Spectrum Incentives, Mandates, Leasing at Core of Administration Critique of Original Mobile Now

The final legislation (S-2555), reduced in scope after these negotiations, died in Congress this month. Senate Commerce Committee Chairman John Thune, R-S.D., told us he wants to bring it back next year, possibly in stronger form as originally offered (see 1612160062). The initial draft circulated Nov. 6, 2015, was a culmination of many bipartisan Hill spectrum proposals, expected to return as stand-alone bills or part of a new Mobile Now. Three records show the substantive negotiation and how Mobile Now evolved from the aggressive package including mandates to the reduced version passing NTIA muster: the administration’s initial harsh review in November 2015; Thune staff’s revised version emailed Nov. 20 and Dec. 8 of that year; and NTIA’s eventual feedback Jan. 25.

In any negotiations involving federal spectrum, “there are a lot of hang-ups about core government use functions,” said Public Knowledge Senior Policy Counsel Phillip Berenbroick. “Some of the critique of the legislation had focused on the need to ensure the agencies weren’t pushed off of their spectrum.”

The original Mobile Now proposed increasing the 30 MHz that would be cleared by the 2015 budget law to 50 MHz. “Many of the spectrum provisions in the bill are unnecessary and regressive” since the passage of the 2015 budget deal’s Spectrum Pipeline Act, the administration said, expressing its existing need to plan for identifying 30 MHz for possible auction. “Mandating additional spectrum auctions, as the MOBILE NOW Act does, before planning efforts have even begun, and accelerating the timetable for auction is likely to result in less successful auctions and fewer revenues,” said the administration. “Additional auctions also put at great risk Federal missions that are also critical to our nation, including the ability to properly train and equip the men and women of our military to effectively accomplish their mission.” Operations involving aerial telemetry, combat training and homeland defense radar systems “must be acknowledged and accommodated,” it said. “The legislation wrongly assumes that many Federal operations could be discontinued without impact, setting unreasonable expectations about future spectrum availability.” The focus should be on “shared access,” not “prioritizing agency discontinuance,” said the administration: The draft “undermines the intense and fruitful collaboration already taking place between industry and Federal agencies like [DOD] to support commercial access to spectrum.”

Commerce Committee GOP telecom policy director David Quinalty sought to compromise and suggested changing the spectrum mandate to 40 MHz rather than 50 MHz. “Based on conversations we have had with folks within and outside the Administration, 40 MHz may be a more reasonable target,” Quinalty told NTIA Nov. 20, 2015. “30 MHz auctioned alone may not generate sufficient revenue to cover the reallocation costs, meaning time and money could be wasted over the next decade working toward that number.” He agreed to strike all references to discontinuance, calling it a “low-priority provision” not "worth causing friction over.”

The administration didn’t budge on allowing any spectrum mandate beyond the Pipeline Act’s 30 MHz: “Recommend deleting section entirely,” NTIA told Senate Commerce in its Jan. 25 response, saying the administration “is committed to implementing the Spectrum Pipeline Act as expeditiously as possible.” The final legislation didn’t include such a mandate. It “seems odd they would still amend the Pipeline Act when they took out the more significant portions of the provision that were a problem,” NTIA Office of Spectrum Management Associate Administrator Paige Atkins said in an internal email Feb. 11, the day the bill was formally introduced.

If Republicans had “played hardball,” President Barack Obama would have likely invoked a veto, said Recon Analytics analyst Roger Entner of negotiations, accepting the legislative concessions despite his own displeasure with the reduced outcome. “It would have been ugly,” he said. “You can see that Team Thune was clearly trying.”

'Unnecessary Risks'

The original Mobile Now proposed federal agencies could receive up to 25 percent of revenue from any spectrum they relinquish for auction -- a model based on earlier legislation that outlined a figure of 1 percent.

But the incentive provisions “present unnecessary risks,” the administration warned, saying the draft “overlooks the extent to which statutory protections for Federal agencies address adequate time and financial resources upfront as well as other statutory safeguards, such as the need to consider comparable replacement spectrum.” The administration also said “the share of auction proceeds is an unknown variable, compared to the guaranteed reimbursement” of the Spectrum Relocation Fund, within OMB. “It cannot be assumed that additional money will enable acceleration of transitions in all cases, particularly if other factors are not addressed in tandem (e.g., other bands to relocate to ‘faster’). In addition, agencies may still need time to develop technological capabilities to expedite transitions.”

Quinalty acknowledged incentives are a “new, wholly optional tool” for the government’s spectrum toolbox. “While we still see much value in this proposal, we do recognize that this is a novel idea,” he said. “DOD was concerned that this was an unproven approach and suggested further study.” He said he was open to changing language to such a study proposal or “dropping it” from Mobile Now “since we are simply trying to empower and benefit agencies like DOD, not create new burdens for them.”

The administration accepted the report idea and on Jan. 25, recommended Senate Commerce change the deadline from one year to 18 months “to ensure sufficient time to provide a robust report” and to recommend that the commerce secretary “consult with affected agencies in the development of the report” and provide copies to committees overseeing them.

Leasing Pushback

The Obama administration slammed the original Mobile Now’s federal spectrum leasing provisions, saying they would disruptively postulate a property right in federal spectrum authorization “that does not exist today and does not align with the way federal spectrum is currently managed,” and the proposal could incentivize "an agency to hold onto an authorization for longer than is necessary, leasing the spectrum to keep it for potential future use” and thus complicating “whole-of-government efforts to repurpose spectrum,” federal officials told senators. “These provisions would also reduce spectrum efficiency by further stratifying the spectrum map instead of creating uniform allocations for federal, non-federal, and shared use. This is counter to the presumed spectrum goals of the bill.” The administration slammed “needless duplication and delay” in forcing NTIA to learn auction processes the FCC already has. Those leasing sections were “already cut” by the Nov. 13, 2015, second draft, Quinalty reassured NTIA.

The administration critique of leasing “really pushes back against” the 2012 spectrum report from the President's Council of Advisors on Science and Technology (PCAST), said Summit Ridge Group President Armand Musey in an interview. “It seems like a really big policy shift. … It’s like the whole PCAST report was thrown out. To take that out, it kind of blew my mind.” That stance would make giving up federal spectrum much harder, Musey said. In a leasing scenario, ownership is “less important in general” while allowing more spectrum to be used, but “stopping leasing puts a huge roadblock to it happening any time soon,” he said, citing time required for auctioning.

The leasing negotiation was among “yellow flags that went up for me,” agreed Berenbroick, who was otherwise generally unsurprised by the records and engaged with the Hill at the time. The thought process behind federal spectrum leasing previously had amounted to an “elegant solution,” he said of his prior understanding of administration positions.

The administration also questioned language calling for an opportunity cost assessment of federal spectrum, saying “it is inappropriate and unwise to force assignment” on federal missions involving national defense: “Requiring NTIA to develop a framework to determine the economic opportunity cost for Federal spectrum assignments based on commercial mobile wireless auction revenue is inappropriate. Wireless broadband is not always the ‘best use’ of spectrum, and repurposing Federal bands will have significant consequences to national security, public safety, weather observations, and many other core government missions.” Such an “unnecessary and constant” mandate “would create unintended consequences of putting mid- to long-term investments in military and other Federal capabilities and missions at risk,” the administration said. It blasted the “unacceptable risks” placed on federal spectrum users below 6 GHz, citing military radar, telemetry, wireless communications, GPS, unmanned aerial systems and satellite downlinks. “As most Federal bands are heavily shared, it is difficult and ultimately of questionable value for a Federal entity to make the determination of opportunity cost for each band it uses as would be required. On its face, this would not be implementable for safety of life and national security systems.”

Quinalty accepted these provisions’ loss by Nov. 20, 2015. While Sen. Marco Rubio, R-Fla., “and his cosponsors will be disappointed to see this provision from his bill fall out, and despite Commerce having already passed a similar provision in 2011, this is another low-priority provision for us,” Quinalty told NTIA.

Provision Haggling

In November 2015, the administration questioned how Mobile Now codified the administration’s goal to free up 500 MHz -- it “could lead to less overall spectrum becoming available for commercial use by mandating [NTIA] delay well-established processes in favor of examining other, more speculative bands that are unlikely to be feasible for auctioning by 2020.” The bill “’moves the goalposts,’ making the 500 MHz goal difficult if not impossible to achieve,” the administration said, citing the preclusion of the “5 GHz bands that are being considered for sharing with unlicensed devices -- with considerable industry support -- from counting towards that goal.”

Quinalty told NTIA Nov. 20 that Senate Commerce was open to bidirectional sharing language. “We know that DOD is interested in having the flexibility to access commercial bands in certain circumstances,” Quinalty told NTIA. Senators could add language “that would codify that such bi-directional sharing would be allowed, with participation by commercial licensees on a voluntary basis,” he wrote. In its Jan. 25 feedback, the administration told the committee it recommended it should “add a separate reporting requirement on bidirectional sharing” requiring the FCC, collaborating with NTIA, produce a report with recommendations. “Such a report shall consider how to address the regulatory certainty that commercial spectrum users and Federal agencies need to make longer-term investment decisions for shared access to be viable,” the administration said.

Quinalty also agreed Nov. 20, 2015, to strike the 3.7 GHz notice of inquiry, labeling it another “low-priority provision not worth causing friction over.” He sought to maintain the language identifying 100 MHz of spectrum between 3.1 and 3.55 GHz for sharing with unlicensed operations, part of the Nov. 13 substitute draft. “Putting more provisions in the bill for unlicensed spectrum is a major priority for Commerce Democrats, left-of-center groups, tech companies, and the cable industry,” Quinalty argued, suggesting he was “very open” to discussion on structuring such a report if there are problems. He also told officials Dec. 8 the Promoting Unlicensed Spectrum Act (S-2278) from Sen. Brian Schatz, D-Hawaii, “is likely to be considered” for inclusion and asked for feedback on that bill. “Changes to S.2278 will certainly need to be made before it could be considered,” Quinalty said. Emails showed Thune’s office circulating a document that November of that year “trying to persuade people that the bill does help unlicensed,” which “could be in reaction to the Schatz bill that he plans to put forward as an amendment or the unlicensed industry more broadly,” NTIA congressional liaison Kate Geldaker noted in an email to colleagues.

By Dec. 8, 2015, Quinalty was emailing NTIA, White House and Office of Management and Budget officials to talk about a “middle ground” on the sections, saying the latest changes “make it clear” there’s no mandate to clear or share any 3 GHz or millimeter wave spectrum and to “more explicitly take into account Federal agency equities and to avoid pre-judging the outcome of the report and NPRM” it then demanded. “It is important for us that the government continue its work to examine these bands for possible future consideration of potential sharing/clearing opportunities. Indeed, with respect to the mmWave frequencies, this is exactly what WRC-15 adopted, at the U.S. government’s urging -- to study these bands for possible consideration at WRC-19 of making these bands available for commercial wireless services.”

Quinalty also defended inclusion of language from the Private Spectrum Relocation Funding Act (S-2227) of Sens. Roger Wicker, R-Miss., and Joe Manchin, D-W.Va. Committee staff wants “to ensure sufficient safeguards to ensure fiscally responsible behavior by all parties involved” but also don't want “an overly complex process that is burdensome to implement,” he said. He asked the administration whether there’s “a simpler approach to allowing payments to accelerate transitions that the Administration would suggest we explore,” such as killing the technical panel’s role and “instead relying upon some sort of OMB/NTIA certification.”

The White House suggested killing Mobile Now’s inclusion of a 150-day shot clock for facilities deployment on federal land and replacing it with a “performance target,” Quinalty noted in his Dec. 8 missive. But he pressed the administration on what that meant: “Is there an analogous requirement currently in statute or regulation that we could use as a model or example for considering a performance target in this context?” In its Jan. 25 recommendations, the administration recommended “performance requirements similar to the FAST [Fixing America's Surface Transportation] Act, such as model schedules for action that are less than the current average response time and reporting requirements for agencies that fail to meet these schedules.” NTIA kept pushing back on certain language. It recommended “deleting entirely” the section on a National Broadband Facilities Asset Database, in the Jan. 25 administration feedback: “This would require significant time and resources from Federal agencies but would have limited impact. In practice, broadband providers have not made robust use of previous attempts to create similar databases.” NTIA referred GOP staffer Greg Orlando -- who left the committee this month for a position at BakerHostetler -- to the White House and OMB “as they are more appropriate sources of feedback” on the shot clock and broadband facilities database critiques. Language creating such a database was retained in Mobile Now’s final version.

Despite a greatly transformed bill, the final result “was very smart” and not as prescriptive on spectrum bands, deferring more to the agencies such as the FCC and NTIA in a key Hill-administration “productive conclusion,” said Berenbroick. “That’s a positive, healthy outcome for democracy and for spectrum policy.”

The changes don't make the legislation any less necessary, FCC Commissioner Mignon Clyburn said this week. Mobile Now still “directs NTIA and the FCC to make available at least 255 megahertz of federal and non-federal spectrum below 6000 megahertz for wireless broadband use, including 100 megahertz for unlicensed use, and 100 megahertz for exclusive commercial licensed use,” said her draft 2020 action plan, released for comment Monday and urging its passage (see 1612190047). “The Act proposes common sense solutions that would streamline deployment of broadband infrastructure.”

Editor's Note: This is the second part of a Communications Daily series examining how the executive branch negotiated with Congress over spectrum proposals. The first showed NTIA officials tracking Mobile Now in intense detail from its inception in 2015 to well past its markup -- in weakened form, mollifying initial concerns displayed here -- in March. Forthcoming coverage will focus on how dynamics may change in 2017.