BUSH BUDGET PROPOSES FEES ON UNAUCTIONED SPECTRUM

Bush also proposed legislation that would encourage TV broadcasters to vacate analog spectrum after 2006 by establishing annual fee totaling $500 million for use of analog spectrum by broadcasters in 2007. He also called for extending FCC auction authority indefinitely, which he expected would raise $2.2 billion over next 10 years. Current authority is set to expire in 2007.

NAB criticized spectrum tax proposals. “Congress has wisely rejected spectrum taxes on broadcasters for the past several years because lawmakers recognize the timetable for the transition to digital television will be determined by consumer acceptance and not by arbitrary government dictates,” NAB Pres. Edward Fritts said: “Broadcasters should not be saddled with an unfair spectrum tax, which would ultimately slow the transition to digital and harm consumers who rely on local stations for high-quality news, information and entertainment programming.”

Concept of spectrum user fees came up in FCC’s Spectrum Policy Task Force report released in Nov. Task force generally outlined recommendations for policies on more flexible spectrum use, touting concepts such as secondary markets. In cases “where marketplace forces may be inadequate, e.g., in spectrum that is allocated for government use, alternative mechanisms such as user fees should be considered to stimulate improvements in efficiency,” report said. Task force also listed recommendations it said FCC should consider making to Congress on statutory proposals.

Among those was recommendation that Congress initiate review of potential use of spectrum fees “for nonmarket-based spectrum uses.” One source said it wasn’t clear from budget proposal whether authority for user fees was meant to be anything other than potential incentive to encourage inefficient spectrum users to move from unauctioned spectrum. Lack of detail made intent of Administration in that area difficult to ascertain. “Wi-fi doesn’t pay for spectrum,” industry source said. General Accounting Office report released Mon. (see separate story, this issue) on U.S. spectrum management said other countries imposed incentive- based fees as part of market-based policy in that area. In Australia, such fees are imposed on govt. and nongovt. users and are based on factors such as demand for frequency.

FCC was budgeted to receive $281 million, of which $252 million would be offset by fees and spectrum auction revenues. Commission also would receive $6.7 billion from Universal Service Fund (USF), increase of $400 million from last year. Budget proposed funds for infrastructure improvement for laboratory facility and enhancement of audit capabilities in FCC’s Office of Inspector Gen.

NTIA would get additional $2 million for assistance in managing spectrum, as salaries for NTIA were budgeted to rise to $19 million from $17 million. However, no funds were provided for public telecom facilities, planning or construction grants, much of which was targeted to purchase digital transmission equipment by public broadcasting stations (see separate item). Portion of CPB funding for 2004, already adopted under 2-year forward funding, would go toward digital transition, budget said. Total NTIA budget, including salaries to manage telecom construction grants already administered, would be $22 million. Budget also proposed legislation for spectrum reallocation fund of $2.5 billion from 2005 to 2010. Fund would help govt. agencies move from cleared spectrum.

Senate source said Agriculture Dept. Rural Utility Service (RUS) was marked for only $9 million for broadband loans. Source said legislation mandated that $20 million be designated for rural broadband loans and that Congress was likely to try to restore funding to $20 million.