Free Frequency Spectrum at Core of Botched High-Definition TV Policy : MICHAEL SCHRAGE

To paraphrase Karl Marx, there’s a spectrum haunting American television--the frequency spectrum of HDTV. The clearer the high-definition television picture becomes, the more warped and distorted it appears. Unfortunately, smart HDTV policy and innovative HDTV technology are definitely not on the same wavelength.

But even the godfather of communism would have been impressed by the grasping entitlement and shameless chutzpah of broadcast socialists dressed up in multimedia capitalist’s clothing. Comrade, can you spare a megahertz . . .

In essence, America’s television broadcasters are taking a hideously botched technology policy and attempting to turn it into a multibillion-dollar government giveaway. Of course, if television broadcasters could program half as creatively they lobby Congress for taxpayer subsidies, they wouldn’t have to worry about competition from cable TV or the Baby Bells.

At the core of this looming high-frequency fiasco is a fuzzy technocratic idealism short-circuited by easily anticipated innovation and predictably brass-knuckled politics. Market forces are being betrayed by congressional logrolling and regulatory spinelessness. There may not be such a thing as a free lunch, but America’s broadcasters are intent on proving there is such a thing as free frequency spectrum.

The original problem was a public policy promoting the future of commercial, over-the-air broadcast television as HDTV--that is, high-definition television offering viewers video resolution at least twice as crisp and pretty as today’s TV sets. Regulators effectively made prettier video the industrial policy of broadcast TV. So four years ago, broadcasters were promised additional space on the frequency spectrum--for free--that would ultimately let them broadcast HDTV shows.

What’s so bizarre is that, at the same time, regulators at the FCC and the more technologically-literate members of Congress were aware that the most important technical trend was the digitalization of media. Audio and video signals could rapidly be transformed into a streams of bits that were readily manipulated by silicon chips. TVs and cable programming were becoming more computer-like, so the new HDTV standards would be digital.

Not being idiots, TV broadcasters quickly figured out that their new frequency allocations weren’t technically limited to HDTV but could be used to broadcast software, video games, paging services or even split into multiple traditional television channels. In other words, all this additional spectrum could be used to profitably diversify into new digital businesses. So broadcasters have been seeking what they call “spectrum flexibility” to allocate “their” new HDTV frequencies any way they please.

Indeed, FCC Chairman Reed Hundt voiced support for this at this week’s National Assn. of Broadcasters convention in Las Vegas. “I suspect you know better than government what to send,” Hundt told the broadcasters, adding that the shift from analog to digital TV was “an opportunity to cut back dramatically on intrusive government regulation of broadcasting.” (This, ironically, from the FCC chairman who just proposed requiring TV stations to broadcast at least five hours of children’s programming a week.)

To be sure, Hundt--like virtually every FCC chairman over the last 15 years--has called for broadcasters to pay “spectrum fees” for the right to use the airwaves to broadcast their commercial wares. Needless to say, the broadcasters don’t want to pay any spectrum fees at all--except for any special pay-services they choose to provide over “their” frequencies.

But, given that the FCC--to its credit--has managed to raise nearly $9 billion over the last year by selling licenses for new wireless frequencies, the question has to be: Why give any additional spectrum to the broadcasters at all? Why are they entitled to these frequencies? Couldn’t a Microsoft or an AT&T; or a Craig McCaw use these frequencies just as ingeniously as a station manager in San Diego or Boston?

Clearly, the HDTV policy blunder of five years ago has been overtaken by innovation and events. Given that broadcasters refuse to commit to HDTV, why should the FCC or Congress feel bound to commit free frequencies to TV stations? By the current logic of Congress and the FCC, we should be giving the Baby Bells and the cable companies “free” fiber optics as they rewire America?

Long-time NAB President Eddie Fritts has argued that over-the-air television is doomed if it can’t compete with cable, satellites and the telephone companies--all of which are moving into digital broadcast. But the only meaningful response to that is, so what? Even the Department of Agriculture is cutting back on farm subsidies. Do we give farmers free farmland when they want to grow new kinds of crops? So why should the FCC give spectrum to broadcasters who want to grow new businesses?

Indeed, the appropriate public policy isn’t to give TV broadcasters more spectrum--it should be to start taking away the spectrum they already have. They don’t even make full use of their existing allocations so let’s devise policies that encourage a more resourceful approach to the spectrum. Beginning, say, in the year 2001, cut the frequency allocation for broadcasters 10% a year for three or five years. That will free up lots of frequencies for other uses, frequencies that other people or companies might be prepared to pay for.

Ultimately, the marketplace--not frequencies or Congress or regulators--determines the real value of spectrum allocations. However, what we are witnessing--and subsidizing--is a multibillion-dollar multimedia policy mistake. If the FCC and Congress really care about creating meaningful competition in the frequency spectrum, then television broadcasters have to be treated as precisely what they are: just another business that wants to make a few bucks in the media marketplace. Our policies shouldn’t encourage them to become America’s bandwidth bums.

* Michael Schrage writes this column independently for The Times. He can be reached at schrage@latimes.com by electronic mail via the Internet.

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