Lost Spectrum Could Be Cable's Gain

Federal Communications Commission staffers have been talking to cable-industry representatives about spectrum reclamation, but those conversations have been about technology rather than broader policy issues. According to broadcast sources, one such conversation the FCC will need to have is on extending the must-carry rules to signals no longer delivered over the air, or now transmitted in a different format. "The historic legal justification for must-carry was ... to preserve an over-the-air service for the non-cable home," said cable attorney Daniel Brenner of Hogan & Hartson. "But if you eliminate that service, then that justification goes away." According to broadcast sources, one take on the spectrum-reclamation proposal being floated by FCC broadband adviser Blair Levin in talks with broadcasters and others would have the stations maintain at least a standard-definition over-the-air signal, with cable operators required to carry an HD feed of that station to their customers. Under another scenario, outlined by economist Coleman Bazelon in an FCC filing, broadcasters would give back all their spectrum, becoming essentially another cable or satellite channel. Cable would find upside in Bazelon's proposal that the government subsidize multichannel video service to the 10 million or so households that still rely on over-the-air TV. "You are offering them 10 million new customers, so that's worth something," Bazelon pointed out. Such lifeline service would be subsidized for life, he said. But is that worth enough for cable operators to accept a continued must-carry regime, perhaps for stations that don't even deliver an over-the-air signal? "Maybe not, but must-carry is going to be in the bargain," he said. Bazelon figures that subsidized service would mean an additional $9.3 billion in cable subscriptions.