The Federal Communications Commission (FCC)'s recent and upcoming auctions once again highlight the enormous value of radio frequency (RF) spectrum. Of course, the auctions also underscore the FCC's continuing policy inconsistencies, as well as the power of cable's HFC network assets.

Last fall, the FCC's auction of a mere 90 MHz of spectrum for advanced wireless services (AWS) in the 1710-1755 and 2110-2155 MHz bands attracted a whopping $13.7 billion in bids. Cable operators were among the big winners, going beyond their wires to buy up 137 AWS licenses for $2.37 billion. As a side note, Sprint Nextel Corp. recently bailed from the cable bidding kiretsu. (See Sprint to Exit SpectrumCo Venture .)

Now, the FCC is gearing up for a second auction of 60 MHz in the 700 MHz band. Google has grabbed headlines with its bidding publicity antics, and the FCC has adopted an "open" broadband approach. (See FCC Straddles Open Access Issue.)

It is expected that this auction will raise at least as much as the last one. In other words, that's nearly $30 billion for 150 MHz of spectrum.

With all this wireless buzz, let's not forget the wires, though. MSO-owned hybrid fiber/coax (HFC) systems are also advanced telecommunications networks delivering digital video, data, and voice services. But, rather than relying on public airwaves, MSOs constructed private infrastructures, recreating the 0-750 MHz spectrum band in a sealed pipe. Thus, in the markets they serve, MSOs own five times as much spectrum as the combined AWS and 700 MHz allocations.

Interestingly, public market valuations for cable operators, as a group, are at not much more than the $150 billion their spectrum would bring at an FCC auction at prevailing prices.

It's an astonishing statistic, considering the U.S. cable industry is using its spectrum to generate more than $80 billion in annual revenues and has invested $100 billion in infrastructure upgrades to do so.

No wonder the Dolans want to take Cablevision Systems Corp. private. (See Dolan-ing Out the Dough.)

It is worth noting that the $14 billion or so that the U.S. Treasury expects to collect from the FCC's 700 MHz auction is payment for spectrum that TV broadcasters have used for free for decades. As broadcasters relinquish these airwaves, they are getting replacement spectrum for free from the FCC for digital TV. The broadcaster spectrum giveaway remains one of the nation's great corporate welfare programs. The boondoggle is particularly ludicrous when one considers that only 15 percent of U.S. TV households rely on over-the-air TV. (See The End of Broadcast TV.)

The inconsistency of spectrum policies and valuations is irksome. The FCC sells spectrum auctions for mobile, gives it away for broadcast TV, and takes it away from MSOs via digital must-carry. The first two instances are orthogonal approaches for valuing the use of the same public airwaves; the latter is a draconian policy of seizing private spectrum.

Not surprisingly, MSOs and cable programmers continue to cry foul over broadcast digital must-carry and the possibility of multicast carriage. They well should. (See Cable's All-Upset Over All-Digital.)

But what the cable industry has failed to articulate is an alternative plan for the use of the spectrum that would be wasted under digital must-carry requirements.

Here's a suggestion. If the FCC deep-sixes digital must-carry, MSOs pledge to use the spectrum to rollout 100-Mbit/s Internet access nationwide. Move the argument into the marketplace, and empower consumers to pressure politicians still under the spell of broadcast lobbyists.

Ultra-fast broadband or duplicate channels of Survivor and American Idol? Let consumers make the call… to their congressional representatives.

— Michael Harris, Chief Analyst, Cable Digital News