A Tuesday Senate Appropriations Financial Services Subcommittee hearing on the FCC FY 2018 budget focused largely on the direction of the commission under Chairman Ajit Pai, with subcommittee Republicans highlighting policy issues Pai championed. Democrats raised concerns with the future of 2015 net neutrality rules and Congress' rollback of ISP privacy rules. President Donald Trump's administration proposed last month that the FCC budget be cut by $18 million, to $322 million, after years of the agency maintaining $340 million in annual funding. The FCC's budget justification document noted a planned reduction of more than 100 employees (see 1705230041).
The FCC’s FY 2018 budget request includes plans for an additional $6 billion spectrum auction, to take place between 2025 and 2027, but offers no more details. Industry lawyers, including former FCC and Capitol Hill officials, said at this stage, the FCC goal may be mostly aspirational and government doesn’t appear to be focused on a particular band. The budget document proposes to extend FCC auction authority to 2027, from a current expiration of 2025. “The Budget proposes to require the auction of additional spectrum by 2027 and further extend the FCC’s auction authority solely to allow this auction to proceed,” it said.
The Trump administration FY 2018 budget request would cut FCC funding by about $18 million. The White House unveiled the documents Tuesday, and several stakeholders said Congress won't take up the proposal as drafted. The funding measure comported with a previous outline and moved to nix funding for the CPB, including a small portion of funding as part of a winding-down process.
Broadcasters are paying a huge price for supposed demand for low-band spectrum that never materialized in the TV incentive auction, said Preston Padden, who advised broadcasters in the auction, at a Duke Law School conference Friday. Padden said the auction was inefficient on several levels, with 42 MHz of “pristine” 600 MHz going unsold.
The Congressional Arts Caucus' co-chairs are preparing a letter to FCC Chairman Pai and the other commissioners that will urge the commission “to retain the ability of wireless microphones in the performing arts to register in the database” to protect against interference. The two co-chairs are Reps. Louise Slaughter, D-N.Y., and Leonard Lance, R-N.J., vice chairman of the Communications Subcommittee. “As the Commission reviews the results of the spectrum auctions, we write to stress the importance of wireless microphones to the performing arts which rely on this efficient and reliable technology,” they said in a draft of the letter, citing commission action in 2014 ruling “that performing arts entities regularly using 50 or more wireless devices would be eligible to apply for a Part 74 license and would have access to a database which protects against interference,” a “move in the right direction and [that] protects some large events and performances against interference from White Space devices.” But the FCC’s choice to leave out performing arts entities utilizing fewer than 50 devices regularly would “leave major not-for-profit regional theatres, and our nation’s symphony orchestras, opera companies, dance companies, presenting organizations and educational entities without interference protection against White Space devices.” The agency should “develop rules which preserve the quality and integrity of wireless microphones used in the performing arts,” said the draft. The deadline for other lawmakers to sign the letter is Friday, and a House aide told us the current hope is to send the letter to the FCC that day.
A new spectrum auction may be wrapped into the bigger infrastructure proposal that Congress and the White House are putting together. President Donald Trump is familiar with the auctions and brought them up in the context of his $1 trillion infrastructure plan, according to a report in The Wall Street Journal. House Republicans plan to put together a set of broadband proposals with that package in mind, a key staffer said.
“The jury is still out” on whether the TV incentive auction will be considered a success, but more incentive auctions are likely on the way regardless of the final numbers, FCC Commissioner Mike O’Rielly said Tuesday in remarks at a Politico Live 5G event. O’Rielly predicted that Congress will look to do another auction in the “near future” to get more budget offsets. Spectrum auctions are one of the easiest places for Congress to look for funds, he said. “In every budget negotiation that I was part of, spectrum was part of the conversation,” said O’Rielly, a former Hill staffer.
The Senate Communications Subcommittee scheduled a spectrum hearing for Thursday, as expected earlier in February (see 1702100051). It said Friday the hearing will be at 9:30 a.m. in Dirksen G50 with the following witnesses: CTIA Vice President Scott Bergmann; Recon Analytics analyst Roger Entner; Microsoft Deputy General Counsel Dave Heiner; Raycom Media President Pat LaPlatney; and Satellite Industry Association President Tom Stroup. The hearing will "explore the future of spectrum policy and how wireless technology benefits consumers and the economy," the committee said. "It will also examine evolving market demand for licensed and unlicensed spectrum and the Federal Communications Commission’s recent spectrum auctions.”
Rising prices in some spectrum auctions worldwide are leading to “more expensive, lower quality mobile broadband services,” the GSMA said in a report released Wednesday, “Effective Spectrum Pricing.” The average final prices paid in auctions increased 250 percent from 2008 to 2016, “with the most exorbitant price tags often influenced by policy decisions,” the GSMA said. “The era of judging the success of auctions based on headline-generating revenue figures is over,” said Brett Tarnutzer, GSMA head of spectrum and a former FCC official, in a news release. “The damage done to consumers -- and the wider digital economy -- by policies that artificially inflate spectrum prices has been too great. While auctions remain an effective means of awarding spectrum, regulators should adopt spectrum policies that focus on maximising the benefits for society, rather than simply driving up the cost of spectrum.”
Small cable operators and groups opposed to media consolidation on one side, and media allies on the other disagreed whether the FCC should reconsider newspaper/broadcast cross-ownership and other media-holdings restrictions as NAB wants. The association and Nexstar petitioned for reconsideration, which the American Cable Association opposed (see 1701250054). About a dozen groups including unions and led by the United Church of Christ opposed such deregulation, but it was backed by Cox Media Group and the News Media Alliance (NMA). Filings were posted Tuesday and Wednesday in docket 14-50 and the subject of an NMA news release Thursday. The UCC, Communications Workers of America, National Association of Broadcast Employees and Technicians, Prometheus Radio Project and others said broadcasters raised no new facts not already considered by the regulator. "The US Court of Appeals, which has retained jurisdiction over the remand in Prometheus III [the court case is named after that group] directed the Commission to assess the impact of any repeal or modification of an ownership rule on opportunities for station ownership by women and minorities. The Commission has conducted no such assessment" here, said the consolidation foes. "Neither petition mentions, much less challenges, the Commission’s threshold determination that it is premature to change the media ownership rules before it has had a chance to evaluate the 'dramatic effect' that spectrum auctions will have on the broadcast marketplace." Comments related to FCC plans for shuffling TV stations after the incentive auction were the subject of separate filings posted this week (see 1701260033). Cox Media sees the rules retaining long-time hurdles to one company owning a broadcaster and daily paper in the same market as a "veritable museum of the way things used to be." When the 1996 Telecom Act mandated periodic review of media ownership rules, Congress didn't "expect the endless cycle of delay, court appeals, and regulatory inertia that have characterized the past two decades of biennial and then quadrennial reviews," said the broadcaster. Nix "this analog-era rule once and for all," wrote NMA. "In the remarkable seven years it took the FCC to conduct its 2014 quadrennial review, the Commission compiled a record clearly demonstrating that the cross-ownership ban is a musty anachronism that undermines the very values for which it was promulgated. Yet, inexplicably, the Commission concluded its review in August 2016 by deciding to retain the rule in essentially the same form in which it was adopted in 1975."