FCC on Track with Auctions, Order on Call Completion Problems, Clyburn Tells Congress

"We will circulate that item soon,” FCC acting Chairwoman Mignon Clyburn said, referring to an order on rural call completion problems.

"Frankly, action cannot come too soon,” Subcommittee Chairman Tom Udall, D-N.M., told her. He judged FCC action appropriate and said he’s “appalled” at the rural call completion problems in New Mexico. Udall cited difficulties with broadband connectivity and displayed a chart showing that New Mexico ranks 49th among states for Internet access, with 34 percent of individuals lacking Internet access. He also used the 12th anniversary of the Sept. 11 terrorist attacks to tell the FCC to focus on public safety. “The FCC needs to get it right” on auctions and their role in U.S. “fiscal health,” said Subcommittee ranking member Mike Johanns, R-Neb. He described the FCC’s responsibility to make sure the auctions “maximize return for shareholders,” which he clarified meant taxpayers.

Sen. Jerry Moran, R-Kan., pressed commissioners on auction timing. “We will meet that statutory deadline,” Clyburn assured Moran on the H block auction. “The Commission will be ready to auction 10 MHz of H-Block spectrum for mobile broadband in January 2014,” Commissioner Ajit Pai said in prepared testimony (http://fcc.us/15kE8mK). The auction is estimated to raise $1 billion, he said. “A successful H-Block auction will signal to the marketplace that the FCC still has both the capacity and the will to hold major spectrum auctions.” Pai lamented the FCC’s “paltry” and “disappointing” record on auctions in recent years, noting it has raised $72 million since January 2009. “We need to have a free and open auction where market forces determine the outcome,” Pai said, urging action “not by government fiat” that may “distort” who can buy spectrum and how much is available for auction. The auctions are critical for funding FirstNet as well as to yield revenue, Udall said. Johanns noted “some right steps going on with spectrum” at the FCC. He asked Clyburn what would happen beyond the H block, in 12 or 60 months, saying nothing will stall growth like lack of available spectrum: “What should we be planning for?”

The H block auction “will use the traditional types of tools,” Clyburn said. But the FCC also is discussing dynamic spectrum technology, considering all the spectrum held by the Defense Department and looking at spectrum sharing possibilities, she added. “It is literally an all-of-the-above approach.” Commissioner Jessica Rosenworcel advocated a policy “about carrots and not sticks,” giving rewards for efficient spectrum use, which would “develop a pipeline for spectrum.” She described (http://fcc.us/14G0XmC) “promises to keep” in auction funding of FirstNet, which Clyburn said the FCC is “on track” to do. Pai backed freeing up new unlicensed spectrum and streamlining the way the FCC evaluates wireless infrastructure to focus on the deployment of small cells and distributed antenna systems.

Rosenworcel and Pai both aired concerns about the November 2011 USF order. Rosenworcel praised the order for shifting the fund’s focus from voice to an emphasis on broadband and wireless but criticized its “complicated” nature as a potential obstacle to broadband deployment. “If we succeed in making our program more simple over time, we will send better signals to the market,” she said, citing the certainty simplicity would bring. Pai worried the reform’s quantile regression analysis benchmarks are chilling investment and slowing broadband deployment and said the FCC needs to “think long and hard” about how the reform affects rural America. Even the FCC admits the regression analysis reform is inaccurate, Moran said, wondering what the agency will do to help fix “the dynamic it has helped to create.”

"We are in it for the long haul, sir,” replied Clyburn, who voted for the reform under then-Chairman Julius Genachowski. The many orders of reconsideration, which Moran cited, are evidence of FCC talks with companies “to put this fund on a budget” and fill in any broadband gaps, Clyburn said.

Sequestration hit the FCC, Clyburn said. Her prepared testimony (http://fcc.us/1arfxxo) said the FCC began operating under a continuing resolution for FY 2013 and that “we started last year well below our request of $346,782,000” and ended up with $322 million after sequester. She cited difficulty processing applications, outdated equipment and “a negative, cascading impact on all Commission operations -- from spectrum development to auctions,” in the prepared testimony. “The air conditioning system goes off at 6 o'clock,” she said at the hearing. “It’s very painful at 6:01.” The FCC has reduced and modified contracts to cut close to $4 million and reduced the number of personnel awards granted, she said. The air conditioning system in the FCC’s Columbia, Md., facility was installed in 1988 with a 15-year lifespan, said Clyburn. “Due to sequestration, the Commission dramatically reduced spending,” she said. “We're spending less on important programs such as tribal consultations.” With 1,735 staff members, Udall said, the FCC has the fewest employees in decades, and the Senate committee’s 2014 appropriations bill keeps the commission’s budget at $359.3 million, a “modest increase” from the level enacted in 2013. Clyburn said the funding level approved by the Appropriations Committee will have the FCC “heading in the right direction.”

Rosenworcel and Pai said IP trials are needed. One issue “befuddling” Johanns is whether FCC antenna installation review processes will prevent rail companies from installing positive train control throughout the U.S., as the Rail Safety Improvement Act of 2008 mandated to take place by the end of 2015, he said. “Isn’t a train wreck headed their way?” he asked Clyburn. House Republicans raised this concern last month (CD Aug 9 p9). Clyburn told the subcommittee that other agencies are also involved but pledged to follow up with a status report, as Johanns requested. Udall said he agreed with Johanns’ concerns but wanted to coordinate with other committees that may have jurisdiction. In considering the IP transition and other changes, such as E-rate reform and next-generation 911, Johanns praised the “light touch of regulation,” saying, “I can almost guarantee a solution is not more regulation.”