UPTON SPECTRUM BILL CLEARS TELECOM SUBCOMMITTEE

HR-1320 was approved as a substitute amendment by Upton to address both Administration and Capitol Hill concerns. Changes included further clarification of the spectrum bands eligible for the fund, to eliminate confusion about bands already scheduled to be auctioned or auctioned previously and the pooling of all proceeds into one fund, addressing a major Administration concern. The bill would clarify that funds would revert to the U.S. Treasury no more than 8 years after their deposit if not already spent. Several provisions were added to increase congressional oversight.

Subcommittee ranking Democrat Markey (Mass.) agreed to withdraw his 2 amendments. The first would have created a Digital Dividends Trust Fund to promote educational and noncommercial objectives, funded by unused trust fund money as well as interest on the fund. Upton said the goals of Markey’s amendment were similar to a bill (HR-747) he introduced with Reps. Towns (D-N.Y.) and Wilson (R-N.M.) that would use interest from auction winners for similar initiatives. “We can’t accommodate either” item in the substitute amendment, Upton said, but he promised to hold a hearing before the August recess to develop “a bipartisan bill we can move” to fund worthwhile telecom initiatives. Markey then agreed to withdraw his amendment.

Markey also withdrew an amendment that would have added a section to the bill emphasizing that the FCC wouldn’t be mandated to hold auctions for spectrum vacated by a federal agency. It also encouraged NTIA to report back in one year on how agencies could be compensated for moving when no auction was held on the freed spectrum. Markey said he wanted to make sure some spectrum remained unlicensed for Wi- Fi and other uses and some was allocated for public safety. Upton said Republican committee members were working with the Administration to draft language with the same goal, and Markey agreed to work with him on language that could be added at the full committee markup.

Not introduced was a proposed amendment by Rep. Stupak (D-Mich.), co-sponsored by Reps. Fossella (R-N.Y.) and Engel (R-N.Y.). They aimed to take unused funds to provide public safety officials with interoperable telecom equipment, but held off the amendment because it would increase the bill’s scoring. Upton vowed to hold a hearing this year “with the intention of moving legislation” to help first responders.

Upton’s original bill raised concerns with both the Defense Dept. and NTIA, as well as Markey and House Commerce Committee ranking Democrat Dingell (Mich.). Upton drafted the substitute by working with all of those parties, as well as the Administration’s Office of Management & Budget.

A line-by-line comparison of HR-1320 and its substitute suggested several revisions: (1) The eligible frequencies specified would be expanded. The original bill mentioned 1710-1755 MHz and “any other band of frequencies reallocated from federal use to nonfederal use after January 1, 2003, that is assigned by competitive bidding,” while the substitute specifically adds the 216-220 MHz, 1432-1435 MHz and 2835-2390 MHz bands. (2) The FCC would be required to notify NTIA of an auction 18 months in advance rather than 9 months. (3) NTIA would be required to submit to the House and Senate Commerce and Appropriations committees initial relocation cost estimates, part of the expanded oversight requested by Dingell. (4) Funds placed in the Spectrum Relocation Fund from auctions would be pooled, rather than placed in separate funds as in the original bill. (5) Congress and OMB would oversee any fund transfers to federal agencies that exceeded estimates by 10%, an open process Dingell hoped would keep agencies in check. (6) Unused funds would revert to the U.S. Treasury, but the substitute would ensure that that wouldn’t happen until at least 8 years after the initial deposit.

“This bill does not reflect normal congressional process,” House Commerce Committee Chmn. Tauzin (R-La.) told his colleagues, encouraging them to “pull together as a team” against expected resistance from appropriators who were likely see the bill as an encroachment on their authority. Asked in an interview about his strategy, Tauzin told us he hadn’t yet spoken with appropriators, but instead was focused on the House leadership. With the telecom industry “in a hole,” he said, the argument could be made that this was an economic stimulus strategy. Referring to the auction funds, Tauzin told us “this money wouldn’t be here without this bill” because federal agencies weren’t going to agree to vacate spectrum if they had to wait for appropriators to allocate relocation funds. Tauzin said he was confident the House leadership would understand that a one-time change in House procedure could give a large boost to the economy.

CTIA Senior Vp Steve Berry said the legislation would “ensure a smooth transition for both the wireless industry and government spectrum users including the Department of Defense, guaranteeing new spectrum for wireless consumers and a simple method of migration and reimbursement for incumbents.”

NTIA Deputy Dir. Michael Gallagher said the panel’s action advanced a bill that was a “critical piece” of a measure that would stimulate 3G wireless services. Last year, the Defense Dept. agreed to clear most of 1710-1755 MHz as part of the 90 MHz being made available for advanced wireless services, including 3G. Current law requires commercial operators to reimburse federal users for the costs of relocating from reallocated spectrum. The bill would alter that system by creating a central relocation fund financed from auction receipts. The subcommittee’s approval “is a significant milestone in the Administration’s request for a spectrum relocation fund,” Gallagher told us. One of the key focuses for the Administration as part of the changes that were made to clear the way for the markup on Wed. was the idea of accountability, he said. The support of ranking committee Democrat Dingell (Mich.) indicates the extent to which such concerns have been addressed, he said. “We now have addressed those concerns to where there are multiple opportunities to make sure the American taxpayer has the maximum return for each dollar that goes into the fund,” he said. He cited the oversight roles laid out for the General Accounting Office, the Senate and House Commerce committees, the White House Office of Management & Budget and NTIA “to make sure this is done,” he said.