Wednesday, September 28, 2011

Spectrum Auctions And Profit Sharing

A controversial issue in the business of media today is the auctioning of unused television spectrums. Congress is currently considering auctioning off part of the unused television spectrum, which are public airwaves that had been leased to television stations for over the air analog broadcasts before the switch to digital broadcasting. Interestingly, many of the potential buyers of these now unused spectrums are wireless carriers, who are seeking to extend the range and effectiveness of their broadband services. Also interesting is the revenue split being considered between the government and broadcasters, which could be worth $25 billion for the US government. At the heart of this issue is the long held and regulated mantra that the airwaves are a public good, and how potential revenue stemming from this deal will be split between TV stations and government.

The impact of auctioning off television spectrums and sharing revenue with publicly traded companies could upset an almost century old precedent, where the government acts as the protectorate of public goods. While the government has auctioned off unused spectrums in the past, this legislation, if passed, would result in the US government profiting off of the auctioning of a private good to a corporation, or corporations. While I understand better cellular service and additional federal funds in a time of economic recession may be a good thing, I am concerned about the potential long term impacts these auctions will have on the state of media in the US.

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