The screwed up economics of the free broadcast spectrum

In the late nineties, Washington policymakers took up a noble cause. There was a new technology, digital television, that almost everyone agreed would eventually revolutionize TV, but quelle horreur almost no one was adopting it. Among other things, local TV stations couldn t transmit digital signals on their existing analog channels. They needed digital spectrum. (If you think of the electromagnetic spectrum as a highway, digital and analog signals travel in different lanes.) So Congress decided to give the stations a leg up or, rather, a handout. Instead of auctioning off the digital spectrum (which might have brought in new competitors, not to mention money), or simply asking broadcasters to pay for it (it was worth, conservatively, tens of billions of dollars), Congress offered it to them free. It was, as Reed Hundt, who was the F.C.C. chairman, said at the time, the largest single grant of public property to . . . the private sector in this century. Senator John McCain was a little more blunt. He called it one of the great rip-offs in American history.