Largent Optimistic Congress Will Approve Spectrum Legislation This Year

"All I'm going to say is that at this point in time: CTIA’s number one, two and three highest priorities are getting more spectrum,” Largent said. “We are focused like a laser beam on getting more spectrum. The U.S. will lose its leadership position in the world if carriers don’t get another 500 MHz in 10 years.” Timing is a big concern and CTIA hopes broadcast spectrum will be auctioned within two years, Largent said.

CTIA isn’t sure which version of spectrum legislation will pass, but is “very confident” a bill “will move” before Congress leaves in December, Largent said, suggesting it could be folded into the work of the Joint Select Committee on Deficit Reduction. Largent is “not confident” the super committee will produce a product that reduces the deficit by $1.5 trillion, “but I am totally confident that they'll have something in there on spectrum, because we're helping the process."

The super committee process is new, so it’s unclear what will happen, said CTIA Vice President Jot Carpenter. Even if spectrum is included, there’s no guarantee it will pass since there are many other issues involved, Carpenter said. It’s still possible spectrum legislation will be passed through regular order, he said. “We've told [Congress] we don’t care much what the process is, as long as at the end of the process, there’s additional spectrum coming to market,” he said.

The House Communications Subcommittee plans a markup on spectrum legislation next week (CD Sept 28 p13). Chairman Greg Walden, R-Ore., wants to move a bill to give “options” to Commerce Committee Chairman Fred Upton, R-Mich., and the super committee, Carpenter said. If the super committee doesn’t take it up, then the House still has the option to move the bill through regular order, he said. The GOP and Democratic staffs have meetings regularly and are working “very hard” to reach consensus, Carpenter said. Based on talks Carpenter has had with both sides, he estimated the parties are in about 80 to 85 percent agreement. “There may be a few issues at the end where the staff can’t figure out how to get in agreement, and that’s where you get the members in the room and you try and work it out,” Carpenter said. “If they can’t get agreement, then you take votes."

CTIA likes most of President Barack Obama’s American Jobs Act, but opposes spectrum fees, Carpenter said. Fees collect revenue for the government later, but reduce the amount of money companies pay for auctions up front, he said. Carpenter hopes “a new tax on wireless would be a non-starter” but CTIA is taking it seriously, he said. “There’s a little more meat on the bones in this particular proposal than there has been in the past,” he said. CTIA officials are particularly concerned about a proposal to impose fees retroactively.

Carriers would bid less for spectrum licensees if they know they'd have to pay “additional fees on the backend,” Largent said. “It doesn’t make sense.” Largent also said one incentive auction probably won’t be enough to “tee up all the spectrum” the industry needs. “Either you're going to hold an auction and it’s going to be so late and our industry is going to so desperately need the spectrum that you're sort of defeating yourself anyway,” he said. “Or you'll hold it so early and have so much spectrum available that you drive the price.” He said the best solution would be to hold two or three auctions over 10 years.

CTIA Vice President Chris Guttman-McCabe said he’s not concerned about Congress imposing too-specific of rules for auction design as part of legislation. “The 700 [MHz auction] as a whole is an example of how not to hold an auction,” he said. “The D-block didn’t get auctioned. The C-block had two bidders but only one that truly wanted to win the license. … Then you had the A and the B blocks and the A block had interference concerns.” Largent said “we've seen the FCC play games with auctions and we've seen what the results are."

Public safety officials have pointed to the wireless industry’s network woes following the Virginia earthquake as evidence that they need to control the 700 MHz D-block. Largent said it’s technically impossible for wireless networks to serve a spike in demand like was felt during the earthquake. Networks saw a 400 to 600 percent demand spike after the earthquake, he said. “The truth is, we would never be able to build enough lanes on the highway, regardless of how much spectrum we have, to handle a 400 to 600 percent increase of traffic on a given moment,” Largent said. That spike in demand “could never be met with all the spectrum in the world,” he said. “It did highlight the fact that we need more spectrum."

Largent has “more confidence in our networks than maybe public safety does,” he said. Commercial networks “are pretty darn good, and when they do go down they're able to come back very, very quickly,” he said. “But public safety has its own needs and wishes, and I wish them well on their quest” to get the D-block, he said. CTIA members differ on whether the D-block should be auctioned or reallocated to public safety, so the association is not taking a position, Guttman-McCabe said. But there is consensus among members that public safety needs money to build the network, he said. CTIA hopes disagreement over the D-block doesn’t hold up spectrum legislation since there’s much more spectrum at stake, he said.

Asked about broadcaster concerns about voluntary incentive auctions, Guttman-McCabe said CTIA wants broadcasters “to be comfortable, because we want broadcasters to participate” in the auctions. “This shouldn’t have to be a life-and-death battle because that’s not what’s being contemplated.” Broadcast spectrum is important, but it’s only 120 MHz of the 500 MHz sought by carriers, he said.

CTIA officials also took questions on a few non-Hill issues. USF reform “is a very big issue,” Guttman-McCabe said. “We believe that here is a vehicle out there that can help get us to a solution on intercarrier comp and USF and what we've suggested are a few changes to it, the key one being a significantly larger Mobility Fund,” he said. “We think that that fits exactly in line with the other policy issues in front of the commission -- greater deployment, greater adoption of wireless broadband.” Guttman-McCabe noted comments by Commissioner Michael Copps that he was able to use his wireless device while on a trip on the Yangtze River in China. “We're not going to get broadband service on our Yangtze rivers if the size of the Mobility Fund is $300 million,” he said. He said he hopes the FCC will be able to vote out an order in October.

"When I signed on with CTIA in August 2003, intercarrier comp and USF was one of the issues that I inherited then, and we're just now coming to a point where I think something is going to happen,” Largent said.

Largent also said he’s “really optimistic” that the NTIA and FCC will conclude that the 1755-1780 MHz band should be reallocated for wireless broadband. “My hope is that as the auctions come along that that would be the first spectrum to be auctioned,” he said. Several of the spectrum bills, including the jobs bill, advocate that the band be reallocated.

Guttman-McCabe questioned the conclusions in a Citigroup report released this week that found there’s no spectrum shortage in the U.S. (CD Sept 27 p10). The study was based on 2010 numbers, he noted. “They suggest in the study that there’s no AWS being used, which isn’t factually correct,” he said. “The paper is based on, as far as we can see, no 700 MHz being used even though Verizon has deployed their C-block to a whole bunch of markets.” Guttman-McCabe said he was surprised when he saw the report: “I don’t want to have to go on the attack against Citigroup. I'm sure these guys had every intention of getting it right. … I just don’t agree with their analysis."

Meanwhile, CTIA expects the House will soon pass the Wireless Tax Fairness Act by Rep. Zoe Lofgren, D-Calif., Carpenter said. The bill (HR-1002), which has wide bipartisan support in the House, would impose a five-year moratorium on new state and local discriminatory taxes on wireless. Meanwhile in the Senate, Sen. Ron Wyden, D-Ore., Olympia Snowe, R-Maine, and John Thune, R-S.D., have asked (CD Sept 28 p13) for a Finance Committee hearing on the Senate companion, S-543. “If we can get the [Lofgren] bill through the House this fall [and] get a hearing scheduled in the Senate, I think we'll be in a nice position with a fairly long runway in front of us next year in the Senate to finally get this done. Without a moratorium, state and local governments will continue to look at wireless as a potential revenue source,” said CTIA Vice President Jamie Hastings.