The top U.S. communications regulator offered to pay television broadcasters to give up their rights to airwaves worth an estimated $50 billion as it looks to overcome a looming scarcity of wireless spectrum for advanced mobile phone services.
But analysts say the plan could run into opposition from broadcasters reluctant to give up their airwaves unless they are offered a price that might be too expensive for the government to pay.
In a move that would more than double the amount of airwaves assigned to commercial operators today, Federal Communications Commission Chairman Julius Genachowski said on Wednesday that he wants to free up 500 megahertz of spectrum to wireless carriers over 10 years, as part of the National Broadband Plan to be released on March 17.
He hopes some of the airwaves would come from broadcasters, which would get a portion of spectrum auction proceeds. He did not say how much the broadcasters would be paid to give up their licenses to use the airwaves.
Genachowski's proposal is the latest chapter in the battle between broadcasters, unwilling to give up highly prized spectrum acquired from the digital television transition, and the wireless industry, which is concerned with a looming spectrum crisis as more people use wireless to surf the Web.
Broadcasters such as NBC, CBS, Fox and ABC, already grappling with advertising dollars moving to the Internet, would likely push for a high percentage of the auction proceeds, said Sanford Bernstein analyst Craig Moffett.
But if Genachowski offers them too much money, public watchdogs would complain.
He's trying to strike a delicate balance where the proceeds are at least theoretically split between the Treasury and the broadcasters, Moffett said. No matter where you strike that balance, somebody is bound to object and is likely to sue.
Other experts said on Wednesday that Congress may need to approve such an auction process as it would involve companies benefiting from public assets. Because of the difficulty involved in passing legislation, this could delay the process.
The 500 megahertz proposal is lower than the 800 megahertz the wireless industry said it would need in the next six years, but the move was still welcomed by the wireless industry.
Wireless operators paid more than $19 billion in a spectrum auction in 2008. Genachowski said that if broadcast spectrum is converted for mobile it may be worth as much $50 billion. He did not say what percentage the FCC would offer broadcasters.
Genachowski also proposed allowing spectrum sharing and other measures to ensure that wireless airwaves are used more efficiently going forward. He said broadcasters typically use just 36 megahertz of the 300 megahertz of spectrum they are allocated in small markets with less than 1 million people. In larger markets, they use only about 100 megahertz.
The highly valuable spectrum currently allocated for broadcast television is not being used efficiently -- indeed, much is not being used at all, Genachowski said at a broadband event hosted by the New America Foundation.
Even in our very largest cities, at most only about 150 megahertz out of 300 megahertz are used.
But the National Association of Broadcasters disagreed that they were using spectrum inefficiently.
As a one-to-many transmission medium, broadcasters are ready to make the case that we are far and away the most efficient users of spectrum in today's communications marketplace, said Dennis Wharton, spokesman for the National Association of Broadcasters trade group.
We look forward to working with policymakers to help expand the roll-out of broadband without threatening the future of free and local television, mindful of the fact that local TV stations just returned more than a quarter of our spectrum following our transition to digital.
Steve Largent, president of the CTIA wireless industry trade group, said the FCC proposal was a tremendous step toward maintaining U.S. leadership in wireless.
CTIA represents Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc; AT&T Inc; Sprint Nextel Corp; Deutsche Telekom AG's U.S. unit T-Mobile USA and Google Inc.
Popularity has soared in recent years for mobile devices that support services from these operators including everything from mobile Web surfing and emailing to downloading software applications or watching videos on the go.
While operators are heavily pushing such services in an effort to keep revenue growing, they often voice concerns about their ability to support the ever increasing popularity of data services unless they have access to more spectrum.
The need for increasing carrier network capacity has been highlighted by complaints from customers of AT&T Inc in some cities as data-hungry users of Apple Inc's iPhone users put a strain on its network.
The amount of spectrum the FCC wants to free up is in line with the amount the Department of Commerce proposed in President Barack Obama's 2011 budget proposal.
Genachowski also proposed setting up a mobile broadband fund that could help rural operators provide broadband in hard to reach areas.
(Additional reporting by Yinka Adegoke in New York, editing by Tiffany Wu, Bernard Orr)