Delaying DTV Is Not All Sweetness and Light

Want to know what's really going on with the decision to delay the mandated switchover to DTV? Take a look at this, from three weeks ago:

But the transition will also free up huge swaths of spectrum in the 700MHz band currently in use by analog broadcasters, which the Federal Communications Commission auctioned off last year. As FCC commissioner Robert McDowell noted on a panel at the Consumer Electronics Show in Las Vegas this weekend, "there are companies paying hundreds of billion of dollars to use this spectrum, and they expect the goods to be delivered."

One of those companies is Verizon, which ponied up nearly $9.4 billion for spectrum it plans to use for its 4G Long-Term Evolution wireless broadband network. In a letter to top members of the House and Senate commerce committees Monday, Verizon CEO Ivan Seidenberg urged members of Congress to resist any delay of the transition, warning that it could impede the company's plans. "Verizon Wireless intends to begin field testing and deployment of LTE this year," wrote Seidenberg. "Deployment of LTE, however, can only be done if we have access to the 700MHz frequencies. Delaying the DTV transition will delay our ability to upgrade those frequencies to 4G broadband for American consumers and have a negative impact on our nation's international competitiveness."

That viewpoint has put Verizon at odds with AT&T, which has signaled its support for a delay in order to ensure a smooth transition—and, coincidentally, is not planning to use its own winnings from the 700Mhz block for LTE.

It's not clear whether Verizon would really be able to make good on its plans to begin deploying its LTE network by the end of 2009. Most analysts believe that a relatively short postponement, on the order of three months, would have little effect on 4G deployment—provided it did not set the stage for further delays, as Verizon clearly fears it might. Such a delay might also avoid a spate of homeowners sliding off icy rooftops as they struggle to install new antennas.

But a longer, more disruptive delay might provide some breathing room for Verizon competitor Clearwire. That company is seeking to build market share for its own WiMAX network, a joint venture with Sprint, before LTE is ready for prime time. Clearwire has boasted that it remains years ahead of the competition, but while WiMAX networks in Portland and Baltimore are already up and running, scheduled expansions to other cities have been delayed until late 2009, even as Verizon has bumped up its own schedule. The company's stock has now been in free-fall for months, and several major backers recently announced they would take major write-downs on their investments in Clearwire. (The roster of large investors in Clearwire includes Obama-ally Google.) A toxic negative feedback loop in investor confidence could leave it unable to finance its promised buildouts for 2009. With any transition delay certain to push the spectrum handover into the next quarter of the fiscal year, if not further, the attendant uncertainty could also factor into investment decisions as Wall Street—and equipment makers—decide which standard to back.

I just love that new politics, don't you?