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CLINTON, CONGRESS FORESEE $14B RAISED FROM AUCTION OF AIRWAVES

WASHINGTON-The GOP-controlled Congress and the Clinton administration continue to have big differences concerning how to balance the budget, but expanding spectrum auction authority is not one of those difficulties. On that topic, there is uncommon bipartisan agreement.

The problem is, Republican leaders and the Democratic White House see eye to eye on little else related to crafting next year’s budget and reducing the federal deficit by the turn of the century.

Yet both sides believe $14 billion can be raised during the next seven years, or by 2002, by giving the Federal Communications Commission greater leeway in selling the public airwaves. That’s the figure in the landmark seven-year budget plan passed by Congress late last month and in Clinton’s new, 10-year balanced budget proposal, which Republicans disregard every bit as much as his original spending plan in February.

“For the first time in decades, both houses of Congress are consciously working toward restraining the growth of big government spending,” said Bob Packwood, R-Ore., chairman of the Senate Finance Committee and the Commerce subcommittee on communications. (Packwood’s political future is riding on the outcome of a Senate Ethics Committee investigation of alleged sexual misconduct and other activities.)

The GOP budget resolution, which promises to balance the budget by 2002 through a combination of $894 billion in spending reductions and $245 billion in tax cuts, is a blueprint for future legislative action. Unlike most legislation, the budget resolution does not go to the White House for the president’s signature and is not enforceable. But it will give rise to spending and revenue-raising bills that will occupy lawmakers through September.

That Democrats and Republicans are unified in their desire to extract more money from spectrum is understandable. In fewer than 12 months, the sale of narrowband and broadband personal communications services licenses has enriched the U.S. Treasury by nearly $9 billion. Several more wireless auctions will be held before the end of the year.

The Senate wanted to force firms that received PCS pioneer’s preferences (American Personal Communications, Cox Enterprises Inc., Omnipoint Corp. and Mobile Telecommunication Technologies Corp.) to pay the government additional money for their licenses, but the House-Senate conference report apparently gave no explicit instructions for lawmakers to follow through on that directive.

Still, authorizing committees have significant freedom to find the savings necessary to meet budget targets in the budget resolution. Settling on $14 billion for future auction revenues may have been the easy part.

Implementing an enlarged FCC’s auction program is likely to come with some controversy and it is already beginning to surface. Other potential problems are less obvious, but still lurking.

Current auction authority, which went into effect as recently as 1993 and lasts until 1998, is limited to subscriber-based, commercial wireless services like PCS, paging, cellular and specialized mobile radio. Congress and the administration want a freer hand to conduct auctions, though.

Private wireless spectrum, which is used for internal communications by utilities, railroads, public-safety agencies, construction firms, manufacturers and others, cannot be sold today. That is all expected to change by fall. Representatives of these business sectors have been arguing against auctions for months, offering at times to pay for spectrum through alternative means, like spectrum fees, but to no avail.

There is, however, a provision in the telecommunications reform bill passed by the Senate last month that would keep public-safety frequencies off the auction block. There also has been talk of selling new telephone numbers, which commercial wireless carriers heavily depend on to fuel skyrocketing growth, to the highest bidders. Another idea bandied about would let bidders themselves decide how to use the spectrum they buy.

Ultimately, it will be up to the FCC to decide how to apply a broader auction statute. FCC Chairman Reed Hundt has proven to be a big fan of assigning licenses by competitive bidding.

At least 235 megahertz and perhaps even more spectrum that would be sold to meet the $14 billion target is being transferred from the federal government to the private sector. That makes some big government users, like the Defense Department and the Federal Bureau of Investigation, uncomfortable.

To ease theirs and other agencies’ anxiety, a plan has been developed to relocate government licensees to new bands (including replacement of equipment) at the expense of communications firms that purchase rights for those frequencies.

The plan is modeled after FCC procedures requiring new PCS operators to finance the migration of fixed microwave users from the 2 GHz band (which is reserved for next-generation pocket telephone service) to higher frequencies.

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