[Congressional Record Volume 142, Number 28 (Tuesday, March 5, 1996)]
[Senate]
[Pages S1528-S1529]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  DIGITAL BROADCAST SPECTRUM AUCTIONS: CONSUMERS WILL PAY THE HIGHEST 
                                 PRICE


                     There is No Spectrum Giveaway

 Mr. DORGAN. Mr. President, the Senate majority leader has said 
that he intends to stop the big spectrum giveaway in the 
telecommunications bill. The Senator from Kansas is referring to 
spectrum that the FCC has set aside for broadcasters to use to convert 
to digital television. He wants this spectrum to be put up for auction, 
which he believes will net billions of dollars in revenues for the 
Federal Treasury. And the chairman of the Senate Commerce Committee has 
announced that he will soon hold hearings on this issue.
  I don't think the real question is not whether there should be 
auctions of broadcast spectrum. Rather, the question is when. Some, 
like the majority leader, have proposed up front auctions of spectrum 
intended for the transition to digital television. Others, such as 
myself, believe that the auctions should occur on the analog spectrum, 
after the transition occurs.
  I am a strong supporter of auctions as a means of allocating 
spectrum. As my colleagues know, I joined the Senator from Arizona, 
Senator McCain, in sponsoring an amendment last year which called for 
auctioning spectrum for a direct broadcast satellite license. The FCC 
concluded the auction for this license earlier this year, netting 
nearly $700 million for the Federal Treasury.
  I think if my colleagues will look through the rhetoric and focus on 
the serious policy consequences of this debate, they will realize that 
the very future of free over-the-air broadcasting is at stake. If up 
front auctions are required for the digital spectrum, as suggested by 
some of my colleagues, it is local television stations and the 
consumers who rely upon them as their only source of television that 
will be the losers.
  At issue in this debate is the current plan of the FCC to allocate an 
additional 6 MHz of spectrum to broadcasters. The purpose of this 
allocation is to allow broadcast television to convert their broadcast 
signals from analog to digital, which will be a necessity in the 
digital world that is rapidly approaching the video industry, and in 
fact, is already here with direct broadcast satellite. Digital 
conversion will permit broadcast television to keep pace with the vast 
changes in telecommunications technology, and thereby help to make 
broadcast TV competitive.
  The FCC is not planning on giving spectrum to the broadcasters. 
Rather, it intends to loan the additional spectrum to broadcasters for 
a period of years in order to permit a transition from analog to 
digital. After a certain point, the broadcasters will return their 
current analog spectrum--but not until Americans have become equipped 
with digital televisions. That has been the plan for years. The process 
of converting to digital television was born by the FCC over a decade 
ago. It is only in the rush of the moment when politicians are 
searching for revenue to balance the budget, that this plan has come 
into question.


                       David and Goliath Auctions

  Some believe that broadcasters should have to pay for this spectrum--
rather than receive it on a loan basis. If the spectrum is placed up 
for auction, there is very little chance that local broadcast stations 
will have the resources to compete with the giant telecommunications 
corporations that want the spectrum for subscriber-based services. The 
proposals talked about up to this point will permit anyone to bid for 
the spectrum. Thus, the telecommunications giants like AT&T, MCI, the 
RBOC's, Microsoft, and others will be competing against local 
television stations for the spectrum. The fact is, up-front auctions 
mean that broadcast stations will not have a chance at the digital 
spectrum, and therefore, will never have the opportunity to compete in 
a digital world.
  Everyone needs to realize how the cards will be stacked in this kind 
of auction. When we talk about broadcasters having to compete in an 
auction for this spectrum, we are talking about little Davids going up 
against Goliath telecommunications corporations. The auctions will be 
between small, locally owned stations bidding against large, national 
corporations. The vast majority of broadcast stations in this country 
are small, locally owned stations and many of these stations have well 
under $1 million in pretax revenues. Local broadcast stations cannot 
successfully compete against other interests vying for the spectrum. 
The other interests who plan to use the spectrum for more profitable 
subscriber-based services will simply overwhelm the local broadcasters' 
efforts.
  Even if we assume that broadcasters would win the licenses at an 
auction, this would not ensure that broadcasters will have the 
opportunity to compete with other digital-quality services. A costly 
fight for the spectrum could make digital conversion financially 
prohibitive. We are told that local broadcast stations are going to 
have to invest nearly $10 million per station to convert to digital. 
Investing in digital equipment and technology for small locally owned 
stations such as those in my home state of North Dakota is going to be 
challenging enough. Add on top of the equipment costs a sizable fee for 
the spectrum, and digital conversion for broadcasters will never become 
a reality. Tomorrow's TV will be like today's AM radio when the rest of 
the video world goes digital.


                     Analog Versus Digital Auctions

  The administration has a different and equally troublesome proposal 
to auction the analog broadcast spectrum. Under the administration's 
proposal, broadcasters would have to accelerate the giveback of the 
analog spectrum after completing the conversion to digital. A 15-20 
year process would be crammed in a 10-year window under this approach. 
While I strongly support the notion that broadcasters should have to 
give back the analog spectrum after converting to digital, and I 
further support the notion that this should be auctioned, the 
administration's proposal is seriously flawed because the acceleration 
is totally unrealistic. Under this approach, broadcasters would be 
required to vacate the analog spectrum they are currently using by the 
year 2005.
  The consequences under this approach fall largely on the American 
consumer. When the broadcasters stop sending analog signals, existing 
television sets will be useless. Thus, under this approach, the 
administration is asking that all Americans replace all existing 
television sets with new, yet to be manufactured digital sets, within 
10 years. The cost to the American consumer will likely exceed any 
revenue gained from this accelerated auction.
  As I stated earlier, there really should be no question about whether 
or not broadcast spectrum should be auctioned. The timing of the 
auction is the question. It seems to me that the best

[[Page S1529]]

policy approach should guide this timing--not budget pressures. If we 
ask ourselves what is the best policy--what is best for the public 
interest and American consumers--we must conclude that broadcasters 
ought to be given the opportunity to convert to digital television. 
Once that conversion has been successfully completed, then the analog 
spectrum that is currently being used should be made available through 
an auction. If this process cannot realistically be completed within 
the arbitrary 7-year budget cycle we have created for ourselves, then 
we should not force ourselves into making a serious policy mistake.


                               Conclusion

  Broadcast television is the universal video service in this country. 
In many rural and remote areas, where cable is not available, it is the 
only video service. Currently, a little more than one-third of 
Americans do not subscribe to cable. That's 33 million TV households 
that have no choice but to rely upon broadcast television. In addition, 
over 60 percent of all the TV sets in the United States--close to 138 
million--are not hooked to cable.
  If the FCC is permitted to move forward with its plan to allocate the 
needed spectrum for digital conversion, consumers will continue to have 
access to free television. Converting to digital will not give 
broadcasters a leg up--it is a necessity in the new digital age. 
Rather, it is consumers that will lose if this conversion does not 
occur. I am convinced that up front auctions for this spectrum will 
result in fewer choices for consumers. In areas where cable is 
available--and in homes where it is affordable--it will mean fewer 
choices. But for one-third of the population, it will mean no choice.
  In my judgment, this is too high a price to pay for the short-term 
revenue gain in up front auctions. My concern is the future of free 
over-the-air television--not a financial giveaway to the broadcast 
industry. I urge my colleagues to examine this issue carefully. It is 
not the corporate welfare as some have claimed. Rather, it is a 
question of the survival of our local television stations and the 
universal service that only they can provide. I urge my colleagues to 
oppose the proposal of up front auctions and the unrealistic 
acceleration of auctioning the analog spectrum. Let's not be tempted by 
the revenue, instead carefully examine the policy implications behind 
spectrum auctions.

                          ____________________