The Great Digital Giveaway

Multinational Monitor, May 1997 | Go to article overview

The Great Digital Giveaway


In one of the single biggest giveaways in U.S. corporate welfare history, the Federal Communications Commission (FCC) on April 7 donated broadcast licenses for digital television to existing broadcasters.

The broadcasters' capture of the public airwaves - a vital public resource - by the broadcasters makes a mockery of democracy. Even more worrisome is the uses to which the public resource will and will not be put, and the foreclosed opportunities to use the airwaves to advance rather than retard democracy.

The size of the broadcasters' take is staggering. The broadcasters will pay nothing for the exclusive right to use the public airwaves, even though the FCC itself estimated the value of the digital licenses to be worth $20 billion to $70 billion. Others believe the value is even higher.

The giveaway was mandated, in part, by the 1996 Telecommunications Act, which prohibited the FCC from auctioning off the airwaves. The Telecommunications Act also required the FCC, if it decided to allocate the licenses, to give them only to incumbent broadcasters.

The licenses will permit the broadcasters to air programs through digital signals, which offer higher picture quality than currently used analog broadcasting. Broadcasters in the largest cities will be required to air digital programs beginning in the next two-and-a-half years. For the next few years, all broadcasters will continue to air analog versions of their programs.

The new licenses are for the equivalent of five or six television channels. The broadcasters will be able to use the extra channels to air multiple simultaneous programs or, more likely, for other purposes, potentially including data transfer, subscription video, interactive materials, audio signals and other not-yet-developed innovations.

The original theory behind granting the broadcasters such wide spectrum space was to permit them to air high-definition television (HDTV). Few broadcasters are now expected to air HDTV. Instead, the extra spectrum channel space is a super-windfall - a giveaway on top of the giveaway of the digital television broadcasting right.

There is no conceivable reason why the incumbent broadcasters should have been given exclusive rights to use the airwaves. Other possible television broadcasters should have been given the right to bid for portions of the digital spectrum, and so should have other potential users, such as data transmission companies.

These competing business interests were completely trumped by the power of the National Association of Broadcasters (NAB), however. The broadcasters are huge political donors, donating about $3 million in the 1995-1996 election cycle. They have close ties to key political figures, notably Senate Majority Leader Trent Lott, R-Mississippi; NAB head Eddie Fritts is Lott's college friend. …

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