April 2011

[Commentary] The Obama Administration wants television stations to give up some of their spectrum so it can be redeployed to offer Internet services to smartphones, iPads, and other mobile devices. The White House considers broadband to be the new national medium. But it sees a crisis coming with too little spectrum available to accommodate the millions who want to use portable devices to stream videos, data, entertainment and everything else. So the administration wants to free up 300 megahertz over the next five years, and 500 mhz over the next decade, for wireless Internet. (A smartphone typically uses 24 times more spectrum than a conventional cell phone uses, while a tablet computer uses 122 times more spectrum.) Without more wireless broadband capacity, there could have a perfect storm of dropped calls, dead zones, slow speeds, and high prices. To help do that, Federal Communications Commissioner Chairman Genachowski is offering a deal to TV stations ranging from big-city network O&Os to tiny independents in places like Peoria. It goes like this: voluntarily give up your spectrum, and the government will share the proceeds when it auctions the airwaves to a wireless broadband company.

Sounds fair? Not to the National Association Of Broadcasters. The airwaves that the FCC wants TV stations to give up are worth at least $33 billion -- but that's according to a study in February that was supported by two lobbying groups that have a lot at stake in wireless broadband: the Consumer Electronics Association and the cellular phone industry’s CTIA. The NAB says the estimate is bogus because it makes too many big assumptions. Yet there’s no doubt that there's a lot of money to be had.

True, Chairman Genachowski hasn't hesitated to compromise in other controversies. But he told the NAB gathering last week that “the costs now of delaying voluntary incentive auctions would be severe.” The FCC has the legal authority to simply take broadcast spectrum if it decided that it would serve the public interest. But it needs NAB help to win congressional approval to offer stations a deal. The law requires all cash from spectrum auctions to go to the U.S. Treasury. People in the know tell me too many TV stations want the cash they could collect by going along with Genachowski's plan. The big question for them is how big a cut they'll receive from an auction.

An arcane-sounding change with potentially significant implications for consumers and businesses is under way on the Web: the shift to a new generation of HTML, the programming standard that underpins the Internet. Senior executives, regardless of industry, should take note; like the exponential growth of device-specific applications, this evolution of HTML will further boost the power of mobile devices, accelerating changes in the way people consume content and the potential use of smartphones and tablets as both a marketing platform and a productivity tool.

The next generation of the Internet standard essentially will allow programs to run through a Web browser rather than a specific operating system. That means consumers will be able to access the same programs and cloud-based content from any device -- personal computer, laptop, smartphone, or tablet -- because the browser is the common platform. This ability to work seamlessly anytime, anywhere, on any device could change consumer behavior and shift the balance of power in the mobile-telecommunications, media, and technology industries. It will create opportunities and present challenges. This article seeks to provide a primer on these changes for senior executives, who may feel the effects of the move toward “Web-centricity” much sooner than they think.

A group of deep-pocketed companies, including Microsoft and Verizon, are exploring delivering TV service over the web, a move that could disrupt the economics of cable TV and lead to a new generation of "virtual" cable companies that provide TV without owning the pipe into the home.

Microsoft has been in talks with TV networks about acquiring rights to provide a package of channels through Xbox in the US, in addition to the video-on-demand and Netflix Watch Instantly service it already carries through Xbox Live to 30 million users in the US. And Verizon is exploring how it could offer Fios TV service outside its wired footprint. And, separately, it's setting up a new business unit, Verizon Digital Media Services, to enable Fios and others to deliver live TV over the web to all net-connected devices. Neither is close to rolling out their own web TV service, but both are determined to secure the rights so that they have the option of doing so in the future. They're not alone: Cable operators are looking at web delivery to leap the confines of their wired network, and video-on-demand services such as Hulu, Apple and Amazon, as well as other brands not generally associated with TV, are looking to enter the TV market.

A Q& A with Radio Television Digital News Association counsel and Wiley Rein partner Kathleen Kirby. She discusses what she would do if she were calling the shots at the Federal Communications Commission. She also comments on the FCC’s Future of Media Initiative and the state of sports access and cameras in the courtroom. She says: "My position is that the government has no business making any recommendations as to how to enhance the quality of local TV news."