Lawmakers Prepare Spectrum Legislation To Transform OMB's Relocation Fund

Sens. Jerry Moran, R-Kan., and Tom Udall, D-N.M., have taken the lead in putting together legislative text in the Senate, Moran confirmed in an interview last week. A Senate staffer for Moran told us the senators are prepared to offer legislation in the relatively near future and want to peg it to the bigger spectrum overhaul package that the staffer ascribed to Senate Commerce Committee Chairman John Thune, R-S.D., and ranking member Bill Nelson, D-Fla.

Congress “needs to update the Spectrum Relocation Fund to provide federal agencies with the right incentives for sharing and improving efficiency and to allow for upfront research and development,” said Reps. Brett Guthrie, R-Ky., and Doris Matsui, D-Calif., co-chairs of the Congressional Spectrum Caucus, in a statement last week after the FCC meeting. “Freeing up more spectrum for innovation and commercial use is a win for American consumers and our wireless economy.” House Communications Subcommittee ranking member Anna Eshoo, D-Calif., raised the need for Spectrum Relocation Fund flexibility as the one possible missing piece among the different measures out there, during a recent House spectrum hearing (see 1510070062).

A mix of House Republicans and Democrats are writing such legislation now, Democratic House staffers said. One Democratic House staffer told us some authors hope the legislative vehicle for a Spectrum Relocation Fund overhaul is the Federal Spectrum Incentive Act (S-887/HR-1641), a high-profile bill from Matsui and Guthrie -- and backed by Eshoo and House Communications Subcommittee Chairman Greg Walden, R-Ore. -- introduced during this and the last Congress promising federal agencies profits from any spectrum they give up to auction.

OMB Advising

The Obama administration has upped its pressure on Congress to tweak the fund, with suggestions expected to influence the tenor of legislation, Hill staffers said. In April, Moran and Udall led a letter to OMB Director Shaun Donovan asking for clarity about the fund’s operations. Other prominent senators, including Thune, Nelson, Sen. Marco Rubio, R-Fla., and Communications Subcommittee Chairman Roger Wicker, R-Miss., signed the letter, too.

OMB’s Donovan warned senators that “current law constrains the Administration’s ability to optimize the use of this Federal spectrum and maximize the amount we can make available for commercial use,” in his seven-page response dated Aug. 31. “Ultimately, these limitations create a chicken-and-egg problem for spectrum planning: identifying bands that might be auctioned by transitioning Federal users out of them without harming agency missions requires intensive research, evaluation, and planning. But SRF funds can only be disbursed to agencies after a band of frequencies has been announced for auction. As a consequence, under current law, OMB is precluded from releasing SRF funds to ‘prove out’ a relocation concept because there would be no guarantee of a subsequent auction.”

Donovan offered seven recommendations: (1) kill the need that funds go only to planning for bands currently slated for auction; (2) change the “eligible Federal entity” definition to allow other agencies that may face costs from relocation of federal entities to receive money; (3) repurpose the fund “to facilitate long-term spectrum efficiency by depositing a modest percentage of proceeds from all spectrum auctions into the SRF, net of relocation or sharing costs incurred for these auctions, in order to create a sustainable replenishment mechanism for research and planning”; (4) let agencies get “pre-auction funding for potential auction,” likely to happen within 10 years rather than five, as at present; (5) speed up the process of relocation “by allowing SRF balances to be transferred to agencies for transition efforts immediately upon completion of an auction”; (6) let the money go toward “systems that increase the efficiency of Federal spectrum usage and accommodate spectrum sharing that otherwise would not be adopted due to cost”; and (7) clarify the FCC’s power to “charge modest licensing, device, or database administration fees” and put those fees into the OMB fund “to facilitate increased unlicensed access to Federal bands” not appropriate for auction.

“We agree with OMB's suggestion to allow Spectrum Relocation Fund money to be used to support more R&D aimed at freeing up spectrum for commercial use, but we do not support OMB's proposal to impose spectrum fees to pay for it,” CTIA Vice President-Government Affairs Jot Carpenter told us of Donovan’s recommendations.

Gateway to Better Auctions?

Tweaking the OMB fund could yield more effective spectrum auctions, one Democratic House staffer argued, thus helping the broader spectrum legislative push underway in the House and Senate. Agencies don't know enough about the effects of moving spectrum bands and possible interference concerns and would benefit from more upfront research and development on relocation with money from the SRF, the staffer said. A few million dollars on research could yield billions of additional dollars from auctions, he said. Many House members became more interested in expanding the fund’s purposing after a recent Communications Subcommittee hearing highlighted the benefits of doing so, the staffer said, saying the administration is working on this concern with various offices. The Senate staffer for Moran said the goal of the legislation, intended as a consensus bill, is to empower OMB when it comes to using the money for spectrum sharing and research and development, tapping many of the suggestions that come from OMB’s letter. The GOP staffer lauded the thoughtfulness of the OMB response and emphasized that it was written in conjunction with NTIA. Staffers acknowledged some bicameral coordination and discussion.

“Unlike some other telecom issues, this should have bipartisan appeal,” Guggenheim Partners analyst Paul Gallant said. “It will probably fly below Wall Street’s radar, but it looks like a cost-effective way to do what everyone wants, which is make government spectrum available for wireless broadband.”

But despite plentiful interest within Congress, any bill may face the same problem as other spectrum legislation from the Congressional Budget Office’s scoring mechanism, one Democratic House staffer said. The measure would likely be registered as a cost only if broader auctions aren't authorized, without any revenue piece attached, the staffer said.

OMB’s Donovan, writing to senators, insisted these tweaks would “continue the momentum” of last year’s AWS-3 auction, which generated tens of billions in revenue: “The resulting actions are estimated to generate additional auction proceeds that significantly exceed the amount of SRF costs that would be incurred,” Donovan said.