LAS VEGAS — The pitch to television broadcasters this 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 far 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 this week, at a major conference here for broadcasters, officials from the F.C.C. went into sales mode. Consider how much money you could make, they told the stations, and consider how little you risk by sitting at the bargaining table with us.
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 is holding the conference, and a former Republican senator from Oregon. “If you sell that, you have no harvest next year. You can’t plant.”
Still, Mr. Smith said he had recently warmed to the idea. “Why is it exciting?” he said. “Billions of dollars.”
The F.C.C. 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 F.C.C., 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.
Mr. 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 Mr. Wheeler’s proposal. A lawsuit filed by the National Association of Broadcasters argues that the F.C.C. 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 F.C.C.’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.
“This is beachfront property,” said Ellen Satterwhite, a former F.C.C. employee and director of Glen Echo Group, a strategic communications firm focused on technology and telecommunications issues. “We’re not going to get this quality of spectrum, or this much spectrum, on the market in the foreseeable future.”
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. But just how much of this prized resource is earmarked for them, and how deeply it is discounted, is a major point of contention.
Profits from the auctions will go to the Treasury.
“The F.C.C. 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 F.C.C. is taking no risks, waging a full-tilt marketing campaign. In recent weeks, it has visited broadcasters in cities from Buffalo to Indianapolis. After the convention here, the agency will go to about 20 more regions, including Denver, Miami and Seattle. Each F.C.C. presentation goes into great detail about the logistics of the auction, in an effort to educate the stations about the process and dispel uncertainty or fear.
Some stations, like KCET in Burbank, Calif. — whose spectrum was valued at around $500 million by an investment bank working with the F.C.C. — 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,” Mr. 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. But Blair Levin, a former F.C.C. staff member who wrote the first proposal for holding this kind of auction, said that paying to reclaim the broadcasters’ spectrum offered them a strong incentive to move off it, as well as recognition of the businesses they built on them.
Nonetheless, more than two dozen broadcasters here expressed concerns about uprooting their stations, speaking anonymously for fear that their consideration of participating could affect investor, advertiser or employee perceptions.
Some said they were concerned the selling price would be too low. But most shared worries that a decline in local broadcasting would give cable and satellite giants a stronger dominance over the TV market and be costly for consumers.
Still, Mr. Levin said, broadcasters bristled less this week than they had six years ago, when discussions of this type of auction were only hypothetical.
At that time, “one broadcaster told me, ‘This is the equivalent for broadcasters of the Bataan Death March,’ ” he said. “But at the end of the Bataan Death March, the Japanese did not give the soldiers multimillion dollar checks.”
Story: NY Times April 16, 2015, By