BILL WOULD DIRECT FCC TO DELAY 700 MHZ AUCTION INDEFINITELY
House Commerce Committee Chmn. Tauzin (R-La.), ranking Democrat Dingell (D-Mich.) and 50 co-sponsors unveiled bill Wed. that would direct FCC to delay upcoming 700 MHz auctions indefinitely, tying future timing to resolution of other thorny spectrum issues. Legislation would delay June 19 auction of upper and lower bands at 700 MHz, requiring FCC within one year to report to Congress on proposed rescheduling. Proposal outlines panoply of other spectrum proceedings that await resolution and would instruct FCC to not hold 700 MHz auction until there was plan to resolve 800 MHz interference issues for public safety. Backed by bipartisan bill, CTIA late Wed. filed application at FCC seeking full Commission review of Wireless Bureau decision earlier this month that kept June 19 date intact. Prospects for companion bill in Senate appeared to be somewhat less clear, although Sen. Brownback (R-Kan.) told reporters Wed. he might support similar bill if administrative actions failed.
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Bill would depart from Administration’s budget proposal for fiscal 2003, which would set Sept. 2004 deadline for selling Ch. 60-69 spectrum and Sept. 2006 for Ch. 52-59. Point of bill, which was sponsored by most of 57 members of Commerce Committee, is to “strip the deadlines from the books,” Tauzin said. FCC faced statutory deadline of Sept. 2000 for depositing proceeds of Ch. 60-69 spectrum in U.S. Treasury and Sept. 2002 for Ch. 52-59. FCC Comr. Abernathy recently said she would back “brief” delay in June 19 date to allow time for Congress to speak to issue. Tauzin stressed that he believed FCC could act even without legislation: “I believe that this legislation should not be necessary to preclude the Commission from conducting the auctions in June. The FCC currently has the authority to delay these auctions and should do so.” He acknowledged that upper band auction already had been delayed 5 times but said auction for both bands in June “would be wrong.”
Bill noted NTIA and Defense Dept. still were working on evaluation to assess whether Pentagon could share or give up additional spectrum for 3G. It said assessment “will not be completed until after the June 19 auction date for the upper 700 MHz band and long after the applications must be filed in the auction.” It said that created further uncertainty for carriers about 700 MHz band. Proposal also noted that FCC last month adopted notice of proposed rulemaking examining ways to cure interference problems for public safety at 800 MHz, with some proposals involving reconfiguration of 700 MHz and other bands, as well. Bill would direct FCC not to hold 700 MHz auction before “interference issues are resolved or a tenable plan has been conceived.” As for DTV transition, proposal said continued presence of analog broadcasters in 700 MHz “reduces both the amount of money that the auction would be likely to produce and the profitability that the spectrum would be purchased by the entities that valued the spectrum the most.”
Proposal would delete language in Balanced Budget Act of 1997 that set deadlines for when 700 MHz auction proceeds must be deposited. Rather than saying FCC had authority to delay auctions, bill said agency “shall not commence or conduct” bidding in those bands as planned without setting specific date. Within one year of enactment, FCC would have to tell Congress when it planned to reschedule 700 MHz auctions and describe progress it had made on DTV transition “and in the assignment and allocation of additional spectrum for advanced mobile communications services.” Sponsors include Telecom Subcommittee Chmn. Upton (R-Mich.) and ranking Democrat Markey (Mass.).
CTIA filing asked that FCC “at a minimum” not hold 700 MHz auctions until broader proceeding on 3G spectrum was concluded and that auction was final. “The uncertainty surrounding the availability and timing of the auction for advanced wireless services spectrum means that companies would not be able to assess their spectrum auctions effectively before having to decide on a 700 MHz auction strategy if those auctions were held in June,” Association said. CTIA Pres. Tom Wheeler called earlier Bureau decision to keep auction date “simply premature… It would be irresponsible for the Commission to ignore the growing consensus to delay this auction until a big-picture plan is put together.”
Delay in legislation is designed “so that we can have a more long-term, comprehensive, strategic process of allocating that spectrum,” said Rep. Pickering (R-Miss.), another co-sponsor. Speaking at CTIA lunch on Capitol Hill, he acknowledged that Commission was preparing to move forward with auction to comply with existing statutory mandate. “We are trying to find ways to get the FCC to step back and put that on hold,” he said. “We are looking at the FCC’s administrative and legislative opportunities.”
Sen. Brownback (R-Kan.) also voiced support for delay and said he was willing to back Senate legislation that would postpone June 19 date. “What we are looking at initially is talking with the Administration and talking with the FCC about what their plans are and conveying our interest in delaying the sale of the 700 MHz. If it takes the introduction of legislation, we'll be considering that option as well.” Brownback acknowledged that time frame for Congress to act was short, with deadline for prospective bidders filing short-form at Commission now set for May 8. “Time is getting very close on this,” he said. “If you look at this from a common sense perspective, these are not frequencies that are vacated. There are significant issues that would need to be sorted through for the government to be able to auction those off.”
In brief lunch speech, Brownback said broadcasters, which must leave 700 MHz band by 2006 or 85% penetration, whichever comes later, looked as if they wouldn’t meet 2006 date based on current pace of transition to digital from analog. He told wireless industry representatives, who made Hill rounds Wed. as part of CTIA Wireless Day they should stress auction timing issues to congressional offices. “If we were to auction this off now, this would have a much depreciated price,” Brownback said. And based on lower valuation levels, auction winners “probably wouldn’t negotiate as well with television stations that own this space to be able to get access to frequencies… Plus the federal government isn’t going to get the money that it should out of this.” He said: “If the [wireless] industry gets its way, the federal government will be a beneficiary of that.”
Support for companion bill in Senate was less clear, although several industry observers cited Brownback and Sen. Stevens (R-Alaska), member of Appropriations Committee, as likely sponsors. Sens. McCain (R-Ariz.) and Allen (R-Va.) wrote to FCC Chmn. Powell earlier this week about factors that made auction controversial, but stopped far short of asking for postponement. “We do not send this letter to support any party to this matter, nor to support or oppose any potential course of action to be taken by the Commission,” they wrote. Letter simply asked FCC to “carefully consider and review all options regarding the spectrum,” citing “difficult” factors such as the DTV transition, “avoiding unjust enrichment of broadcasters,” and auction revenue. “While we don’t envy your task, we believe the Commission has the expertise and the resources to analyze and determine the best course of action.”
Meanwhile, Markey was drafting legislation that would cover some of same ground as auction bill dropped by Tauzin but that would address some broader spectrum issues as well, source said. It would create trust fund in connection with auction-generated revenue that would cover, in part, financing for govt. incumbents that potentially would be relocated as part of new allocations. Trust fund concept is part of Administration’s budget plan and is designed to provide certainty for military incumbents that may ultimately be relocated as part of pending govt. 3G decisions. Markey version also would cover public interest telecom issues. For example, proposed trust fund would be designed to supplement funds zeroed out under Bush Administration budget proposal for Technology Opportunities Program (TOP), Clinton-era program designed to finance establishment of on-ramps to information superhighway. Another area under trust fund would be assisting public TV stations in making transition to DTV, source said.