Spectrum Questions Linger as Obama Reveals Fiscal 2012 Budget

The spectrum revenue estimate presumes “a certain amount of participation” by broadcasters, and takes into account broadcasters’ getting some proceeds of voluntary auctions, U.S. Chief Technology Officer Aneesh Chopra told reporters after a budget briefing by the Office of Science and Technology Policy. The White House thinks there’s bipartisan consensus in Congress for giving the FCC authority to do incentive auctions, and it isn’t telling the commission how to structure them, Chopra said.

Democrats and Republicans in Congress will likely “demand more detailed information about the spectrum proposals outlined in President Obama’s FY 2012 Budget,” said David Taylor, managing partner of Capitol Solutions. “$27.8 billion is a big number, even in Washington.” The budget doesn’t say what spectrum the FCC would auction or when, nor does it say what percentage of auction proceeds would go to spectrum owners, said MF Global analyst Paul Gallant. Getting Congress to pass legislation authorizing voluntary auctions “will be a close call, but we give the edge to passage because of its deficit-reducing potential,” he said.

Obama proposed using $10.7 billion from spectrum auctions to build a national public safety network. The figure includes giving the $3.2 billion D-block to public safety. The budget set aside $5 billion to expand wireless broadband in rural America, an investment it said will “complement” the FCC’s “efforts to reorient its Universal Service Fund towards broadband support.” And Obama proposed using $9.6 billion over 10 years to reduce the federal deficit.

The budget would give $3 billion in spectrum receipts to a Wireless Innovation Fund to improve research and development of wireless technologies and applications. Over five years, more than $1 billion from the fund will go to the National Science Foundation “for targeted research on experimental wireless technology testbeds, more flexible and efficient use of the radio spectrum, and cyber-physical systems such as wireless sensor networks for smart buildings, roads, and bridges,” the budget said. About $500 million of that amount would go to the National Institute of Standards and Technology to help get public safety priority access and preemption rules that don’t apply to commercial networks now, Chopra said at the briefing.

Chopra acknowledged that reallocating the D-block could be difficult, since current law requires the FCC to auction the spectrum. If the law isn’t changed, the commission will auction the D-block and “we will have to achieve a secondary … lesser alternative,” he told reporters. Chopra said he believes Congress will consider the 10th anniversary of 9/11 an important milestone for raising the question, “Have we completed the job in preparing our infrastructure for the future?” The White House hasn’t endorsed a particular public safety bill and wants to work with “Congress at large,” Chopra said. Obama’s plan adds elements not in any bill, like the Wireless Innovation Fund, he added.

Also in the budget is $354.2 million in proposed funding for the FCC. That’s $1.7 million more than the commission sought for fiscal 2011. The request includes money for carrying out the National Broadband Plan, overhauling FCC data systems and processes, strengthening Inspector General audits and investigations, and supporting the FCC’s public safety and cybersecurity roles, the commission said Monday. The request also provides money to cover “mandatory inflationary increases for contractual services,” the FCC said.

The budget proposes an FCC spectrum license user fee and estimates projected revenue to total almost $4.8 billion for 2012-2021. The figure was the same in last year’s budget proposal. Obama again proposed cutting the FCC’s Telecommunications Development Fund, a program that has traditionally had the strong support of important Democratic constituencies including the Congressional Black Caucus. The program, created by the Telecommunications Act of 1996, is funded by interest earnings from deposits on spectrum auctions. Obama also again proposed cutting the $20 million NTIA Public Telecommunications Facilities Grant program.

The budget would increase cybersecurity spending nearly 35 percent, said Philip Coyle, OSTP’s associate director for national security and international affairs. The budget would provide $2.3 billion to improve cybersecurity capabilities at the Defense Department and to increase “joint planning efforts” between DoD and the Homeland Security Department. The budget proposes $459 million for the National Cyber Security Division of the Homeland Security Department and $119 million for the U.S. Cyber Command. The budget proposes $97 million to increase R&D and improve education efforts, the security of online transactions education efforts, and network security at “small Federal agencies.”

The White House hopes most of the science and technology budget survives the congressional budget process, said OSTP Director John Holgren at the office’s budget briefing. “We think this is a budget that is both responsible and … essential.” Cuts to science and technology proposed by House Republicans in their proposed continuing resolution “would be very damaging,” Holgren said. Not even Republicans will vote for the cuts when they realize what they mean, he added.

In his budget message, Obama called high-speed Internet one of the “seeds of economic growth in the 21st Century.” U.S. mobile networks and high-speed Internet access “have not kept pace with some of our rivals, putting America’s businesses and our people at a competitive disadvantage.” Only 63 percent of American households subscribe to broadband, whereas 95 percent subscribe in South Korea and 77 percent subscribe in the Netherlands, the budget notes.

"NAB has no quarrel with incentive auctions that are truly voluntary,” said President Gordon Smith. “We will oppose government-mandated digital TV service degradations that would result in a loss of service for the tens of millions of viewers who watch free and local broadcasting every day. NAB also opposes new spectrum taxes that could imperil promises made to consumers during the DTV transition."

The Obama budget is a win for tech innovators, said Grant Seiffert, president of the Telecommunications Industry Association. “It is critical to our industry to see the continued commitment to ensuring that America regains and retains its lead and competitive edge making it the enduring home for visionary technologies and businesses."

GOP Wireless Cuts

A $52 million cut to the Justice Department’s narrowband wireless system for law enforcement, proposed last week in House Republicans’ continuing resolution (CD Feb 10 p13), raised the ire of Judiciary Committee Ranking Member John Conyers, D-Mich. The cut, from Obama’s proposed funding for 2011, would set the program’s funding at $136.1 million.

"This program provides critical support to law enforcement officers and agents in major metropolitan areas across the Nation in responding to terrorist attacks or other catastrophic incidents,” Conyers’ office said over the weekend. “The Republican funding cut will reduce by more than half the money used by the program to eliminate interoperability issues with wireless communications, thereby jeopardizing officer and public safety and the safety of millions of Americans."

The House GOP resolution would freeze the FCC budget at fiscal 2010 levels. It would provide $40.6 million for the NTIA, the same amount that the agency has under the current continuing resolution expiring March 4. Like Obama’s budget, Republicans would cut funding for NTIA’s public telecommunications facilities grant program. The GOP budget sets aside $30 million for Agriculture Department broadband, distance learning and telemedicine programs. It would rescind $15 million from unobligated funds available for broadband loans under the Rural Electrification Act. It also would take back $500 million appropriated to the Social Security Administration in fiscal 2010 and previous years for investment in IT and telecom hardware and software infrastructure.