Broadcasting Licenses: Ownership Rights and the Spectrum Rationalization Challenge
by J. Armand Musey
13 Colum. Sci. & Tech. L. Rev. (forthcoming May 2012)
Abstract
This paper examines the looming showdown between television broadcasters and the FCC in light of the FCC’s plan to reallocate underutilized broadcast spectrum for significantly higher value mobile broadband use. The government must do so in an economically and legally efficient manner, balancing the interests of society as a whole against those of the politically powerful broadcasters in light of the governmental time and resources required to negotiate and/or litigate with the broadcasters. The government has indicated it seeks a process that is voluntary on the part of the broadcasters. Nonetheless, the broadcasters’ current opposition to the spectrum reallocation plan raises the question of whether, and to what extent, the broadcasters’ ultimately possess rights to license the spectrum and what type of compensation, if any, they would be owed if the FCC takes their spectrum licenses involuntarily. The answer to this question sets the boundaries of the broadcasters’ legal leverage in the negotiation. This paper finds that, from a strictly legal perspective, the broadcasters have a very weak claim to property rights over their spectrum licenses. Thus, the broadcasters are not legally entitled to any compensation if their licenses are simply allowed to expire. Moreover, the broadcasters have no legal claim to any of the new value associated with the use of the frequency for higher value mobile broadband services. The broadcasters may, however, be entitled to due process before the spectrum can be taken from them and are almost certainly entitled to seek judicial review of any adverse FCC decisions. This could result in lengthy rulemaking procedures, adjudication hearings and judicial appeals that could delay any reassignment of the spectrum. For practical political reasons, including maximizing revenue from future spectrum auctions, the most expedient way for the government to reacquisition spectrum rights would be for the government to incentive the broadcasters to voluntarily participate in a reallocation plan by providing compensation beyond the level that that is legally required.
About the Author
J. Armand Musey is president and founder of Summit Ridge Group, LLC where he provides a valuation and strategic consulting services to companies and investors in the media, telecom and satellite industries. He is a graduate of Northwestern University’s School of Law and its Kellogg Graduate School of Management. Additionally. Mr. Musey holds an M.A. from Columbia University and an A.B. from the University of Chicago. He is also a Chartered Financial Analyst (CFA).