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Streaming Poses Ultimate Catch-22

By Lawrence White and Thomas Lenard

Lawrence White testifies on paperless ticketing

Broadcast TV will survive the incentive auction in some form, but it is hard to know how it will survive in the long run.

Barry Diller’s new Aereo venture may turn out to be the ultimate Catch-22. Aereo is possible only because of the existence of broadcast television, but broadcasters view it as a threat and have warned that they may stop broadcasting. If that happens, broadcast television and Aereo could both cease to exist.

Unlike the iconic fictional Catch-22, however, this outcome would yield benefits to society: Hastening the demise of broadcast television would accelerate the transfer of spectrum to higher-value uses.

Only a small fraction of TV viewers — about 10 percent — still rely on over-the-air broadcasts to receive their programs; the remaining 90 percent view their programs through subscription TV services like local cable or satellite transmissions.

The current over-the-air broadcasters occupy a large block of spectrum that would most likely be more valuable if converted to mobile broadband use. The effective supply of spectrum for such mobile broadband uses hasn’t expanded sufficiently to keep up with the exploding demand, contributing to a growing and widely acknowledged scarcity problem.

Read full article as published in Politico

Lawrence White is the Robert Kavesh Professorship in Economics and the Deputy Chair of Economics.