Broadcast Interference Hurts the Industry
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The Soviet Union collapsed 15 years ago. Japan’s growth rate is barely positive. But apparently Congress still hasn’t learned that industrial policy leads to economic stagnation. Both the Senate and the House are working on a government-managed transition of broadcast television from analog to digital. In these provisions and in the debate over the transition is a sad lesson about the absence of private property rights over industrial policy.
The Senate would have the government mandate the end of analog broadcast television in the spring of 2009, with only digital broadcasts available after that. The Senate would also establish a multibillion-dollar fund to subsidize households that do not get cable so they could purchase converter boxes that would allow them to receive digital signals with their analog sets.
The House bill is similar to the Senate’s, with an earlier transition date, of December 31, 2008, and a smaller subsidy fund of slightly less than $1 billion.
Congress is not interested in digital broadcasting simply because of its technological superiority. Rather, Congress hopes the federal government can reclaim part of the spectrum now used for analog broadcasting, which occupies more than 10% of the most valuable spectrum in America.
The government has been working on the digital broadcast transition for 20 years and would use the returned spectrum for two purposes. Some of the spectrum would go properly to police, fire departments, and other public safety providers. The rest would be auctioned off for new wireless services, and the federal government would receive the proceeds.
In most markets, sellers try to convince potential buyers that an asset has great value. In the topsy-turvy world of spectrum, potential buyers try to convince the federal government to change laws because spectrum has unrealized value. Congress has been bombarded for years with studies showing the economic benefits – usually in the hundreds of billions of dollars – of migrating some or all broadcast spectrum to other commercial purposes.
General Electric, Viacom, Disney, News Corporation, Tribune, and other broadcast companies have financial interests that would compel them to use spectrum for the highest-valued uses, even non-broadcast services. But current law prevents broadcasters from offering many forms of non-broadcast services, even if those services would not interfere with other broadcasters. While much of the business community clamors to put spectrum to more efficient uses, broadcasters are left with few practical alternatives under current law but to broadcast under the terms of the unending transition plan.
Both the government and broadcast industry have been working on a digital transition since the 1980s. Indeed, in 1997, Congress passed a law requiring the FCC to auction returned analog spectrum by 2001. The proceeds from those planned auctions were part of Congress’s budget in the late 1990s, and Congress effectively “spent” the auction receipts from returned analog spectrum years ago.
Needless to say, the FCC ignored the 1997 law, and now Congress again has an opportunity to “spend” the planned receipts from the same returned analog spectrum auction, which has yet to take place. It gives new meaning to the term “funny money.”
Since the 1980s, cable, satellite television, and many other industries with substantial FCC licenses have upgraded their technologies many times without coming to the federal government for a transition plan. These industries were not required to turn in their licenses or to migrate to new bands of spectrum with each improvement in technology.
Instead, these industries got more capacity with technological innovations and by purchasing the rights to additional spectrum. If the government had put in place a transition plan for technological changes in these industries, they too would be handicapped, much as broadcasters are today.
We know from our own experiences and those of failed economic systems around the globe that industrial policy is rarely successful. Ill-fated micromanagement of technology need not be repeated. There is a simple solution: With or without the transition plan, give broadcast and other spectrum licensees clear rights to buy, sell, and use licenses, with protections from interference. This will allow broadcasters the opportunity to put spectrum to its best use.
A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.