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BREAUX BILL ALLOWS LEASE FEES

WASHINGTON-Sen. John Breaux (D-La.) last week unveiled legislation to prohibit the Federal Communications Commission from auctioning 12 megahertz of new private wireless spectrum, while allowing regulators to impose lease fees on licensees.

“The Private Wireless Spectrum Availability Act” is one of several bills that have surfaced recently in response to problems in the FCC’s auction program generally and in the wireless telecom policy specifically.

The Breaux bill addresses an entire class of licensees-numbering hundreds of thousands-whose interests have been largely ignored and overshadowed since Reed Hundt became FCC chairman in late 1993 and made auctions a centerpiece of his administration.

“Spectrum auctions have done a good job in quickening the licensing of services for interpersonal communications such as cellular car phones, and the sales have generated money for the federal government,” said Breaux. “But these recent actions have also skewed the process in favor of subscriber-based services and away from critical radio services such as private wireless that are exempt from auctions.”

Hundt, the White House and Congress have been pushing for legislation in recent years to expand auction authority such that private wireless spectrum would be subject to competitive bidding.

Today, FCC auction authority is limited to subscription-based commercial wireless services like paging, mobile telephone and dispatch radio. Since auctions were authorized in 1993, $22 billion has been raised from wireless license sales.

Auction authority would have been extended to private wireless had President Clinton and the GOP-led Congress reached a budget deal more than a year ago.

Under the Breaux plan, the FCC and private wireless users are to develop a fee formula. Fees would be capped during the 10-year term of licenses. Licenses would continue to be administrated on a first-come, first-serve basis.

“We appreciate this recognition that private wireless licensees use spectrum to greatly enhance the American public’s quality and safety of life and to support competition through productivity contributions,” said Mark Crosby, president of the Industrial Telecommunications Association.

A potential complication with the Breaux bill involves an effort by Chadmoore Communications Inc., a medium-sized specialized mobile radio operator, to attach an amendment to the legislation that also would impose spectrum lease fees on heavily licensed SMR spectrum. Sens. Bill Frist (R-Tenn.) and Richard Bryan (D-Nev.) are potential sponsors of the Chadmoore amendment.

Chadmoore fears its business will be disrupted by the FCC’s 800 MHz SMR auction plan, which is expected to be issued soon. But Nextel Communications Inc., the nation’s top SMR, is expected to oppose such an amendment.

The budget deal recently reached between the Republican congressional leadership and the White House depends on expanded FCC auctions to balance the budget by 2002.

The Clinton budget proposal earlier this year projected $36 billion for auctions, but the new budget agreement between Congress and the White House lowered that estimate to $26.3 billion.

Elsewhere, a bill sponsored by Sen. Bob Kerrey (D-Neb.) would set minimum bids on wireless licenses auctions by the FCC, a reaction to the sale of some Wireless Communications Service permits for a dollar and the failure to generate the $1.8 billion anticipated by Congress and the administration.

Kerrey also is pursuing legislation to examine the merger trend since the passage of the 1996 telecom act-landmark legislation designed to promote competition, lower prices and spur employment. Though some argue it is too early to judge whether the new law will yield such benefits, there are creeping concerns about continued layoffs, mergers and lack of a drop in telecom service prices.

Another measure being drafted by Senate Commerce Committee Chairman John McCain (R-Ariz.) would require intervals between auctions to enable industry and Wall Street to commercially exploit the spectrum and, thus, avoid unnecessarily saturating the market with spectrum. The strategy is intended to allow taxpayers to realize the maximum value of the public airwaves.

McCain also wants to set aside 24 megahertz of TV channels 60-69 for public safety communications and to fund construction of new radio systems for police, fire and emergency medical service providers with some of the proceeds from auctioned frequencies. Private wireless interests are lobbying for some of the remaining TV channels.

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