GOP Spectrum Draft in Controversial House Payroll Tax Extensions Bill

The spectrum section is nearly identical to the Walden bill as amended and approved by the Communications Subcommittee. Like the Walden draft, the GOP extenders bill would authorize voluntary incentive and other auctions, give public safety the 700 MHz D-block and up to $6.5 billion, and extend FCC auction authority through 2021. It would not let the FCC dedicate for unlicensed use spectrum that was freed up by incentive auctions. States and a private company would play a large role in governance of the public safety network. And the bill would limit FCC authority to make rules in auctions. The package’s spectrum provisions would raise nearly $16.5 billion from 2012 to 2021, the Congressional Budget Office estimated in a report dated Thursday.

There were minor changes to language on bidding eligibility and unlicensed spectrum. One tweak prevents the FCC from barring participation in an auction if the bidder “meets the technical, financial, and character qualifications” required in the Communications Act to hold a license or “could meet such qualifications prior to the grant of the license.” An addition to the unlicensed section clarified that the bill didn’t “expand or contract the authority of the Commission, except as otherwise expressly provided” or prevent the implementation of the FCC’s 2008 White Spaces order “in the spectrum that remains allocated for broadcast television” after repacking.

The extenders bill in its current form appears unlikely to survive the Senate, mainly due to disagreements on issues unrelated to spectrum, telecom industry lobbyists and analysts said. Those fights make the current bill “dead on arrival,” but negotiations continue, a telecom industry lobbyist said. Congress is under pressure to complete action on so-called “extenders” legislation by the end of this week, when it’s expected to leave for the year, so a deal early to middle week is possible, a telecom industry lobbyist said. Whether that deal will contain spectrum language is unclear, but lobbyists read its inclusion in Friday’s House bill as positive.

The package’s spectrum language is not likely final, another telecom industry lobbyist said. House and Senate Commerce committee aides were meeting last week to hash out a compromise between their two proposals, and appeared to be making progress, the lobbyist said. The House has the votes to pass the current package, but it will likely “ping pong” back and forth between the chambers until agreement on the entire bill is found, the lobbyist said.

"While bipartisan support generally exists for authorizing incentive auctions to help underwrite payroll tax holiday/unemployment insurance extensions as the year’s last piece of major legislation in advance of the 2012 election year,” said Medley Global Advisors analyst Jeff Silva, “there are enough material differences between the White House and congressional leaders on how the overall legislation should be crafted that details of any Democratic-Republican compromise will likely ... remain indiscernible until moments before lawmakers adjourn for the year later this month."

"Including spectrum is a good development for passage, but the two sides still need to resolve their differences on issues like unlicensed spectrum and public safety governance,” Guggenheim analyst Paul Gallant said. “Even if they can do that, the payroll tax cut is caught up in presidential-level politics, so spectrum still has a ways to go.”

Disagreement between the House and Senate remains on spectrum, but aides on each chamber’s Commerce Committee on Thursday expressed optimism about reaching a deal on that subject (CD Dec 9 p1). They now agree on reallocating the 700 MHz D-block to public safety and have moved closer to agreement on the amount of funding for the network. Unresolved matters include governance of the public safety network and whether any reclaimed broadcaster spectrum should go to unlicensed use.

McCain objected fiercely Friday to two parts of the Walden spectrum bill. In a letter to leaders of the House and Senate Commerce committees, McCain said legislation should not force public safety to give back 700 MHz narrowband spectrum. “To force public safety to give up critical communications capabilities is wholly irresponsible and dangerous,” McCain wrote.

McCain also criticized the GOP bill for what he called a $3 billion “slush fund” for broadcasters to cover their relocation costs. The Walden bill provides up to $3 billion for relocation, but the actual amount is to be based on broadcaster costs. “Spectrum is a public resource owned by the taxpayers,” McCain said. “As such, for the Congress to pay billions in taxpayer dollars for the relocation expenses of entities that have profited without ever having to purchase that spectrum in the first place is a federal bailout.” McCain said some of the $3 billion should go instead to funding the buildout of the public safety network, and most should be used for deficit reduction.

"Three billion dollars is the amount our engineers say is necessary to accommodate repacking and other transition costs associated with the spectrum auction program under consideration in Congress,” said Association of Public Television Stations CEO Patrick Butler. He said 70 percent of stations will be forced to move, and estimated costs at $1 million to $3 million per station. APTS asked Congress for the $3 billion fund. “Broadcasters did not request this spectrum auction legislation and should not be expected to bear the costs associated with it,” Butler said. “Public broadcasters are committed to providing universally free service to every corner of this country regardless of a viewer’s ability to pay for such services and we want to ensure that our stations are able to continue to provide those services and they are reimbursed for the reasonable costs associated with repacking.”

House Commerce Committee Chairman Fred Upton, R-Mich., supported the House extenders bill. The spectrum section will expand broadband access and set up a nationwide, interoperable public safety broadband network, he said. CTIA also praised the bill. “The spectrum provisions in the bill will make a substantial downpayment toward alleviating the looming spectrum crisis,” CTIA President Steve Largent said. “At the same time, the bonus depreciation provisions will encourage the deployment of additional wireless infrastructure.”