Broadcasters Must Give Up Spectrum to Match Changing Market Needs, Shapiro Says

Calling the CE industry a “bright spot in a very cloudy economy,” CEA CEO Gary Shapiro welcomed attendees Thursday to “CE Week” festivities in New York in a keynote in which he urged senate passage of the Spectrum Act (S-911), which would promote incentive spectrum auctions. The bill cleared the Senate Commerce Committee June 7.

Wireless broadband is one of the primary drivers of the CE industry, Shapiro said. Many of the new products and services coming to market require wireless broadband, he said, making the “spectrum crunch one of the most critical technology policy issues we face today.” Much of the most attractive spectrum now is being used “as it has been for the last 40 or 50 years” by broadcasters, Shapiro said. Despite their “important service to the public,” the demand for wireless broadband services has exhausted all of the available spectrum, creating a “crisis” that can only be served by allocating additional frequencies for broadband, he said.

Spectrum reallocation is a bipartisan issue supported by President Barack Obama and Republicans, Shapiro said. Smartphones, which didn’t exist five years ago, consume 24 times the amount of data as traditional cellphones, Shapiro said, and tablets use more than 122 times the amount of data of a traditional cellphone. He referred to an FCC report issued in the fall projecting a spectrum deficit of 300 MHz by 2014. Commenting on the bill in Congress, he said it would free up spectrum and let broadcasters “profit from their underused spectrum” by voluntarily returning a portion to the FCC for auction. A secondary benefit of the auction would help “cure the federal deficit” by returning as much as $30 billion to the U.S. Treasury, he said: This is spectrum broadcasters “will benefit from even though they got it for free.”

Broadcasters have challenged the CEA’s estimate that 8 percent of U.S. TV households rely on terrestrial signals, but Shapiro said Nielsen estimates of 9.6 percent released this week come close. If only one out of 10 American homes is relying on TV broadcasters’ spectrum, “is that a good use for that spectrum for all of those channels all the time?” Shapiro asked. NAB continues to believe “the credibility of many of CEA’s claims related to broadcasting is dubious, at best,” a spokesman responded.

The remaining TV households rely on cable, satellite or other multichannel video programming distributors, Shapiro noted. “There’s a whole generation of people coming forward who want to use their computers and other devices, and for some of these people, TV has become an irrelevancy: Broadcasters are sitting on these “huge swaths of spectrum that serve very few households” and it’s time for “a market-based correction,” he said. The number of stations broadcasting over-the-air should be “more in line with the viewership for that medium,” he said.

Spectrum, “just like any other natural resource,” can be put to better use for the sake of stimulating innovation, including getting Americans access to “faster and more reliable” wireless Internet connections, Shapiro said. For decades, broadcasters have enjoyed laws and regulations that support their business model, including must-carry regulations and retransmission consent that allow them to charge pay-TV providers over $1 billion, “and they feel entitled to the spectrum, even though it’s a loan and they never paid for it,” he said. Ubiquitous Internet access and broadband competition are better suited for the spectrum to meet today’s and future needs, he said. Developing technologies in home health care, education and other applications may be superior to “big valuable pipes reserved for infomercials and re-runs,” he said.

Paraphrasing a recent FCC report on the decline of local news viewership, Shapiro cited a section about how “the Internet has enabled an unprecedented free exchange of ideas and information” with the conclusion “we should push for universal broadband to help online businesses thrive.” As more smartphones are in the hands of consumers, more industries are created that “we couldn’t have dreamed of a decade ago.” Social media and media-sharing sites are examples, he said. More videos are uploaded to YouTube in 60 days than the average three major TV networks created in 60 years, he said. He mentioned Cisco data, forecasting that traffic for wireless devices will exceed that of wired devices by 2014. Calling spectrum “the lifeblood of innovation,” Shapiro said if the industry doesn’t get more allocation “we'll have the World Wide Wait for all of our wireless devices."

Shapiro said the U.S. has to resist what other companies are proposing in terms of Internet regulation. He recently participated in the EG8 Summit, where French president Nicolas Sarkozy issued a plea for nations “to regulate the Internet to preserve political values” and what Shapiro called “other protectionist purposes.” In France “you're not allowed to say Twitter or Facebook on radio or TV,” he maintained, urging protection of First Amendment rights. Shapiro expressed concern about the U.S. government asserting broad powers on websites “it doesn’t like with very little or no judicial process.” Whether the issue is child pornography or intellectual property, hundreds of businesses are pulled offline mistakenly because “when they shut down websites, they shut down a lot more than they intended,” Shapiro said. “We have to be very careful to protect businesses against our own government’s efforts to develop new powers that hurt innovation and send the wrong message to regimes abroad that use our technology to spread their pro-democracy messages."

Preservation of spectrum isn’t just about large carriers, Shapiro said: Legislation would also set aside 120 MHz for unlicensed spectrum “that anyone can use.” Unlicensed spectrum has been important to the CE industry, enabling technologies including garage door openers, baby monitors, family radio, remote control helicopters and Wi-Fi, he said. To further solidify the commitment to innovation, Shapiro used the address to unveil the CEA-sponsored “Declaration of Innovation” which he encouraged attendees and the public to sign at the CEA website. By signing, people are declaring that “innovation is and should continue to be a key national priority and strategy for the nation,” he said. Main points include support of free trade, freeing up of spectrum for wireless broadband, welcoming “the best and brightest minds to the U.S. and cutting the federal deficit.

For the upcoming CES, Shapiro announced a new partnership CEA forged with the National Science Foundation called Eureka Park, telling attendees that “every great company started with a Eureka moment.” CES 2012, to be held Jan. 10-13, will have a dedicated Eureka Park section for small companies “looking to gain a foothold in the consumer electronics industry.” Companies that want to participate need to have a product that’s not currently available but can be realized commercially within three years, Shapiro said. CEA sent notice of Eureka Park to potential participants earlier this month and 28 companies have signed up, he said. “We've already exceeded our goal,” Shapiro said, adding that the number will expand.