 MHz band. The FCC may have to pay more for the spectrum than expected, he said, to encourage more broadcasters to take part in the incentive auction. “Whenever economists look at this issue, they look at the relative valuation of the spectrum. If you’re using the spectrum for mobile broadband use, there’s a powerful economic incentive out there,” he said. “This is spectrum that’s worth essentially billions of dollars when put to work in mobile broadband, so we think there are going to be a lot of incentives for broadcasters to participate … I don’t think we’re going to have a final answer on how many broadcasters are going to participate until this auction is over,” Bergmann said. Wharton said there are 600 broadcasters outside the NAB, some of which may be interested in selling their spectrum. Ted Woodhead, senior vice-president of government and regulatory affairs at Telus Corp., said in an emailed statement Monday that 600 MHz spectrum could be “as valuable for carriers as 700 MHz” under the right conditions. He said Canadian carriers would put value on the spectrum if U.S. operators rolled out 600 MHz networks and manufacturers started selling mobile devices compatible with the band. “Rather than experimenting with reverse auctions however we believe that should simply recall the spectrum at the appropriate time or relocate the broadcasters from it,” Woodhead said. Stacey said U.S. broadcasters that do not want to take part in the auction would probably resist FCC pressure to move to another channel. He said broadcasters could incur “significant” costs if they change broadcasting frequencies, and would risk losing viewers. Martin Marcotte, director of transmission at CBC/Radio-Canada, said in a telephone interview Monday that most new broadcasting equipment is “frequency agile,” giving broadcasters the ability to change channels without incurring significant costs. He said CBC spent up to $1 million to switch a local broadcasting station to digital during Canada's transition to digital, over-the-air TV signals in 2011, though he declined to say how much it would cost to move five CBC channels out of the 600 MHz band. If the FCC’s incentive auction frees up enough spectrum for American mobile operators to use, the Canadian government must determine how to reclaim 600 MHz spectrum from Canadian broadcasters before allocating it for mobile providers. Stacey said broadcasters were not compensated for moving out of the 700 MHz band as part of Canada's conversion to digital TV, and they may put up a fight if asked to switch channels again without compensation, even if that moves them lower down on the dial. “The DTV conversion itself would have cost the broadcasters money even if there had been no spectrum changes,” he said. “In this case, you’d be talking about disrupting a DTV station that’s sitting there, operating as happy as a clam right now, and might find that they’d have to go onto another channel.” Marcotte said CBC has had discussions with Industry Canada about the possibility of refarming the 600 MHz band for mobile use, and that the broadcaster is not yet taking a position on the idea. “It’s still early days in terms of whether or not that’s going to actually happen in Canada,” he said. This month, Industry Minister Christian Paradis said the federal government plans to auction mobile spectrum in the 700 MHz band starting in November. The 700 MHz spectrum being auctioned was previously used by Canadian and American broadcasters on channels 52 through 69. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca

Canadian telcos’ access to 600 MHz may rest on reluctant U.S. broadcasters

Broadcast | March 25, 2013

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