MCCAIN SAYS HE WILL INTRODUCE SPECTRUM REALLOCATION FUND SOON

McCain said the legislation would move spectrum to the commercial sector more quickly. House Commerce Committee leaders have championed spectrum reallocation, and Telecom Subcommittee Chmn. Upton (R-Mich.) introduced a trust fund bill in the last session. A similar trust fund bill is expected to be offered in the House again this session. President Bush included the trust fund in his 2004 budget proposal.

The hearing centered on the recent FCC Spectrum Policy Task Force but McCain asked panelists to evaluate the ideas of Michael Calabrese, dir., New America Foundation (NAF) spectrum policy program, who advocated leasing as a better way to allocate spectrum in many situations. He said the task force report suggestion that incumbent licensees be given exclusive and permanent property interests in their frequencies was the “blueprint for the biggest special interest windfall in history.” Calabrese said a licensing system would give policymakers more ability to reorganize spectrum and accommodate greater sharing of spectrum. NAF joined several consumers groups, including the Media Access Project, Consumers Union and the Consumer Federation of America, in filing comments to the FCC on the task force report.

CTIA Senior Vp Steven Berry said licensing would work in some scenarios, noting that the task force had called for a mixture of regulatory formulas, but said wireless companies had invested billions in spectrum auctions on the assumption that they would be able to retain the spectrum. “If companies are meeting the terms and conditions set forth at the auction, then the licenses should be renewed,” he said. He said companies wouldn’t be likely to invest in technology if there were no assurances that they could retain use of the frequencies. Calabrese said a licensing system could retain a “strong presumption” of renewal and licensing would allow companies to spend less up front on auctions, which would make more funding available for technology.

Senate Communications Subcommittee Chmn. Burns (R-Mont.) said he would introduce spectrum reform legislation that would include some form of market-driven allocation. Outright bidding for spectrum might not be the best approach, he said, particularly given the sagging telecom economy. He advocated a hybrid royalty-based approach, saying “the risks of spectrum assignment and ownership are shared between the government and the user is likely the best way to achieve efficient spectrum use.”

Burns also said legislation should include financial incentives, through either tax structures or guaranteed future use, for technological innovation to develop devices that would operate in the underutilized areas of licensed spectrum, particularly above 3.1 GHz. Burns said he supported a single regulatory agency, or more formalized cooperation between the FCC and NTIA, to manage spectrum. He also said he supported more funding for NTIA and FCC laboratories that conducted interference research.

Senate Commerce Technology Chmn. Brownback (R-Kan.) said he backed removing legislative barriers to secondary markets, a change he said was needed for rural areas. Sen. Lautenberg (D-N.J.) stressed that public interests shouldn’t be sacrificed in favor of market efficiencies.

McCain told reporters after the hearing that he hadn’t seen any comment from the Commerce Dept. on the proposal to merge NTIA under the Technology Administration. He said he generally backed the current “status quo,” but wanted to see the proposal first. McCain again criticized DTV spectrum allocation, calling it a “$70 billion rip-off” and a testament to the lobbying power of the NAB.