AT&T Merger Fail Highlights Failure Of Spectrum Politics

Editor’s Note: This guest post was written by Frank Barbieri, a serial entrepreneur and sometimes blogger. You can follow him @frankba

Those reveling in the thumb-in-the-eye the DOJ gave to AT&T over the T-Mobile merger should pause a moment to consider the politics of spectrum allocation in the US.

Anyone who has an iPhone on AT&T knows they need spectrum. Spectrum is a finite resource of airwaves allocated by the federal government (FCC) to businesses based on a bidding process that necessitates demonstrated consumer benefit.

AT&T has been hungry for such spectrum ever since it won a few years of iPhone exclusivity and saw the usage and capacity lines cross on their forecasts and MG develop finger blisters from typing so many hate posts. We all felt AT&T’s constraints as an infuriating experience of dropped calls and poor app connectivity.

So AT&T has been on a spectrum buying spree to try and, well, improve service. They are trying to buy the failed FloTV spectrum from Qualcomm, but it’s not enough. So AT&T is running out of options to improve their service.

You may already know all of this, but what you might not know is that powerful local television broadcasters are squatting on very valuable spectrum with the mere promise of deploying local television services that, well, no one really wants.

Have you heard of the Open Mobile Video Coalition?  I thought not. How about startups like Tivit and Sungale and iMovee?  I thought not as well.

In looking for someone to blame for your bad cell service have a glance at these guys. The OMVC represents the interests of over 800 local television broadcasters who in the transition from analog to digital terrestrial television in 2009 ended up with rights to big chunks of unused, extra spectrum.

The whole reason Congress and the FCC mandated the switch to digital was that digital is far more efficient and thus frees up spectrum for new services. Local broadcasters fought hard against this of course because it meant buying new equipment and potentially losing customers. A product of the haggling was that the local TV companies got to retain access to the spectrum they freed up as long as they use it for “consumer benefit.”

What are the local television broadcasters doing with that extra spectrum? Nothing. Well, nothing that anyone wants. What they are doing is issuing press releases (PDF) saying that live local television is coming to your mobile phone. Aren’t you excited? I thought not.

What they are not saying is:

  1. Qualcomm already tried this, investing several billion dollars in FloTV which was an abject failure.
  2. No one wants local television live on their mobile phones. Have you watched daytime local TV lately?
  3. No cellphone manufactures are ever going to pay the extra money for another radio receiver in their phones for a service no one wants. Yes, it requires specialized battery-depleting hardware.
  4. Broadcasters are in private negotiations with the FCC to share in the profits of selling that spectrum.

Let’s set aside the fact that the sharing of profits with private companies for the sale of a public asset is unprecedented, and just recognize the cynicism of local television owners for a second. They have temporary rights to a public asset. The asset does not enhance their existing business and they have no ideas for using that asset on a service consumers want. So they are blackmailing the public (federal government) for release of that asset, and issuing press releases pretending they are creating the next great consumer service. This stifles innovation that could happen if that asset was used to just give consumers what they want: more, faster, mobile connectivity. It’s like a crazy hermit holed up in a national park with a shotgun demanding the Department of the Interior gives him $100 to leave.

Of course the FCC could just take that spectrum away. There is ample evidence that they are just squatting, and their live television idea is completely bankrupt. But these are broadcasters, with nightly news programs. Eight hundred of them. Starting to follow the path of politics? The FCC doesn’t really want eight hundred local anchors on the nightly news harping about how unjust the FCC is.

So the next time you drop a call on your AT&T iPhone, or can’t load Google Maps when you’re late for a meeting, flip the bird at a local news van if you see one. It will not change the gridlock on spectrum, but it is at least directing your rage at the right target.

Photo credit: Paul Garland