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Financial Times: Hazlett's Letter to FCC Chair

In an op-ed in the Financial Times, Professor Thomas Hazlett writes a letter to Federal Communications Commission Chairman Julius Genachowski proposing a scheme for "the most innovative and intelligent reform by any federal official since Alfred Kahn deregulated the airline industry," a policy decision that saves US consumers $20bn per year.

Hazlett's plan involves removing TV broadcasters, paying cable and satellite operators to offer all TV stations free to viewers, and providing a means to deliver the "broadcast TV" programming to households that do not subscribe to satellite or cable service at no charge. The payoffs would be numerous, says Hazlett.

"The American public gets an extra 294 MHz in productive use—far more, in total, than employed by today's cellular carriers. Consumer benefits of at least $50bn annually, and a US Treasury windfall of $40-60bn. Mobile phone service prices will fall and wireless techno-wizardry will expand; data networks, engorged with vast new spectrum capacity, rocket into a new era of technological innovation. The US will be the envy of the wireless world."

A letter to the new FCC chair, Mr Julius Genachowski, Financial Times, June 27, 2009. By Thomas Hazlett.

Excerpt:
"First, the FCC gives me $3bn. No - don't stop reading. Here's what I'll give you in return: 208 MHz (35 channels) of TV Band spectrum - prime, pristine bandwidth free and clear of broadcasters and wireless microphones (which, while small in number, are causing a messy food fight in this band). You can allocate it to low-power unlicensed devices like home networking devices, or package it up and sell it to mobile networks new and old. In last year's auction the FCC sold 52 MHz for $19.6bn. If this block - four times the bandwidth - is made available to competitive wireless carriers, the $40-60bn in federal receipts is just the tip of a melting iceberg. Consumer gains would be at least $50bn annually. This is huge.

"Second, the FCC lets me keep the rest of the TV band, 86 MHz (14 channels). That's a lot for just one person, but I promise not to hog it. In fact, I will sell it to the highest bidders. That will bring me $15bn or more.

"I need that money for a fix-up project: I'm going to upgrade the TV Band by removing the TV broadcasters - they're just cluttering it up! Funny thing is, the stations don't care about broadcasting their signals anymore, either. That's expensive and wastes fossil-fuel generated electricity. Bad for the environment and it pollutes the most beautiful radio spectrum on God's Green Earth.

"The stations know that the viewers long ago fled to cable and satellite, but broadcasting maintains their 'must carry' rights. According to a 1992 law, the station gets free carriage on local cable systems if it blasts out radio waves, even if no one is watching those over-the-air signals. Silly system, wouldn't you say? I'm going to end it by simply paying cable systems and satellite operators to carry all the TV stations. That extinguishes the litter from over-the-air broadcasting, making the New TV Band - yours and mine - clean, uncluttered and ready to host a wealth of cool new wireless networks and applications."

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