Spectrum policy is getting more scrutiny in Congress in light of the 2007 expiration of auction authority, Congressional Research Service analyst Linda Moore said in a report for Congress. Some have questioned the system’s efficacy. Despite the FCC’s conclusion that auctioning spectrum licenses has sped deployment of new wireless technologies, many ask if the FCC shouldn’t augment auction policy “more aggressively” with other market- driven solutions such as licensing fees.
A scaled-back DTV provision setting a hard transition date of Jan. 1, 2009, and authorizing spectrum auction authority will be part of the budget bill to be voted on in mid-Sept., Hill sources say. The budget vote is expected to be close, due to discord over President Bush’s tax cuts -- the budget resolution passed 52-47 in the Senate and 214-211 in the House. Should it not pass, Congress would enact a continuing resolution with a specific time frame to keep the budget operating at the same level as the previous year until a new budget is approved, sources say.
FCC hopes to circulate a draft order this week revising an Oct. 2003 advanced wireless services (AWS) spectrum band plan, an FCC source said. The new 1710-1755 MHz and 2110-2155 MHz band plan urged by the Wireless Bureau incorporates parts of proposals by T-Mobile and the Rural Telecom Group (RTG), and Verizon Wireless, the source said. The order, expected to be scheduled for the July 14 FCC meeting, also would resolve other issues raised in reconsideration petitions.
Council Tree Communications urged the FCC to “repair, improve and ultimately preserve” designated entity (DE) incentives in advanced wireless services (AWS) spectrum auctions. Council Tree asked the Commission to: (1) Raise from 25% to 35% the maximum DE bidding credit offered in AWS auctions. (2) Provide an additional 10% bidding credit for DEs that serve underserved populations. (3) Not allow large incumbent wireless carriers to have any material investment, financial or operating relationship with a DE if they have licenses with material geographic overlap. (4) Not allow individuals with a net worth exceeding $3 million to have a controlling interest in a DE. “These proposals will ensure that DE benefits are limited and applied only where needed, and will provide meaningful entry points for new competition in the wireless industry,” Council Tree said, adding the proposals can be implemented “on a non-disruptive basis well in advance of the first AWS auction” expected in mid- 2006.
The Senate Commerce Committee announced Thurs. it plans a hearing June 29 on DTV spectrum auctions, but it isn’t certain whether a draft bill will be completed and introduced as legislation before that date, a committee spokeswoman said. “We expect a draft bill by the end of the month,” the spokeswoman said.
Incumbent providers operating in the 900 MHz band urged the FCC to ensure “sufficient” protection for their systems from harmful interference if the Commission moves forward with a proposal to facilitate the band’s more flexible use. They want the agency to ensure that licensees don’t face interference such as that which required the remedies adopted in the 800 MHz interference proceeding. The incumbents, which are site-specific licensees, generally opposed the geographic market area licensing the FCC proposed. They said it would cause commercial systems to proliferate at the expense of continued licensing of critical infrastructure, industrial and land transportation systems.
Congress passed the 2006 budget resolution late last week. The $2.6 trillion spending outline calls on the House and Senate Commerce committees to produce $4.8 billion more for the federal treasury between now and 2010. Senate Commerce Committee Chmn. Stevens (R-Alaska) has said he sees spectrum auctions as a way to raise that revenue. Since FCC spectrum auction authority expires Sept. 30, 2007, Stevens has said the auction program could be extended and should be reformed, but hasn’t outlined specifics. Medley Global Advisors said Congress would likely focus on 2 revenue sources: (1) Continuing the spectrum auction program, which the Congressional Budget Office has said could produce $1.7 billion revenue. The Office of Management & Budget puts the figure even higher. (2) Setting a hard DTV transition deadline, which would free some 88 MHz of prime spectrum for auction. The spectrum’s value has been estimated at $30-$60 billion.
The FCC revised its auction attribution rules, saying the determination of a bona fide co-op shouldn’t be based on the co-op’s tax exempt status. It also allowed rural telecom co-ops to demonstrate their co-op status either under Sec. 501(c)(12) of the IRS Code or by adhering to the co-op principles enumerated in Puget Sound Plywood v. Comr. of Internal Revenue. The FCC action was in response to an NTCA petition seeking to clarify a rule that determined how co-ops were granted a limited exemption from the auction attribution rules. The FCC had revised its rules so affiliates of a co-op’s officers and directors wouldn’t count against the co-op to determine whether it was eligible for auction bidding credits. But the exemption was only available to co-ops that satisfied all components of a “3-part test,” including procession of tax-exempt status. “The problem with that is that cooperatives can provide service to non-members [and] can also set up subsidiaries,” NTCA Senior Regulatory Counsel Jill Canfield told us: “Those things don’t really affect the cooperative, but… could make the cooperative no longer tax-exempt.” In its Jan. 31 order, the FCC granted a petition for reconsideration filed by NTCA and other rural carriers, admitting that the tax-exempt element of its 3-part test could prevent legitimate telephone co-ops from taking advantage of bidding credits. NTCA applauded the decision, which it said eliminated “an anomaly” in its competitive bidding rules that “threatened the ability of rural telephone cooperatives to provide new and advanced wireless telecommunications services to rural areas.” It said the ruling would help ensure NTCA member co-ops have access to bidding credits at future spectrum auctions. FCC Comr. Adelstein said in a statement he was “very pleased” with the decision, which he said would “promote the interests of cooperatives in expanding the scope of their telecommunications services while still ensuring that the benefits of this important exemption are limited to bona fide cooperatives.”
Another obstacle has emerged for the beleaguered spectrum trust fund legislation. Senate and industry sources told us that Senate Appropriations Committee ranking Democrat Byrd (D-W.Va.) has placed a hold on the bill, which has now been paired with E-911 and universal service fund (USF) legislation (HR-5419). Sources said Byrd’s hold is due to the same concerns that appropriators always had over the bill: The usurping of Appropriations Committee jurisdiction. The bill, which seeks to reimburse Defense Dept. and other govt. users for portions of the 3G spectrum they now occupy, would essentially appropriate money from spectrum auctions in advance. House appropriators had similar concerns over HR-1320, the original spectrum trust fund bill, that were eventually resolved before the House passed the bill in 2003. That bill is now part of HR-5419, a catch-all bill passed by the House 2 weeks ago, and includes state funding for E- 911 deployment and an exemption from Anti-Deficiency Act requirements on USF. The Senate Commerce Committee has passed spectrum trust fund legislation, but it never moved to the Senate floor. During deliberations on the bill, Senate Appropriations Chmn. Stevens (R-Alaska) said he had concerns that the bill would usurp appropriators authority. But sources said Byrd’s hold wasn’t the main obstacle for HR-5419. Senate Commerce Committee Chmn. McCain (R-Ariz.) is also holding up the legislation because House leadership won’t take up his measure to establish a national boxing commission. One industry source said differences with Byrd, which were based on substance, are likely to be easier to resolve than the differences between McCain and House leadership, which sources said appear to be political.
The FCC shouldn’t vote on a DTV transition plan until Congress fully funds a mechanism to ensure universal TV service for all Americans, the Minority Media & Telecom Council (MMTC) said in a letter to the FCC. MMTC supported plans to provide vouchers, funded from spectrum auctions, for low-income consumers to equip sets with down-conversion capability. MMTC also advocated vouchers for DTV-ready sets. The White House announced its opposition to any voucher initiative Oct. 21, MMTC said: “These families, many living paycheck to paycheck, as well as elderly and disabled persons surviving on social security, cannot suddenly yield up the cost of a converter box without forgoing a week of food.”