Qualcomm ( QCOM - Get Report) could be a big loser if Congress delays the switch from analog to digital broadcast TV as expected. Qualcomm says it could lose "tens of millions of dollars" if Congress pushes back the deadline for the country's switch to digital TV by four months. American broadcasters were supposed to vacate analog broadcast spectrum in mid-February to free up space for companies that bid for, and bought, 700MHz spectrum last year to launch mobile services. On Monday, the Senate passed a bill to delay the nationwide switch to digital TV from Feb. 17 to June 12. The House is expected to vote Tuesday. President Obama supports the delay. The legislation is fueled by worries that viewers weren't ready for the congressionally mandated switch-over. The government has made discount coupons available to help offset the cost of new digital converter boxes but it ran out of coupons earlier this month. Nearly 2.5 million Americans are on a waiting list to receive them. The delay will also allow consumers with expired coupons to request new coupons.
Chipmaker Qualcomm was one of the big spenders in the government's spectrum auction, agreeing to pay $550 million to roll out its MediaFLO mobile TV platform. "We are very much opposed to the delay of the DTV transition," Qualcomm COO Len Lauer told Dow Jones last week. "The delay will cost us tens of millions of dollars in extra expense and lost revenue." CEO Paul Jacobs reportedly wrote a letter to Congress, pleading for the original time frame to be maintained.
According to published reports, Qualcomm has already invested in equipment and fees to TV broadcasters (in addition to the amount spent in the auction) on the assumption that it could launch MediaFLO services next month. The service is currently offered by AT&T ( T - Get Report) and Verizon ( VZ - Get Report) Wireless in the U.S. but is deemed to have insufficient geographic coverage currently. Qualcomm said earlier this month that it was planning to use the new spectrum to roll out MediaFLO to more than 100 U.S. markets this year. The delay could also derail the "next-generation" rollout plans by Verizon and AT&T. Both have previously said they plan to use the 700MHz spectrum for mobile services based on 4G, Long Term Evolution (LTE) technology. Verizon has been said to be planning a LTE launch before the end of the year, potentially making it the world's first mobile operator to do so. Qualcomm recently bought a $65 million chunk of Advanced Micro Systems' ( AMD - Get Report) hand-held assets in an effort to deliver complex graphics and multimedia services on mobile devices. Many lawmakers are concerned that an estimated 20 million, mostly poor and rural households headed by seniors were not ready for the switch to digital TV. It requires owners of older television sets receiving over-the-air signals to buy a converter box or to pay for a cable or satellite subscription. Broadcasters are moving from analog to digital signals to give public safety officials more spectrum. More importantly, the government also auctioned parts of the old analog TV frequencies spectrum to businesses interested in using those frequencies for new technologies, such as Qualcomm.