Capitol Hill spectrum negotiators may be closing in on consensus as Congress nears a vote on the payroll tax cut extension that may include spectrum auctions as a “pay for,” Hill officials and industry lobbyists said Tuesday. House Republicans floated a proposal this week to strip all offsets from the payroll tax bill, but lobbyists said spectrum is still likely to make the final cut after the bill moves through the Senate. “Staff negotiations are ongoing and good progress is being made,” a House Commerce Committee spokeswoman said of the spectrum talks. “Everyone agrees about the important role this legislation can play in supporting job creation and producing savings for taxpayers."
A group of 100 companies, associations and nonprofits urged unlicensed use of spectrum be made available from voluntary incentive auctions. The House-Senate conference working on the payroll tax extension is considering using the auctions to pay for its bill due at the end of the month. “As Congress considers [spectrum] legislation, it must ensure the [FCC] maintains its flexibility as an expert independent agency to make more spectrum available for a diversity of uses and users,” the group said. “It is particularly critical that some of the ‘beachfront’ spectrum located in the television bands remain available for unlicensed services, which are driving innovation, promoting rural broadband deployment, and creating new services in the wireless ecosystem.” The letter’s more-than-100 signers included Google, NCTA, Broadcom, Public Knowledge and the National Telecommunications Cooperative Association. In a separate letter to conferees Monday, Public Knowledge, Media Access Project, New America Foundation and 15 other public interest groups railed against restrictions on unlicensed and other areas under considerations. “The provisions that restrict the application of pro-consumer and pro-competition conditions on spectrum auctions would be a massive step backwards in the evolution of our Nation’s wireless policy,” they said. Besides the unlicensed issue, the groups objected to language in the House bill scaling back the FCC’s net neutrality powers and preventing the FCC from using spectrum screens.
Sen. Maria Cantwell, D-Wash., objected the House spectrum bill, in a letter Friday to conferees on the payroll tax cut extension. Congress should allow the FCC to set aside some spectrum for unlicensed use, she said. Congress should not limit the agency’s authority to design and manage spectrum auctions, she said. Limits on that authority in the House bill would hurt competition and “benefit only the biggest incumbent providers with the deepest pockets,” she said. The House bill inappropriately narrows the definition of “public safety,” limiting which local agencies can use the proposed national network, she said. Cantwell also objected to the bill’s requirement that public safety give back 700 MHz narrowband spectrum, because she said many public safety organizations have built out or are building networks with that spectrum. “Communities that have invested millions in local taxes for their 700 MHz public safety networks will have stranded assets and limited alternatives to migrate to for public safety grade voice, without the benefit of any federal compensation,” Cantwell said. Also Friday, T-Mobile condemned auction eligibility language in the House bill. “Our concern is the auction eligibility language now being considered by Congress will give a significant advantage to the largest companies with the deepest pockets, who will buy any and all available spectrum to the exclusion of competition,” said T-Mobile Vice President Kathleen Ham in a blog post (http://xrl.us/bmrobz). “We all want free markets,” she said. “But the reality is that spectrum supply is not a normal free market since the US Government uniquely controls this fundamental input to our business. It is incumbent upon the government then to ensure that when and if it makes this resource available it does so fairly, ensuring all who want to compete have that opportunity."
Competitors of the top two wireless carriers protested the House spectrum bill for limiting the FCC’s ability to make rules on auction eligibility. Sprint Nextel, T-Mobile, the Rural Cellular Association and five others sent a letter Wednesday to conferees on the House-Senate conference for the payroll tax cut extension. They urged conferees to reject Section 4105 of the House bill (HR-3630) banning the FCC from considering existing spectrum holdings in determining a carrier’s participation in auctions. “The proposed provision would substantially limit the FCC’s ability to promote competition and a competitive wireless marketplace for consumers throughout America,” the competitive carriers said. “It would facilitate spectrum warehousing, inefficient use of scarce spectrum resources, and reduce spectrum auction revenues to the U.S. Treasury.” The provision benefits only AT&T and Verizon Wireless, they said. “Stripping the FCC of its auction design discretion would disserve the public interest by permitting unchecked participation by the two largest, best-funded wireless carriers in future spectrum auctions,” they said. “That would discourage smaller competitors from participating in future auctions thereby reducing auction revenues and limiting wireless competition and innovation.” AT&T Senior Executive Vice President Jim Cicconi disagreed with his company’s rivals. “Any qualified carrier, including those on today’s letter, should have a chance to bid on any spectrum available in an auction,” he said. “This group, however, wants the FCC to stack the deck in its favor. … These companies should be prepared to compete in a fair and open auction, and should stop seeking a rigged spectrum auction that would harm consumers and cost the Treasury billions."
Talk of incentive spectrum auctions in Washington is overblown, Sinclair CEO David Smith said during the company’s Q4 earnings call Wednesday. “Based on what I've seen on the Hill, it’s conceivable there will be no auction any time in the near future,” Smith said in response to an analyst’s question about spectrum bills. “I'm not sure it ever gets into any kind of final legislation because there are fundamental disagreements between the Democrat side and the Republican side about what the final legislation has to say,” he said. Negotiations between House Republicans and Senate Democrats are under way. (See separate report in this issue.)
Sen. Jay Rockefeller, D-W.Va., “compromised” on governance in negotiations with the House on spectrum legislation, the Senate Commerce Committee chairman said Tuesday. Rockefeller agreed to put NTIA in charge of deploying the public safety network, Rockefeller told reporters after Democratic senators’ weekly policy lunch. Rockefeller’s original spectrum bill, S-911, proposed setting up a federal entity called the Public Safety Broadband Network Corp. to govern the network. The corporation would have included federal, state, local, tribal, public safety and private sector members. Meanwhile, the House GOP bill had proposed a state-by-state approach involving a third-party administrator. The House-Senate conference on the payroll tax cut extension is expected to include spectrum auctions as a pay-for provision in the bill due by month’s end. Staffers from the House and Senate Commerce committees are separately negotiating the spectrum piece (CD Feb 7 p9). While not a conferee, Rockefeller has signaled he’s willing to compromise on the spectrum bill as long as the end result is a national network for public safety, a Commerce Committee spokesperson said. The House Commerce Committee didn’t respond to a request for comment. Committee Democrat Doris Matsui of California said she hopes “that any final deal will have a strong governance structure in place.” Matsui didn’t comment specifically on the NTIA approach cited by Rockefeller, but warned that “the lack of a strong governance structure could threaten the achievability of a nationwide public safety network.”
AT&T and Reed Hundt continued their war of words over spectrum legislation (CD Feb 2 p10). AT&T supports the House bill for restricting the FCC’s ability to condition eligibility in spectrum auctions, while Hundt has urged Congress to back off or risk allowing companies to monopolize spectrum. “As Reed admits, Congress gave the FCC discretion in the PCS C Block auction, and it used that discretion in a way that resulted in an auction that was a disaster for the industry and for the Treasury,” AT&T Executive Senior Vice President Jim Cicconi said Thursday. “And the flaw, in our view, was not simply a function of installment payments. It was the decision to have a closed versus an open auction. Our point is that an auction should be open to all competitors, not just to those hand picked by the FCC.” Hundt replied that the House bill strips the FCC of discretion to promote market competition “for no reason.” Even AT&T will benefit if all carriers are able to buy spectrum, Hundt said. “The House bill would delay the auctions for years and limit the amount of spectrum for all carriers. This isn’t as bad an outcome for [AT&T] as it is for their competitors but it is somewhat bad for [AT&T].” About his handling of the C-block auction, Hundt said, “The fact that 17 years ago I made 2 mistakes which had nothing to do with bidding eligibility … should not be held against an agency that is now in very competent hands, and is advised by the best theorists in the world.”
It appears that the FCC wants to “pick winners and losers rather than letting the markets work,” AT&T CEO Randall Stephenson said about the agency’s scrutiny of spectrum transactions. Specifically, he criticized the agency for applying the spectrum screening standards differently when reviewing AT&T’s T-Mobile USA deal than when evaluating the Qualcomm spectrum transfer that was approved earlier, he said during AT&T’s earnings call Thursday. Meanwhile, the carrier lost $6.7 billion in Q4 partly due to the deal breakup fee paid to T-Mobile, other charges and benefit plan costs.
President Barack Obama complained in his State of the Union address Tuesday night of an “incomplete high-speed broadband network.” The unfinished network “prevents the small-business owner from selling her products all over the world,” he said. Obama also urged Congress to pass cybersecurity legislation. Obama sought tax changes benefiting the tech industry. “If you're a high-tech manufacturer, we should double the tax reduction you get for making your products here.” And Obama announced a trade enforcement unit to investigate counterfeiting and piracy by China and other countries. After the speech, House Commerce Committee Chairman Fred Upton, R-Mich., blamed the FCC for the incomplete broadband network. The FCC “is protecting its turf instead of joining us to free up airwaves to build the next generation communications networks,” Upton said. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., praised Obama’s comments on cybersecurity and broadband. “I have been working for years to address our country’s vulnerability to cyber-attacks and believe now is the time for Congress to act,” Rockefeller said. Senate Homeland Security Committee Chairman Joe Lieberman, I-Conn., said senators are “committed to bringing bipartisan cybersecurity legislation to the floor in the next few weeks.” In industry statements, broadband providers unsurprisingly praised the president’s call for more broadband. “As this administration moves forward on this initiative,” said National Telecommunications Cooperative Association President Shirley Bloomfield, “I urge them to ensure that actions by our federal agencies support, rather than undermine, the independent telecom companies that are key to connecting and employing rural Americans.” The Information Technology Industry Council hopes “Republicans and Democrats put aside partisan differences in this election season and realize that specific ideas -- tax reform, spectrum auctions for mobile broadband, high-skilled labor regulatory reform, improved trade, and smart cybersecurity, just to name a few, are essential ingredients to short-term job creation and a long-term recovery,” ITI President Dean Garfield said. TechAmerica acting President Dan Varroney urged Obama to “follow through” on his tech goals.
The House Communications Subcommittee plans to be active this year on FCC process reform, cybersecurity, the LightSquared controversy and the future of video, audio and data, Chairman Greg Walden, R-Ore., told reporters Wednesday morning. Walden said he was optimistic about passing spectrum legislation as part of the payroll tax cut bill. And he criticized FCC Chairman Julius Genachowski’s remarks at the CES show seeking more flexibility from Congress on auction conditions.