Television has always been a strange business. For decades, local TV stations like ABC and CBS fought for the opportunity to give away their channels. Being granted a (free!) license to broadcast by the FCC allowed broadcasters to accumulate an audience for advertisers and was, in turn, tantamount to being granted the right to print money. In exchange, broadcasters produced local news that the public got for free. Though perhaps not a fair trade, this relationship was good enough to last for more than 50 years. But today, the declining economics of broadcast TV threaten both the profitability of local TV stations and the quality of the news they produce. Ironically, after generations of rabbit-ears and fuzzy pictures, now that over-the-air broadcast TV finally provides a flawless product, there’s no longer a reason for it to exist.
In short, broadcast channels desperately want to mimic cable-only channels like ESPN. There are two interrelated reasons for this. First, only about 10% of the American public watches TV over the air today. Second, in addition to advertising sales, cable networks have a revenue stream that broadcast networks lack: Cable providers like Comcast must pay to carry these channels – $3.65 a month, per subscriber, for ESPN, for example. In other words, today it is much more valuable to get paid by a cable operator for your channel than it is to have access to all American homes over the air instead of just 90% of these homes via cable or satellite.
Nobody should be happy with this situation. Broadcasters don’t have the Midas touch anymore. Most consumers do not watch local channels over the air. The government gets nothing in return for granting free broadcast licenses. And the quality of local TV news is shockingly poor. There has to be a better way to utilize the precious radio spectrum that TV broadcasting occupies.
Sure enough, the FCC and academic types have begun discussing broadcast spectrum reallocation. If the spectrum was repossessed from TV broadcasters, educated estimates suggest that it could be auctioned off by the FCC – following recent precedent – for approximately $100 billion. The spectrum could be productively used by new owners to provide and improve mobile technologies: more wireless bandwidth could open the door to a host of new, transformative technologies like long-distance mobile medical monitoring and also improve the functioning of devices we already have, like smartphones. Meanwhile, mandating that the existing local broadcast networks be carried – and compensated – by cable providers would please their owners. And, part of the auction proceeds could be dedicated to getting some kind of basic cable for the 10% of Americans who currently watch TV over the air. Add it all up and broadcasters, consumers, and the government all win…
But wait, there’s more! In fact, there are billions and billions more. Perhaps $97 billion more, because providing basic local TV of some sort to the folks who don’t currently have cable should cost less than $3 billion. Of course, this $97 billion could go to plug one of the many holes in America’s budget. Since radio spectrum is a shared public good, this seems fair.
At the same time, since radio waves only carry so far, the spectrum is really the shared public good of each community across the country. Since the advent of broadcasting, the spectrum has been given to TV and radio stations for free in return for the public-service content (local news) that they provide. Doesn’t it make sense to continue leveraging this asset – spectrum – to generate news that communities need?
If the extra $97 billion was used as an endowment to fund local news production from coast-to-coast, the crisis of collapsing local media institutions that our democracy faces could be elegantly addressed. Many details about the right way to distribute the loot come to mind – how much does each community get? who controls the exact distribution? can this be accomplished in a non-partisan fashion? – but if we believe that communities need local media, the idea at least merits further consideration.
Lee Shaker is a research fellow at Princeton University. He holds a Ph.D. from the Annenberg School at the University of Pennsylvania. You can read more of his work at leeshaker.com.