Gordon Crovitz, “Spectrum Dinosaurs at the FCC,” February 6, 2012

Article

Gordon Crovitz, Spectrum Dinosaurs at the FCC, February 6, 2012

Comment #1

Title: Spectrum Pigs at the WSJ

The disconnect between the Wall Street Journal’s spectrum advocacy on behalf of its parent company, the News Corp., and its public policy pretensions in this commentary, are simply astounding. Nowhere is it acknowledged that the News Corp. has huge broadcast TV spectrum holdings that would increase in value by billions of dollars if the proposed Congressional/FCC “auction” takes place. Nowhere is it acknowledged that the “auction” really isn’t an auction in the way it is presented here because the proceeds will overwhelmingly go into the pockets of the WSJ/News Corp., not the public; anyone who argues otherwise needs to carefully read the legislation and parse the many Congressional hearings and markups on this subject.

Rupert Murdoch (owner of the WSJ and News Corp.) has consistently been one of the most aggressive (and successful) lobbyists for spectrum giveaways to News Corp (e.g., see my book, Speak Softly and Carry a Big Stick: How Local TV Broadcasters Exert Political Power).. And his corporate lobbying position is mimicked here. At the very least, the WSJ, as a matter of journalistic ethics, should acknowledge in this and similar op-eds its parent company’s huge business interest and lobbying activity in the proposed auction of its spectrum licenses. Given the gross magnitude of its conflict of interest, disclosure is probably too embarrassing an option. So its practical options are probably either to merely ignore the issue or write about it without disclosure. To its discredit, it has clearly chosen the latter approach. Shame on it and shame on any other news outlet with broadcast holdings that acts in a similar way.

 Comment #2

Reply to a reader’s comment seeking clarification:

The way broadcast incumbents acquire additional public spectrum rights without compensation to the rights holders (the public) is complicated, and I explain it in my book and also, to a lesser extent, at SpectrumBS.info. Here I can simplify it quite a bit; just remember it is a simplification.

Broadcasters are currently licensed to use a chunk of spectrum for broadcast purposes. The market for spectrum is such that a license to use spectrum for mobile broadband purposes is worth an order of magnitude more than a license to use spectrum for broadcast purposes. This change in license terms is akin to a change in a property’s real estate zoning from low density residential to high density commercial in a commercial area. The incentive auction is structured so that the broadcasters will receive all or substantially all of this windfall. This conflicts with the Communications Act, which prohibits spectrum windfalls, and it also embarrasses Congress, which is embarrassed to give huge amounts of corporate welfare (the spectrum windfall) to some of the wealthiest individuals and most profitable corporations in America. The result is a lot of political posturing and Orwellian type misinformation to the public. This so-called “auction” isn’t about the government staying out of the marketplace; it’s about the government giving a vast amount of public assets to private entities without public compensation (i.e., what should be called “corporate welfare”).

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