Brian Stelter, media columnist of The New York Times tweeted a link to this “Economic View” column in the Times on February 27th by Professor Richard H. Thaler of the University of Chicago.
“The Buried Treasure In Your TV Dial” (click on that title to link to the column)
Now, I probably don’t possess the mental intellect or knowledge in economics or behavioral science that Professor Thaler has at his disposal. Plus right up front, I acknowledge that I have more than just a vested interest in the topic, since working in broadcast television has been my professional life for most of the thirty-five years I have been getting a paycheck.
But I can’t help but respond to Professor Thaler’s “proposal that sounds too good to be true” because of course, despite the enticing headline that suggests that this modest little idea would solve all of America’s major problems, it is in my opinion flawed on so many levels.
Thaler’s premise in his Times column is to end the system of free over-the-air television broadcasting in the United States, and forcing everyone to get their television from either Cable or Satellite delivery. Then by selling off, at auction, the radio frequencies that are currently occupied by the nation’s television stations, would create a massive economic windfall and in turn allow the growing national deficit will be wiped out–along with everyone getting better cell phone service, especially for those data hungry new “smartphones”, all with fewer ugly cell towers dotting the landscape.
Who could argue with that?
The professor even goes for a “slam dunk” when he suggests that this idea could solve our nation’s health care crisis by having wireless spectrum available for the promise of new long-distance medical technologies that would only be possible utilizing these radio waves.
At first read, particularly for those “people who don’t like “American Idol”", It really does seem like this plan might be “buried treasure” in the air that we can’t see–but one that could hold a treasure chest with billions of dollars and improve everyone’s quality of life.
Heck, I almost wanted to sign up for this plan, until I remembered a couple of things that the good Professor chose to gloss over a bit.
First of all, it’s already been done once.
In the transition to Digital Television that we all lived through in 2009, a good chunk of the channels that television used to use to deliver a signal were spun off to different purposes, including better two way radios for police and fire departments, a new private pay service to deliver television to mobile devices, and oh yes–to make more space available for the wireless companies who deliver your cell phone signals.
A quick reminder here, as Thaler also points out, that the “airwaves” belong to everyone. They are public property, and anyone who uses them has to get a license to do so from the federal government through it’s agency in the Federal Communications Commission, also known as the FCC.
Did you happen to notice that your cell phone bill went down because the private companies that use the public airwaves to deliver their service got additional capacity from the airwaves that you and I own?
Me neither.
Professor Thaler goes on to make the case that the spectrum allocated to television broadcast is used inefficiently, with only 17 percent of it actually allocated by the FCC for full-powered television stations. Add in that 91 percent of the population now gets their television from cable or satellite and the conclusion by Thaler, built on top of a proposal for better spectrum allocation from Professor Thomas W. Hazlet of George Mason University is that we are using a lot of prime radio spectrum (the good Professor calls it “beachfront real estate”) is being wasted on the small percentage of the population unwilling to pay for their television reception.
No mention is made by the Professor that the wireless companies have been using a lot of real estate on either end of “the beachfront”. Instead he suggests that we could sell off the rest of this property along the beach because “we must make better use of the existing space…And the target that looks most promising in this regard is the spectrum used for over-the-air television broadcasts.”
For a moment, you might wonder if Mr. Thaler is also a real estate broker. He isn’t, but he is an investment speculator of another sort. We’ll get back to that in a moment.
If you are one of those luddites who still doesn’t pay a monthly charge for your television reception it is OK, because Thaler’s proposal is that you would get a special low cost deal or maybe even the television equivalent of “food stamps” to make sure that your television sets were hooked up to some kind of service like…cable or satellite.
There’s the second problem.
The Professor’s pitch chooses to ignore the idea that broadcast television itself is already wireless. You don’t have to have your big flat screen television hooked up to anything other than an antenna to get full High Definition pictures. Plus, on the horizon are a whole wave of devices that will deliver the idea that you should be able to watch television wherever you might want to. If you can carry a wireless telephone in your pocket, why not a television? There will even be devices that allow you to do both, but of course that might mean that you have to pay a wireless phone company for the ability to watch television on that device.
If the mobile televisions could tune in the already existing television signals, you could get a whole range of the most popular channels people already watch, for that best monthly price of all – free.
And of course, let’s not forget this idea of Professor Thaler’s probably kills off your local television stations as a viable business.
Thaler acknowledges that local broadcasters might oppose his modest proposal, because they are “likely to contend that they are providing a vital community service in return for free use of the spectrum that was put in their hands decades ago.” He then goes on to coyly suggest the question of “whether the local news or other programs are vital services is up for debate…”
Well yes, Mr. Thaler, the idea that the local stations in Hawaii went on the air for hour after hour yesterday to inform the people of Hawaii about the potential threat of a Tsunami wave hitting the islands wasn’t of anyone’s vital interest. The television stations that went on the air for days before and after Hurricane Katrina in New Orleans, to serve the citizens with crucial information weren’t vital in the least. And the thousands of other hours that local broadcasters have devoted to covering local news and public interest programming aren’t vital, even though the federal government requires that local broadcasters operate in a regulated fashion as “a public trustee in the public interest.”
Did anyone notice if the cable or satellite companies were providing this vital service in these situations?
Is it vital that more Americans get their news from television than any other source? And that local television news routinely has larger audiences in each of the communities they serve over any national networks?
Or that local television stations provide more public service and free airtime to local causes than any cable or satellite companies ever have? Have you ever seen DirecTV or Dish doing something good in your local community?
Let’s not even mention that until quite recently, Cable and Satellite providers didn’t even pay local television stations for taking their over-the-airwaves signals and reselling them to their subscribers–and even today still balk at paying fair rates for the stations their viewers watch the most.
Of course, it is easy to see that I have a vested interest in considering Professor Thaler’s endorsement of finding “buried treasure” by scrapping the current system of over-the-air television. I am a life long broadcaster, who gets his salary to support his family and send his kids to school based on the work that I do at a local television station.
What isn’t as easy to see is that Professor Thaler is also the founder of a “Asset Management Firm” where he is “setting strategic direction and enhancing the research and investment processes”.
Whether or not that means he has a more vested interest in this “treasure hunt” of an idea that he claims is even better than the ‘free lunch’ that it appears to be…isn’t so readily apparent.
We might do well to remember what you’ve always heard about the promise of “a free lunch” or “buried treasure”.