CQ WEEKLY – IN FOCUS
Sept. 17, 2011 – 2:52 p.m.
A Full Spectrum of Revenue Wishes
By Keith Perine, CQ Staff
Congress designed its new deficit reduction committee to overcome legislative stalemates to reduce the deficit, and no target may be more tempting than the billions of dollars that could flow into the Treasury from auctioning licenses for portions of the electromagnetic spectrum.
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Despite warnings of a looming shortage from tech companies and the Federal Communications Commission, lawmakers can’t agree on how to free more of the spectrum to meet demand for broadband and wireless carriers. That’s despite the fact that auctioning spectrum is one of the few ways to increase revenue without running afoul of Republican opposition to anything that smacks of a tax increase.
“Spectrum is like easy money,” said Jeffrey Silva, a telecommunications analyst at Medley Global Advisors.
Last week, President Obama folded a spectrum provision into his jobs package, essentially recycling a proposal he made earlier this year. And last week, the Consumer Electronics Association, a group of equipment makers, Internet service providers and retailers, sent a letter to the deficit committee, urging it to include spectrum auctions in its November proposals, which could bypass the committees of jurisdiction.
Still, lawmakers will have to sort through contentious issues that matter a lot to police and fire officials, local television broadcasters and wireless providers.
Nobody knows for sure exactly how much revenue is at stake — after all, auctions are inherently unpredictable — but the final figure could be significant, depending on how far lawmakers are willing to go in bucking politically powerful constituencies.
The Congressional Budget Office estimated that a spectrum bill by West Virginia Democratic Sen.
Size of the Pie
Wireless carriers and equipment manufacturers say that there is potentially a lot more revenue at stake than either the Obama administration or CBO has calculated. According to an analysis by the consumer electronics group and CTIA, the wireless industry trade group, auctions of 120 MHz of television broadcast spectrum could generate another $36 billion.
The broadcasters are waging an intense lobbying battle against any legislation that would either force them to surrender their licenses, fail to compensate them enough for doing so, or banish stations that stay on the air to a less technologically desirable part of the airwaves.
Police and firefighters have kept up their drumbeat for Congress to hand over a vacant slice of spectrum, known as the D block, along with billions of dollars in new grant money, to help public safety officials build a network to speed communications in emergencies.
So far, top lawmakers on the Senate Commerce panel have staked out a different position on those details than have leading Republicans on the House Energy and Commerce panel. Rockefeller wants to turn over the vacant spectrum, and billions in grants, to public safety.
A Full Spectrum of Revenue Wishes
Republican
Public safety officials are now targeting the new deficit reduction committee as well.
“We don’t want to see spectrum auction policy dealt with without dealing with the D block and the public safety broadband network,” said Sean Kirkendall, a spokesman for the public safety officials.
Broadcasters back Upton’s plan because they fear that the FCC, with congressional blessing, eventually might force them to give up licenses. “Our concern is that the FCC plan will morph into involuntary, because it is impossible for the FCC to meet spectrum reclamation goals without this becoming a government mandate,” said National Association of Broadcasters President Gordon H. Smith, a former Republican senator from Oregon.
For their part, wireless providers are hoping that Congress mandates that the FCC can’t put conditions on the new licenses or cap the amount of spectrum any one company can acquire. The wireless companies contend that unburdened licenses will fetch higher auction bids. So far, Upton is willing to bar the FCC from conditioning the licenses, but Rockefeller isn’t.
So, despite potential for revenue, the deficit committee will have to overcome a substantial partisan divide in order to include spectrum provisions in any proposal it makes. If it doesn’t, the next deadline for lawmakers will be 2012, when the FCC’s existing general authority to auction spectrum licenses is set to expire.
FOR FURTHER READING:
Jobs proposal, p. 1930; spectrum proposals, CQ Weekly, p. 1670; FCC plan, 2010 CQ Weekly, p. 2795; emergency networks, p. 1913. The Rockefeller bill is