TV Auction's Big Question: How Much?

Wall Street seems skeptical about the National Broadband Plan's proposal to induce broadcasters to give up all or some of their spectrum in exchange for a cut of the money when it's eventually auctioned off to wireless broadband operators.

Any attempt to evaluate the so-called incentive auction is thwarted by the fact that there has been virtually no public discussion of what percentage of auction proceeds broadcasters would receive. One of the reasons for that: Allowing broadcasters to receive anything at all from an auction of spectrum requires congressional approval. Enabling legislation has been introduced, but it's a long way from getting the green light. At the heart of the FCC plan is the contention that broadcast television is, at best, a mature industry, and at worst, an industry in decline, while wireless broadband, where the FCC would reallocate the spectrum, is on the rise. Some also see in the plan a bureaucratic determination that broadcasters may not be the best judges of how to deploy and monetize their spectrum.

"Broadcasters are effectively being told their current business model may not be best use of spectrum," a financial analyst says.

"For a broadcaster to hear that, when you're serving the public interest and just spent millions to get your station digital ready, from the perspective of many of the broadcasters I cover, that's not what they want to hear." Broadcasters want time to judge whether nascent services such as digital subchannels and mobile DTV will bear fruit, says Mark Fratrik, vice president of BIA/Kelsey.