WASHINGTON-Spectrum in the 700 MHz band is worth $20 billion to the federal treasury, but has a social value of at least $233 billion, according to a study sponsored by Intel Corp.
“The current market value of licenses to use the unsold 60 megahertz would be $20 billion to $24 billion,” said Coleman Bazelon, vice president of Analysis Group. “These estimates of the spectrum’s value are dwarfed by the social value, which would be an estimated $233 billion to $473 billion.”
Peter Pitsch, Intel communications policy director, previewed the study May 26 before the House telecommunications subcommittee as the subcommittee held a hearing on the staff discussion draft of the Digital TV Transition Act of 2005.
Both the House and Senate are expected to consider legislation this summer to end the DTV transition Dec. 31, 2008, with auctions of 700 MHz spectrum earlier that year.
In 1997, Congress said that in 2007, broadcasters would have to return the extra 6 megahertz of spectrum in the 700 MHz band given to TV broadcasters to facilitate the DTV transition. The plan has been mired in proposed legislation and protests since.
“DTV is on the reconciliation train,” Peter Filon, minority counsel to the House Commerce Committee, told the Broadband Policy Summit: A Leadership Blueprint sponsored by the Federal Communications Bar Association. Rachel Welch, minority counsel to the Senate Commerce Committee, agreed.
The Analysis Group study acknowledged two previous studies assessing the value of the 700 MHz spectrum.
“The first estimate, by William Zarakas and Dorothy Robyn of the Brattle Group, is based directly on market comparables, including two major sales of broadband PCS licenses in 2005 and the Federal Communications Commission’s 2004 valuation of rights to 10 megahertz of spectrum in the 1.9 GHz band. Zarakas and Robyn estimate that licenses for the auction bands would sell for $1.65 per megahertz per pop or $28 billion in total,” said Bazelon. “The second estimate, prepared by Charles Townsend of Aloha Partners L.P., concludes the current value of the spectrum is $1.63 per megahertz per pop. The analysis further estimates that the increased supply of spectrum expected in the next few years might reduce prices by as much as 33 percent, implying that auction bids could average $1.10 per megahertz per pop. Townsend discounts the lower number because he believes that increased demand for spectrum-based services will mitigate the effects of increased supply of spectrum licenses.”
The draft DTV bill would also require TV manufacturers to place warning labels on analog-only sets and the FCC to begin a consumer-education campaign.
