LAS VEGAS -- The pitch to television broadcasters last week was not easy for them to swallow. It is a good time, they were told, to sell their most precious resource.
With Americans increasingly turning less to over-the-air television broadcasts and more to their mobile devices, the federal government wants to devote a bigger portion of the airwaves that carry communications signals to mobile phone data.
As it turns out, some of the most desirable airwaves -- those able to travel long distances and through buildings and trees -- are in the hands of America's local television stations. The government is seeking to pay stations billions of dollars to move off those airwaves, and then it plans to sell those airwaves to wireless carriers.
But if enough stations do not offer up their airwaves, also known as spectrum, the ambitious plan of the Federal Communications Commission will not take shape. And so last week, at a major conference here for broadcasters, officials from the FCC went into sales mode.
Many stations seemed intrigued, if resignedly so. But they have been reluctant to commit, knowing that selling their airwaves could come at a price.
The stations that choose to sell will either go off the air entirely or move to a different channel -- possibly sharing one with another station, limiting their capacity to do things like broadcast in high definition.
"I've told broadcasters: Your spectrum is your seed corn," said Gordon H. Smith, president of the National Association of Broadcasters, which held the conference, and a former Republican senator from Oregon. "If you sell that, you have no harvest next year. You can't plant."
Still, Smith said he had recently warmed to the idea. "Why is it exciting?" he said. "Billions of dollars."
The FCC effort to redistribute spectrum is expected to take an unprecedented form, with two auctions conducted simultaneously. The government will bid on airwaves from the broadcasters and, at the same time, sell those airwaves forward to wireless phone carriers. Although the auction date has yet to be set, the agency predicts it will take place in the first three months of 2016.
Tom Wheeler, chairman of the FCC, has called the auction a top priority, one that was seen as possibly characterizing his legacy -- at least before his recent handling of open Internet regulations.
Wheeler made his own case on Wednesday at the broadcaster's convention, calling the chance to cash out "a once-in-a-lifetime opportunity" that would be lucrative without impairing those broadcasters committed to staying on the air.
Some broadcasters have put up potential roadblocks to Wheeler's proposal. A lawsuit filed by the broadcasters' association argues that the FCC is not doing all it can to ensure that stations that stay on the air will reach the same coverage area they did before.
Even those stations interested in the auction have concerns.
Preston R. Padden, executive director of the Expanding Opportunities for Broadcasters Coalition, which represents 85 stations around the country that would like to participate, said the FCC's formula had set opening bid prices too low.
The broadcasters' part of the auction will feature reverse-bidding, with the lowest dollar amount winning, so the opening price is critical because it represents the highest figure possible.
Still, huge money is at stake, enough to make the stations listen. A simpler auction last year, which sold airwaves widely seen as less desirable than those held by the TV stations, raised $41 billion.
In the wireless industry, nearly three-quarters of this kind of spectrum -- which delivers more reliable phone service, particularly in rural areas -- is owned by AT&T and Verizon, the two dominant wireless carriers. T-Mobile and Sprint, the next largest wireless carriers, have a tiny portion of those airwaves, and a major motivation for the auction is to keep competition among those four players alive.
In selling the spectrum, the agency has said it plans to set aside some of it for smaller carriers like T-Mobile and Sprint.
Profits from the auctions will go to the Treasury.
"The FCC is trying to balance the desire to bolster competition in the wireless industry by steering spectrum to smaller players, while also recognizing their obligation from Congress to maximize revenue for U.S. taxpayers," said Craig Moffett, senior analyst and partner at MoffettNathanson Research.
But the ability to sell any spectrum, discounted or not, hinges on enough broadcasters putting their swath of it on the auction block. The agency needs at least 200 stations, of about 2,100 eligible ones, from specific parts of the country to participate for the complex undertaking to succeed.
The FCC is taking no risks, waging a full-tilt marketing campaign. In recent weeks, it has visited broadcasters in cities from Buffalo to Indianapolis. From Las Vegas, the agency will go to about 20 more locations.
Some stations -- like KCET in Burbank, Calif., whose spectrum was valued around $500 million by an investment bank working with the FCC -- have already decided they want in. Gordon Bell, senior vice president for engineering, operations and information technology at KCET, a public educational station, said money was the primary motivator.
"Like most public broadcasters, we're not exactly rich," Bell said. "This was looked at as a pretty good shot in the arm for public broadcasting. We're getting paid for something we don't even own."
The government owns the spectrum the broadcasters use, having licensed it to them during the Eisenhower administration.
SundayMonday Business on 04/19/2015