WASHINGTON-The Clinton administration’s balanced budget plan calls for $36 billion from expanded auctions over the next five years, a projection that raises key wireless policy questions.
The initiative, which includes selling toll-free 888 telephone numbers but is otherwise vague, was included in the $1.7 trillion spending package for fiscal 1998 the White House sent to Congress last Thursday.
Republicans attacked the Clinton budget plan for delaying tough spending cuts until after the president leaves office, while putting Clinton in a good position to negotiate a balanced budget in his second term.
But, unlike the last two years, the GOP-led Congress tempered its criticism to avoid getting into another nasty battle with the Democratic White House that could hurt Republicans again.
“There are still differences between the parties about how we should do this but I am convinced those differences can be bridged,” said Clinton.
Spectrum auctions, however, may represent the very kind of program that lawmakers-Republican and Democratic alike-later find was based on faulty assumptions. That could create big problems for congressional budgeteers and telecom policymakers as well.
Auctions to date have raised $22 billion since being authorized in 1993. Most of the money has been generated from the sale of digital paging and pocket telephone licenses, collectively known as personal communications services.
But concern is growing over whether spectrum auctions, if not handled properly, could undercut policy and fiscal objectives of the government.
Sen. John McCain (R-Ariz.), chairman of the Senate Commerce Committee and a deficit-reduction auction hawk, is still concerned about FCC spectrum management.
McCain, according to an aide, is studying whether more planning needs to go into spectrum auction licensing. The idea of holding auctions at regular intervals or least tying them to policy objectives, is being examined as a way to inject a level certainty and stability on behalf of investors and industry.
Today, the wireless market is chock full of spectrum and would-be competitors, but there is worry over whether the frantic pace of auction licensing is out of control and creating problems down the road.
For example, if wireless licenses carrying heavy debt from auction payments and system buildout tank, the federal government would lose billions in auction pledges and tax revenues from failed enterprises.
Competition, the hallmark of the 1996 telecom law, could suffer as well.
As such, McCain plans to raise such issues at an upcoming spectrum policy oversight hearing.
The wireless telecommunications industry is anxiously awaiting an FCC plan to auction 2.3 GHz wireless licenses. The Clinton administration and Congress agreed last fall to include projected income from the auction in its 1997 appropriations package. That auction will take place this spring.
But the budget-driven infusion of spectrum and initial uncertainty about licensing has created chaos on Wall Street, where C-block broadband personal communications services licenses were scraping for dollars.
Now, the administration feels it can raise $36 billion above and beyond the $22 billion already pledged by top wireless carriers for prime spectrum real estate.
Though the licenses were smaller in terms of spectrum and geographic scope, money bid for D-, E, and F-block PCS licenses fell off dramatically. The cellular fill-in auction was over within days.
The budget plan estimates that expanding auctions, making private wireless licenses vulnerable to sale, will raise $17 billion by 2002. Analog broadcast license sales would bring in another $14 billion, according to the White House, with toll-free 888 projected to ring up $700 million.
Meanwhile, the portion of spectrum in TV channels 60-69 not held for public safety is expected to net $3.5 billion. The administration is reserving 24 megahertz for public safety and receiving lots of praise.
“We must prevail and ensure the success of this bipartisan effort, and we must use this early success to ensure a long-term plan to provide all of our public safety agencies the spectrum capacity they will need over the next decade to take full advantage of emerging new technologies that can make the difference between life and death,” said Mark Schwartz, president of the National League of Cities.
McCain, who earlier last week introduced legislation to shift broadcast spectrum to public safety, wants an entity other than the FCC to conduct that auction of the remaining, commercial 36 megahertz.
Elsewhere, the FCC and National Telecommunications and Information Administration would get more money. The digital wiretap program is to receive $100 million under Clinton’s plan, matching the 1997 funding level.
