Michigan State University has the opportunity to auction off valuable broadband spectrum and make millions of dollars, but it could mean fewer options for viewers of WKAR-TV channels. Current State talks with President Lou Anna Simon about her considerations before deciding whether to participate.
There will be two public forums held to provide members of the community an opportunity to offer feedback to university leaders as they consider a decision. They will be January 4 and January 11 at 7 p.m. in Room 147 of the Communication Arts and Sciences Building, 404 Wilson Road.
MARK BASHORE: The stunning worldwide growth of mobile communications means the industry is hungry for more of the broadband spectrum that it needs to operate. That growth could alter the mid-Michigan television landscape in the not-too-distant future. It means that TV stations, including those operated by WKAR, could stop broadcasting.
On Friday [12/18/15], the Michigan State University Board of Trustees, which oversees WKAR television and radio, voted to give University President Lou Anna Simon the authority to participate in an auction that could lead to the transfer of the WKAR TV spectrum to other entities, like wireless companies. President Simon has until January twelfth to decide whether to involve the WKAR TV stations. The Federal Communications Commission values the bandwidth assigned to WKAR-TV at up to $206 million. Here to explain more of how this works and what it all means, MSU President Lou Anna Simon.
BASHORE: Welcome back.
LOU ANNA SIMON: Well good morning.
BASHORE: So I want to make sure I've got just the basic groundwork down, right, here. On one side we have broadcast spectrum on which three TV signals operate and on the other we have the potential for a couple hundred million dollars that might be derived from the auction of that spectrum. That's at the heart of this, do I have that right?
SIMON: Technically, the spectrum is on loan to us from the federal government, with the Board of Trustees holding the license. And so this is an action by the FCC under a number of orders that people can look up -- [FCC 14-50] -- that would make more spectrum available through what is called a "reverse auction" and then a "forward auction." It’s a relatively complicated process but January twelfth is simply a time in which we would keep our name in or out of the reverse auction.
BASHORE: And this is TV spectrum and not radio?
SIMON: Not radio.
BASHORE: Since everyone is hearing this on radio, we’ll be clear about that.
SIMON: Right, radio would remain, "WKAR" as call letters remain. The university would fully intend to provide content that is very similar to what goes over the air on TV through streaming, the development of content. So it's really the mode in which we transmit, not the content that the university might generate. And so then there is the question of how the community would get PBS content and there's a commitment through the cables and others that they would make available PBS content, if not through us, through some other means.
BASHORE: Well, talk to us about the key factors that you will take into consideration, you are taking into consideration, when making this decision.
SIMON: Well obviously we have to look at our public commitment and the question over the next 10 to 20 years, is how will people get content? Will it be through traditional over-the-air TV? Will it be through computer streaming? What are the mechanisms, as we think about cord cutters and all the things that are around us. And what does that look like and how do we meet our public commitment within that context?
A second factor is, WKAR is part of the College of Communication Arts and Sciences. It was replaced in the college to assure that our students had the kind of educational experiences that would prepare them not simply for today's jobs but for tomorrow's jobs. And that involves developing content and learning how to organize and make that content the most dramatic visually as well as audio compelling for various audiences, whether it's streaming on phones or on big screen television.
The third factor is really whether we believe over time that we have a fair and appropriate economic value. And the question then becomes, is it a fair value today? And is it a fair value or an increasing value in the future, if in fact there’s another auction or sale.
And then the fourth factor is, with emerging technologies we know that we cannot directly monetize the spectrum, it is not ours to monetize. So we can't sell it to a third party to use, we have to use it ourselves. The question is, with new technologies and new approaches, are there other things we could use it for -- because if we don’t sell, we have a very large bandwidth -- for other things that would be the new technological frontier and that will have value to the university moving forward beyond what might be the current economic value.
BASHORE: Is it possible that the demand for broadband spectrum in 2016, let’s say, is a lot higher than it might be in the future and now would be an advantageous time to auction it off?
SIMON: That's one of the factors.
BASHORE: Yeah, that’s the "fair and appropriate value" piece.
SIMON: That's the "fair and appropriate value" piece, because we also don't know if, in a reverse auction, what the value will be assigned to the spectrum really. Because what we know is that the $206, $207 million is the top value. So it could decrease in value through the auction because other bandwidth that is more desirable is up for sale and has been purchased.
BASHORE: Human nature being what it is, some number of people are going to be hearing this and you know that they are going to generate… their response is going to be: don't even think about taking away my WKAR TV. And I know you've alluded to different modes of delivery, content delivery here, but it seems like… Is part of your mission persuading those naysayers that the $200 million, the up to $200 million, that the university could come into, could be better spent than on transmitting TV programs the way they currently are?
SIMON: Well when you think about $200 million and you make it as an endowment, and so that gives you $10 million annually to spend. And think about it in terms of what you could do with $10 million annually. Because I think it’s not prudent just to sort of get a windfall and spend it and then not have anything for the future. Because WKAR, the content we produce, is an enduring asset. So the dollars that would need to be accrued from any auction needs to be an enduring asset. That’s sort of my going-in position. That's about $10 million a year.
BASHORE: Is that at the heart of your effort to persuade any naysayers that might resist this move? Is that at the heart of it? What else do you intend to tell people who might resist this?
SIMON: What we have to think about is, what ways will they get content in the future? And if you assume that under a rubric of "YouTube 'KAR" or all the other means that are evolving to produce and deliver content, that the institution is committed to the production and the transmission of content as we always have.
And the question is, what's the best way to do that if you're looking at it 20 years from now or 10 years from now? And could you use the assets from no longer delivering it in a traditional TV way more appropriately, to assure that people have this kind of quality content moving forward in the future forever with an endowment.
BASHORE: Are households that don't have the internet a factor in this decision making process?
SIMON: Well it has to be sort of looked through in terms of not only today, but what is the trajectory of people who are cutting cords in varieties of ways.
BASHORE: How big a factor will the public response to be in your decision-making process?
SIMON: It will be a factor along with all the other things we’re trying to determine, from consultants that we have who are looking at this from a national perspective.
So we have scheduled two public comments, one on January 4th and one on January 11th, that’ll be in the ComArts building at 6 p.m. [CORRECTION: 7 p.m.], room 147. In addition, there’ll be a vehicle developed through WKAR for the public to continue to provide comments.
But after January twelfth we cannot respond, by FCC rules. So there is a silent dead period. It doesn't stop people from commenting, we believe. This is a very complicated legal process and it wasn’t designed for public entities. But these two opportunities we know fit before the deadline of January twelfth and then I’m sure there’ll be other vehicles for people to send in their comments but they can't expect a response after January twelfth.
BASHORE: One is just the day before you need to make your decision though.
SIMON: Right. Well we don't really need to make a decision on January twelfth whether we sell or not. The decision on January twelfth is simply whether we continue in the process, because at any time we can we can decide to pull out of auction.
BASHORE: What will determine the price here or what will determine the dollar amount? I'm led to believe this might be like a closed bid auction type situation?
SIMON: It's called a reverse auction and so… We do not conduct it, the FCC will conduct it. And I don't fully understand in what order they will auction off the various properties that they've identified from around the country. Whether that will be in geographic region or however they've determined greatest value and greatest need in terms of the volume of spectrum required to move the wireless communication forward. And then they will do that sometime we think after March but we're not sure about that date. And then they will conduct that.
They will determine if there is a price that is being offered for our spectrum. We can decide at that point to say no, so it's not really January twelfth as the drop-dead date. It’s simply a date that we have to be able to say we are either in or out while we’re further considering our options.
BASHORE: When it comes to a number, will it be your decision to accept or not to accept or will the Board of Trustees also be involved in that process?
SIMON: Well we’ll obviously be consulting the board and we've talked about basic parameters, but technically the resolution makes that my decision. Mine to sign the piece of paper, I guess.
BASHORE: This has been your plate or on your radar at least for some time. Are you leaning toward approving participation?
SIMON: I think that it would be very difficult at this point in time knowing what we know, to say that we shouldn't at least continue to explore. And I'll use "continue to explore" other various options. We’ve been talking to some consultants around the country. We did eliminate the option of channel sharing, which is one of the three options available.
BASHORE: Like the old, old days.
SIMON: Like the old, old days. And the reason for that is that there would be some money that would come from channel sharing to the university. But, more importantly, the amount of bandwidth left for WKAR would be -- in our judgment, the judgment of the technical experts -- insufficient for us to participate in the new technologies moving forward. And it's important for the community, for our students, to have the opportunity to always participate in those new technologies that we know are on the rise. And you can't always imagine what might be coming around the bend, but you should be able to plan for the things you know are on the horizon. And there would not be a sufficient bandwidth to do that. as we understand it. So a decision's been made to not channel share. Beyond that, either option of selling or keeping it are still both very much open.
BASHORE: And clarify please: is auctioning parts of the spectrum an option?
BASHORE: Oh. It all goes away or it all stays with us.
SIMON: Right, in terms of the TV spectrum, the broadcast spectrum.
BASHORE: Is there a sensible case to be made that universities, like Michigan State, simply should not be in the TV business? I mean you hear of big companies all the time shedding divisions, unloading entire companies that are not really in their wheelhouse. Can a similar case be made in this instance?
SIMON: I think the university has a responsibility from its education programs to deliver content. And I think we have a responsibility to make content broadly available publicly. The question about whether or not that’s through a TV, moving forward in the next 50 years, is what we’re really discussing not our public commitment to content or our educational commitment to having exciting opportunities for our students. So it’s really how that will happen in the future and what’s the best way for the university to position itself to do both of those missions.
If you look at major universities around the country, AAU universities that have stellar comm arts and sciences programs and have stellar community outreach programs, many of them don’t have a TV station that they operate. So that much we know. But how we think through then the way in which we’ll provide content and meet our public obligation, particularly in this area, is really part of the challenge.
BASHORE: I mean people think of WKAR-TV, they think of programs like Frontline, Nova, all kinds of really high-quality PBS programming. Do you realistically envision a day when those quality programs are simply transmitted through the internet then?
SIMON: Well some of them already are. And if you look at the decisions recently been made by, about Sesame Street, you’ll know that the approach is changing. How it will change and how fast it will change, it’s the kind of thing that you think a lot about and try to make sure that you position yourself in the right way. But those programs as well, there's nothing in the technology that precludes a cable network from picking up a different PBS station to provide Nova and that kind of content through, say, a cable. It’s very difficult to do over the air for those people who are not on cable.
BASHORE: We’re down to just 30 seconds. Is MSU under under any pressure from the commission, from the FCC or the feds, to let the auction happen? Is there subtle or overt of pressure to move forward with this?
SIMON: No. I think it’s an opportunity that you have to look at very, very carefully, both in terms of what we're doing now in content and delivery and penetration to the community, in terms to people who have access to information. But also what the resources could do to leverage further education and access by the public in new and different ways as the 21st century unfolds. So it's not about not having a commitment. It's a matter of how that commitment is delivered.
BASHORE: President Lou Anna Simon, who has until January twelfth to decide whether to involve the WKAR TV stations in an auction that would, that could, surrender its broadband spectrum to other entities.
SIMON: Again, the twelfth is simply keeping your name on a list, it's not deciding to sell.
BASHORE: Understood. Thank you very much for being here.
SIMON: You’re welcome. Thank you. Thanks you for all you do. Happy Holidays.
BASHORE: Thank you.
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