President Clinton's call on Mar. 11 for free television airtime for candidates was great political theater. Under pressure from the campaign-finance scandal, the President now wants the nation's broadcasters to cough up that TV time in exchange for receiving a free second television channel. The Federal Communications Commission is awarding broadcasters the new channels to begin the transition from the current analog television system to advanced digital TV.
Clinton's free-airtime proposal may be a smart political move. But it's hardly good policy. Because few in Washington had the will to take on the powerful broadcasters and force them to pay up front for the new spectrum--which is estimated to be worth upwards of $70 billion--pols are now trying to win some other political concessions after the fact. And there's the problem in a nutshell: Increasingly, lawmakers and policymakers in Washington are viewing the spectrum as a quick fix for political problems, ranging from the campaign-finance mess to the hole in next year's federal budget. But this airwave capacity, used to carry everything from TV signals to cell-phone calls, is a valuable national resource that should be managed according to sound policy, not political imperatives.
UNDER THE GUN. Congress, the Administration, and the FCC should stick to the four-year-old system of auctioning spectrum off to the highest bidder. And the FCC should give the buyers even more flexibility for finding the best use for it. Auctions with few strings attached can spark innovation while putting spectrum into the hands of the people who value it the most and adequately compensating taxpayers for its use.
Auctions done in a rushed manner simply to raise money, in contrast, can lead to the squandering of a valuable asset. Mandating airwave sales based on a deadline for eliminating the federal deficit means less consideration is given to selling those assets at the best time to garner the best price. That sort of approach is already creating headaches at the FCC. Under last year's catch-all appropriations bill, the agency is under the gun to sell off another chunk of spectrum space for wireless communications by Apr. 15. Problem is, that deadline has left little time for potential bidders to study what they can do with that airwave capacity or to raise capital to bid in the auction. Now FCC officials are worried the auction could be a bust.
It's also risky to treat revenue from future auctions as money in the bank. The White House is banking on future spectrum sales to generate $47 billion in revenue by 2002. That calculus is based on a convoluted scheme in which the government auctions the original analog channels in 2002 but doesn't hand them over to their new owners until 2006. But industry experts warn that many Americans may want to use old analog sets well into the next century. That could delay indefinitely the return and auction of that original channel--and give the broadcasters a chance to use the extra "transitional" bandwidth indefinitely.
Indeed, the requirement that broadcasters return the original analog channel creates a perverse incentive to delay the digital transition. It's no surprise that the networks are now warning that digital TV won't be widely available for years. In the meantime, broadcasters can use their extra capacity to offer services such as paging or data delivery--if they pay the government an extra fee for the privilege. If broadcasters had been forced to pay for their spectrum up front, no such strings would have been attached. "We are taxing innovation," says James L. Gattuso, vice-president for policy
development at conservative advocacy group Citizens for a Sound Economy. "So spectrum could be wasted."
If auctions are done properly, they allow the market to find the best use of spectrum. Who says that television is best for those precious frequencies, anyway? Given that TV is often received via cable and satellite, perhaps those
frequencies could be used better for other services.
It may be too late to stop the spectrum handout to broadcasters. But Washington policymakers still have time to make sure the rest of this national treasure is managed responsibly.