New Jersey’s broadcast bandwidth could net $2 Billion in FCC Auction

New Jersey could be in line for a multibillion dollar windfall if it sells off some or all of the broadcast TV spectrum that it owns, an event that could go a long way toward propping up the state’s shaky finances. But questions abound as to when the state could see the money and what the new revenue could be used for.

An initial maximum value for all of the broadcast spectrum controlled by the state as estimated by analysts adds up to $2.3 billion, though due to a number of complex factors experts say it is still too early to know whether New Jersey could actually achieve or even exceed that jackpot if it decides to sell.

Here’s the backstory: New Jersey owns four noncommercial broadcast TV licenses in what is considered the most valuable geographic area in the country — the Northeast corridor between New York and Philadelphia. They are currently used to provide public-television programming by NJTV.

But mobile wireless vendors are clamoring for more broadcast spectrum in order to deliver expanded services, and the Federal Communications Commission is organizing a nationwide auction of whatever spectrum can be freed up voluntarily from TV stations. But the auction itself, and its unknown results, are almost two years off.

Time is of the essence, however, since a filing window opened up just last week and the deadline for applications to join the auction is now set for January 12.

Meanwhile, it’s up to an often-overlooked panel affiliated with the state Department of Treasury that has for decades held the four television licenses to decide right now whether to offer up some or even all of the broadcast spectrum that the state controls in the auction to be administered by the FCC next year.

The impact that the auction could have on the state — which is deep in debt and also way behind on funding the public-employee pension system — is potentially significant. And it could come with New Jersey public-TV consumers barely noticing a change.

The auction has also raised some compelling public-policy questions about what the state should do with whatever revenue it could generate by participating. Some experts advocate that at least some of the money should be reinvested in public media to ensure that residents remain well-informed in an ever-evolving state media landscape.

The goal of the auction, according to FCC officials, is to reorganize the broadcast spectrum that’s currently being used by TV, radio, cellphones, and other technology to ensure that wireless companies have the capacity to build out networks that can keep pace with consumers’ surging demand for high-speed, reliable Internet access from their handheld smartphones.

There are actually three steps to a process that’s been mapped out by the FCC that will play out over the next several years. It begins with a voluntary “reverse” auction in late March 2016 in which TV stations can sell back their licenses directly to the FCC. The reverse-auction format means prices will go down during each round, a setup designed to give the federal government leverage to get the best deals possible.

Next, wireless companies will be given an opportunity in a more traditional auction to bid on broadcast spectrum that has been freed up. Then television channels throughout the country will be reorganized or “repacked” in response to any changes.

The four noncommercial broadcast licenses that are owned by taxpayers via the New Jersey Public Broadcasting Authority are based in Camden, Montclair, New Brunswick, and Trenton.

Right now, public-television programming, including a daily evening newscast, is provided by NJTV under a five-year deal with the nonprofit Public Media NJ, an affiliate of WNET. That arrangement was established in 2011 after Gov. Chris Christie’s administration decided to shut down New Jersey Network, a state-run TV station that had been broadcasting since the 1970s.

(Full disclosure: NJ Spotlight is also a nonprofit media entity focused on New Jersey and is a content partner of NJTV. The author of this article also frequently appears as an unpaid guest on NJTV.)

A resolution adopted unanimously by the New Jersey Public Broadcasting Authority during a public meeting last month authorized an exploration of the FCC’s spectrum auction and the state’s possible participation, according to the minutes of that meeting. The authority also brought on a consultant, Washington, D.C.-based attorney Meg Miller, to serve as special counsel.

A final decision hasn’t been made, but due to FCC-required nondisclosure restrictions it may take months before taxpayers learn whether the state has joined the auction and what the outcome may be. And the state agency’s final decision would apparently not require legislative approval.

Questions about the issue were referred to the Department of Treasury, where spokesman Joseph Perone stressed the state is not planning to shut down public television in New Jersey.

“The NJPBA has no intention of exiting public television because it is a valuable service for New Jersey residents,” Perone said. “However, we would be remiss if we did not thoroughly review our potential options regarding the FCC auction, as many other broadcasters are doing around the nation.”

New Jersey has several less-lucrative options in addition to selling its broadcast spectrum outright, explained Ellen P. Goodman, a professor at Rutgers School of Law who specializes in communications law and media law. It could move to a less-powerful frequency or enter into a channel-sharing arrangement with other broadcasters.

But the issue before New Jersey officials right now is a novel one because few states own broadcast spectrum, especially spectrum situated in high-density markets like New York and Philadelphia.

“New Jersey is unique,” Goodman said.

Since nearly all of NJTV’s audience is viewing programming right now via cable, some officials believe there would be little impact on consumers if the state does decide to cash out. But industry analysts have also warned that those without cable subscriptions may ultimately be left with fewer options for local news.

And Goodman argued that the revenue that New Jersey could raise should be dedicated to public-media purposes like enhanced digital journalism. That would conform to the original reason that New Jersey, which sees little in-depth coverage from Philadelphia and New York television stations, obtained its licenses decades ago, she said.

“It’s a resource that was meant to enrich the information environment,” Goodman said, adding such a move could be “transformative” given the state’s evolving media landscape.

A statement from NJTV yesterday said the network is looking forward to “continuing our relationship with the NJPBA and serving New Jersey for years to come.”

“Everyone involved with NJTV is proud to be New Jersey’s public television network, and to provide the state with a unique local voice in what can be a crowded, often overshadowing, metropolitan region,” the statement said.

And WNET, in a factsheet on the issue that’s posted online, said it is still assessing the auction as it relates to the spectrum it controls.

“Like many other commercial and noncommercial broadcast license holders, WNET is evaluating the FCC spectrum auction to determine the best course of action for our viewers, the stations and public broadcasting in the Tri-State area,” the fact sheet said. “No decision has been made at this time.”

But while the auction could end up producing a windfall for broadcasters who choose to sell their spectrum licenses, a group of U.S. senators, including Democrat Cory Booker of New Jersey, has raised concerns about how the auction and repacking process could ultimately impact local broadcasters who don’t sell.

Booker’s office yesterday pointed to a letter that was sent by the senator and several of his colleagues over the summer to FCC Chairman Tom Wheeler. It urged the agency to use “extreme caution” to ensure local news broadcasters don’t end up being shifted to less-reliable spectrum that’s more prone to interference.

“More than national network news, more than cable news — local broadcasters are the first source Americans turn to when they tune in,” the senators said.

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.