Agreement With Canada To Boost Prices for U.S. TV Stations Located Along Border
The agreement the FCC worked out with Canada on a band plan tied to next year's U.S. TV incentive auction is expected to boost prices for TV stations that decide to sell their spectrum in U.S. cities along the border, industry officials said Tuesday. The provision is deep in the statement of intent with Canada, on page 13 of the agreement, which was unveiled Friday (see 1508140049). The agreement discusses the “equation for calculation of opening bid prices for U.S. television stations.” It says the formula used will be the “base clock price x U.S. population x (US constraints + 2.3 x Canadian constraints).”
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That means, in effect, that stations in cities including Seattle, Detroit and Buffalo are now a lot more valuable and their owners will have more incentive to sell their licenses, industry officials said. In the past, in estimating starting prices, the FCC counted only interference a station causes to other U.S. stations, officials said. Now these border stations will get credit for 2.3 times the number of Canadian constraints, giving them a more incentive to sell.
"By getting signed deals with Mexico and Canada the FCC has proven the skeptics wrong,” said Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition. "Without the Canada deal, the FCC would not have been able to clear much spectrum. The boost in broadcaster starting prices is a welcome surprise."
“It appears that, because Canada received such robust protection in the deal, the natural impact is that the FCC has to raise prices in border areas because they’ll more desperately need volunteers to avoid putting slews of them in the wireless band," a broadcast lawyer said.
Meanwhile, Industry Canada released its “Decision on Repurposing the 600 MHz Band.” Canada hasn't announced plans for a similar incentive auction. “Industry Canada will proceed with the repurposing initiative of the 600 MHz band to include commercial mobile use and jointly establish a new digital TV (DTV) allotment plan based on repacking [over the air] TV broadcasting stations more tightly in lower frequencies, in collaboration with the United States,” the ministry said.
Industry Canada cited the growing demand for mobile broadband, pointing to a projection that Canada will require at least 473 MHz and as much as 820 MHz to be allocated for mobile services by 2017. “The global trend towards increasing demand for data-intensive content and applications is expected to continue into the foreseeable future, and world-class, competitive mobile wireless networks and services will continue to be critical to success in the global digital economy,” the ministry said. “Smartphones, tablets, wearable devices, machine-to-machine devices and the apps that run on them are changing the way in which Canadians work, live and play.”
Industry Canada also recognized that TV viewing habits are changing. “While Canadians increasingly watch video programming online, they also continue to watch television through traditional distribution channels such as cable or satellite,” it said. “Some Canadians also consider [over-the-air] TV services as an inexpensive alternative to cable and satellite television.”