STEVENS BILL WOULD KEEP 700 MHZ AUCTIONS ON SCHEDULE

Stevens introduced bill in response to unwillingness of Tauzin’s staff to reach middle ground on auction date issue, according to Hill source. Stevens wanted to negotiate compromise on how best to address disputed date. He introduced legislation that would force FCC auction after Tauzin aides wouldn’t budge on proposal to delay auction indefinitely, source said.

House bill backed by Tauzin, ranking committee Democrat Dingell (Mich.) and 50 other co-sponsors would delay 700 MHz auction indefinitely, citing uncertainties such as timing of band-clearing in DTV transition. In Senate, Sens. Ensign (R- Nev.) and Kerry (D-Mass.) unveiled bill last week that mirrored House version. CTIA, which backs both bills, has asked full Commission to review Wireless Bureau decision that would keep auction date as planned. Commission had been expected by some to issue decision on group’s application for review as early as Wed., which was when filing window closed for short-form applications by prospective bidders. Those filings provide Commission with information on which licenses bidders would vie for and their financial information. Now that date has passed, some industry observers said Commission might not issue decision until even next week as it studied options. Next big auction deadline isn’t until May 28, when upfront payments are due.

Paxson Communications and rural wireless carriers have been urging that auctions be held as scheduled, particularly because Ch. 52-59 band is optimally suited for carriers targeting smaller communities. Stevens bill -- Auction Completion Timing Act or ACT Now -- would keep Sept. 30, 2002, statutory deadline FCC faces to deposit proceeds from lower 700 MHz spectrum in U.S. Treasury. Commission already has missed Sept. 30, 2000, deadline for depositing proceeds from Ch. 60-69 band and Stevens bill would create new date of Sept. 30, 2002, for that band, as well. Notwithstanding other statutory deadlines for auctions, bill -- S-2481 -- would amend Communications Act so that FCC would determine auction schedules.

“In order that this situation may not develop again, my bill also suggests future spectrum auction deadlines will be determined by the Commission alone, unless Congress specifically passes a law that the President signs that would interfere with that authority,” Stevens said in floor statement. Saying that 700 MHz auction already had been postponed 5 times, he said: “I think that is wrong.” He said spectrum should be made available as part of competitive process to deploy new technologies: “But it should not be used just for speculation. And it should not be auctioned just because of market demands for spectrum, per se, in order to get the government the highest level of return for the spectrum.”

Rural Telecommunications Group Gen. Counsel Carri Bennet lauded Stevens’s bill. “The large carriers’ calls for ‘indefinite’ delay are thinly veiled attempts to wait until the current economic recovery affects the telecom sector,” she said. “Releasing spectrum now will do more to help our economy than waiting until Wall St. smiles once again on the large carriers.”

Paxson Communications, citing “sources close to the FCC,” said more than 150 bidders had registered for June 19 auctions as of close of filing window Wed. FCC spokeswoman said Commission didn’t comment on potential bidders. Typically, it releases public notice one to 2 weeks after short-form deadline to announce which applications have been accepted for filing. “With all these bidders, it proves the value of the spectrum and the urgency that American business has to get its hands on this spectrum,” Paxson Chmn. Lowell Paxson said. “It becomes obvious that the FCC should immediately proceed with the auction and dispel any further rumors about delaying it.”

Focus of some tracking 700 MHz auction debate is on where there’s room for possible compromise. Sen. Brownback (R-Kan.) is said to be drafting bill that would provide compromise, including possible brief delay in auction of Ch. 52-59. Earlier this month in speech to U.S. Chamber of Commerce, he called passage of spectrum reform legislation in this Congress “pretty remote and difficult” (CD May 1 p2). However, last month Brownback also had voiced support for delay and said he was willing to back Senate legislation that would put off June 19 date (CD April 25 p2). His office couldn’t be reached for comment by our deadline.

Among possible compromise scenarios under discussion at FCC and on Capitol Hill this week have been versions in which Ch. 52-59 auction would be held on time or with little delay, while Ch. 60-69 spectrum could see longer delay, several sources have said. Where 8th floor stands on that wasn’t clear. FCC Comr. Copps said earlier this month that while current economy didn’t appear to be ideal time to hold 700 MHz auction, Congress was “pretty specific” about when its proceeds had to be deposited. Comr. Abernathy appeared to support delay, several sources told us.

Meanwhile, report that accompanies Tauzin’s auction bill, HR-4560, includes Congressional Budget Office (CBO) cost estimates of delaying auction that would vary depending on when bidding was held. “Proceeds could be higher than expected under current law if all of the frequencies were auctioned before the FCC’s auction authority expires in 2007; but they could be lower or zero if such auctions are not completed by 2007,” CBO said. “On balance CBO estimates that enacting this bill would reduce expected proceeds from the authority to auction these frequencies.” CBO estimated legislation would lead to net loss of receipts and increase in direct spending of $1.4 billion over 2003-2007. CBO said it expected that under existing law Ch. 52-69 wouldn’t be cleared of incumbent broadcasters until “well after the statutory goal of December 31, 2006.” As result, bidders would discount amount they were willing to pay for such licenses because of lag between auction and completion of DTV transition. CBO estimated proceeds from FCC auction of upper and lower bands, if started June 19, would bring in $4 billion under existing statutes. It said delay in auctions would have 2 effects: (1) Holding auctions after June 19 was likely to increase total proceeds of bidding beyond $4 billion. (2) Eliminating statutory deadline “would increase the likelihood that these bands would not be auctioned before the FCC’s auction authority expires in 2007, particularly because the transition to digital television is not likely to occur until well after that point.” CBO said it based its estimate on 50% chance that 700 MHz auctions would be held by 2007. “Our estimate of proceeds under this bill -- a total of $2.6 billion over the 2003-2012 period -- reflects the net effect of these two factors,” CBO said.

Reacting to Stevens’s bill, CTIA Pres. Tom Wheeler said group agreed that budget deadlines shouldn’t stand in way of FCC’s public interest responsibilities on spectrum. “However, we join the full House of Representatives, many senators, the public safety community and the Administration in concluding that a June auction for the 700 MHz spectrum band is a bad idea,” he said.