HOUSE COMMERCE COMMITTEE CLEARS BILL TO DELAY 700 MHZ AUCTION

CTIA petition asks full FCC to review Wireless Bureau order that kept June 19 auction date. One scenario floated to policymakers in recent days would keep Ch. 52-59 auction date and postpone for now Ch. 60-69 auction, several sources said. Tauzin told reporters Thurs. that he spoke Wed. with Stevens, ranking Republican on Senate Appropriations Committee, who plans to introduce bill that would compel FCC to hold 700 MHz auction June 19. “His concern is with the possibility of auctioning off the spectrum in the lower 700 band for rural purposes,” Tauzin said. He said Stevens was concerned about availability of spectrum in Alaska as well as other rural areas nationwide. Tauzin also said he had informed Senate Commerce Committee Chmn. Hollings (D-S.C.) that HR-4560 had broad support in House and could clear that chamber “expeditiously.” While Tauzin said Hollings indicated he would process proposal, he acknowledged that Stevens and Hollings were close. “I want to understand his concerns a little more, we'll talk to him a little more,” Tauzin said of Stevens. While Tauzin said he talked with Powell about possibility of one-year delay, he didn’t think full time would be needed to have legislation pass both chambers.

Possibility of holding Ch. 52-59 auction as scheduled and Ch. 60-69 at later date is idea that has been floated on 8th floor at FCC and in congressional offices, several source said. One said that among drawbacks of that path would be extent to which bidders that sought both bands of spectrum would be limited to one band. For example, new company called Total.TV, owned by PGTV, last month asked FCC to delay June 19 auction, citing its interest in bidding for both upper and lower bands. Company also sought changes in service rules for that spectrum to enable it to deploy services that would compete with digital cable and other offerings. But at least politically, holding Ch. 52-59 auction on time could provide room for compromise, particularly because that spectrum has been highly prized by rural carriers and may be of less importance to some analog TV broadcasters, industry sources said. National Telecom Co- op Assn. (NTCA) asked FCC this week to hold lower band auction as scheduled: “The lower 700 MHz spectrum is particularly well suited for rural deployment. Its propagation characteristics are such that only a few towers may be needed to cover much distance.” NTCA said other bands appeared to be less valuable to rural carriers “because it is uneconomical to put up multiple towers to cover vast stretches of empty road between small towns.” Rural Telecommunications Group also has focused on lower band auction, saying inclusion of rural service areas in bidding would make it easier for rural carriers to roll out service to more remote areas.

As for his conversation with Powell, Tauzin said: “His concern is primarily postponing without a date certain… If he can do that, if he can extend that in a time frame for us to have legislative action on this through the House and Senate, that’s really all we need.” Only committee member present who opposed legislation was Rep. Stearns (R-Fla.), who echoed concerns raised by Fla.-based Paxson Communications, which argues that June 19 auction should move forward. “Absent a statutory change, holding the auctions will more likely accelerate -- rather than delay -- band clearing,” Stearns said. He cited reserve price of $2.6 billion that FCC had placed on upper band and importance of clearing 700 MHz for public safety use.

“The FCC should use its own authority to delay these auctions, and today we are making clear that holding the auctions within the FCC’s designated time frame is contrary to both sound regulatory policy and contrary to the Communications Act,” Tauzin said at markup. He stressed that Sec. 309(j) of Communications Act required FCC to include safeguards in auctions that ensured that interested bidders would have adequate time to develop business plans and assess market conditions. That means Commission now faces conflicting statutory mandates between that part of Communications Act and Balanced Budget Act of 1997, which set deadlines for completing upper and lower bands of auctions, Tauzin said.

In broader spectrum policy area, Tauzin said he was tasking Telecom Subcommittee Chmn. Upton (R-Mich.) to begin organizing effort to define “in policy and hopefully in legislation that this committee might see in the not-too- distant future” spectrum management plan. He said he also had tapped ranking committee Democrat Dingell (D-Mich.) to make sure effort had bipartisan support. “This bill is an example of what happens when the budgeteers come out here and make spectrum policy and we are left with a mess on our hands,” Tauzin said on need for legislation to delay 700 MHz auction. He said he wanted policy to present to House committee’s “thoughts on what a spectrum management policy should look like.” Talking with reporters after markup, Tauzin said that policy probably would delve into areas such as relative spectrum authority held by FCC, NTIA, Defense Dept. Stearns cited “problem” of FCC’s deciding to hold auction in Northpoint proceeding and told Tauzin he would like that to be part of House spectrum reform effort.

Ranking Telecom Subcommittee Democrat Markey (Mass.) expressed disappointment at markup over recent FCC decision to hold auction of licenses for multichannel video distribution and data services. “Northpoint could provide near-term competition in the video programming marketplace, as well as in the telecommunications services marketplace, with its plan to offer consumers broadband access to the Internet,” Markey said. He said Northpoint also had planned to offer consumers access to all local TV stations. “I remain concerned about the proposal to distribute all of these licenses by way of auction,” he said. “To do so without due policy recognition of the company that was the trailblazer in identifying the possibility of such a service in the first place is unjust.”

Meanwhile, efforts to delay 700 MHz auction received new support Thurs. Assn. of Public-Safety Communications Officials International (APCO) for first time urged FCC for “brief” delay “not to exceed 6 months.” Letter to Powell marked first time APCO had deviated from its neutral stance on auction timing. It said FCC still had petition pending from public safety community on whether rules to protect public safety operators from interference at 700 MHz were adequate. APCO told Powell: (1) Group’s concern over 700 MHz interference rules “has only increased with the growing interference problems plaguing the 800 MHz band.” (2) Questions had emerged over “economic viability of the 700 MHz auction” and whether winners would be able to clear broadcast incumbents from that spectrum in timely manner. (3) Wireless carriers had asked FCC to re-examine entire 700 MHz and 800 MHz allocations to cure interference problems that public safety operators faced at 700 MHz. One potential scenario involves provisioning entire 700 MHz band for public safety use, which would mean that auction decision on that spectrum should be delayed, APCO said. It stressed that it didn’t currently support proposals that would allocate all of 700 MHz to public safety, “especially to the extent that it might displace 800 MHz public safety licensees.”

Telecommunications Industry Assn. also wrote to Tauzin and Powell this week, backing Tauzin bill as “necessary measure.” TIA Pres. Matthew Flanigan said: “Auctioned spectrum should be unencumbered or a relocation plan should be put in place, prior to auction, to create certainty for operators about when spectrum will be available for use.” Commerce Secy. Donald Evans also wrote to Tauzin on Thurs. in support of legislation. Evans wrote to Powell last month urging FCC to delay both upper and lower band auctions. “The Administration continues to believe that legislative action postponing the auctions is the right approach,” Evans told Tauzin. “Accordingly, we support your efforts to pass legislation that would authorize extending the current statutory dates for auctioning this spectrum.” Following committee vote, CTIA Pres. Tom Wheeler said: “The Commerce Committee’s rapid action and overwhelming vote sends a major message. We hope the FCC understands the message to slow the railroad.” Interstate Telecommunication Cooperative told FCC this week that 700 MHz band is “largely unencumbered” by broadcasters west of the Miss., meaning that services could be rolled out in some areas before end of DTV transition.