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SENATE AUCTION BILL AVOIDS SPECTRUM FEES, TOLL-FREE NUMBER BIDS

WASHINGTON-The Senate Commerce Committee last week rejected spectrum fees and toll-free telephone number auctions, but embraced lease fees for private wireless licensees in budget legislation lawmakers concede will fail to generate $26.3 billion from wireless license sales during the next five years.

But spectrum fees and other revenue proposals opposed by the wireless telecom industry could resurface this week in House and Senate Budget committees because auction bills in both chambers fall short of the $26.3 billion spectrum auction revenue target in the balanced budget plan reached by GOP congressional leaders and the White House.

“I admit this is a game, a charade, that we are talking about,” said John McCain (R-Ariz.), chairman of the Senate Commerce Committee. He said the same about the notion of balancing the budget by 2002.

The Congressional Budget Office last week scored the House auction bill at $9.7 billion, owing to a slew of amendments that lowered projected auction receipts by two-thirds of the amount anticipated by congressional budgeteers.

Lawmakers were alarmed after some bidders bought wireless communications licenses for $1 in the April auction that netted $13.6 million, not the $1.8 billion Congress and the White House expected. But the same two branches of government mandated that auction in order to fill a gap in the 1997 omnibus spending bill.

The declining value of spectrum also is attributed to the abundance of spectrum on the market, the financial problems faced by wireless firms that spent $22 billion on licenses and antenna siting moratoria.

CBO scored the White House’s auction bill-the starting point for the Senate Commerce Committee-at $21.4 billion. But the figure is expected to drop substantially as a result of amendments that don’t specify when analog TV channels will be returned to the government and that exempt public-safety, local government, low-power TV and secondary broadcast spectrum from auctions.

After House and Senate budget panels complete work on their respective budget reconciliation bills, both chambers could vote on the legislation this week. A House-Senate conference will convene after Congress returns from its week-long July 4th recess.

“Our members did well today,” said Rob Cohen, director of congressional relations for the Personal Communications Industry Association. PCIA is aggressively against toll-free telephone number auctions.

The Cellular Telecommunications Industry Association and the Industrial Telecommunications Association were part of a broad-based coalition that weighed in to help kill spectrum fees, an option pushed by the Clinton administration to make up for any revenue shortfall from spectrum auctions.

ITA, for its part, has been the driving force behind spectrum lease fees in lieu of auctions for private wireless licensees.

McCain won approval for an amendment that would mandate the return of analog TV channels from digital-bound broadcasters by Dec. 31, 2006, but it was watered down by subsequent amendments.

McCain, mentioned increasingly as a GOP presidential candidate in 2000, said he fears uncertainty over the future availability of analog broadcast spectrum will lower CBO’s scoring of the auction bill. As a result, according to the maverick Arizona lawmaker, the Senate Budget Committee could impose spectrum fees and/or other provisions opposed by the Commerce Committee.

The auction authority of the Federal Communications Commission would be extended and expanded under House and Senate bills. Auction legislation of 1993, which expires next year, limits competitive bidding to commercial, subscription-based wireless services like paging, pocket phone and dispatch radio communications.

The spectrum auction debate has telecom policymakers and budgeteers blaming each other for recent problems with spectrum auctions.

“We’re not a revenue committee,” said Sen. Ernest Hollings (D-S.C.), ranking minority member of the Commerce Committee.

FCC Chairman Reed Hundt, who blamed Congress for the disappointing wireless communications auction in April, is seen by many as contributing to today’s spectrum auction woes.

In addition to making spectrum auctions a top FCC priority and unnerving capital markets by advocating spectrum flexibility while other pressing wireless telecom policy matters sit, Hundt has geared paging and dispatch radio rules to auction licensing even though frequencies are limited and existing communications systems will be disrupted.

Legislators are making sure parochial interests are protected in the debate. Senators from rural states-Republican and Democrat alike-fought McCain over mandating a certain date for return of analog TV channels, fearing small market broadcasters will need more time to convert to digital technology.

Sen. John Breaux’s (D-La.) spectrum lease fee amendment would protect Louisiana-based oil companies in the Gulf of Mexico from having to bid for private wireless frequencies.

Sen. Kay Bailey Hutchison (R-Texas) won support for an amendment to protect NASA Mission Control radio communications from interference.

Sen. Ted Stevens (R-Alaska), fearing the loss of locally owned wireless businesses, stated: “I hate to see the day when all the airwaves in Alaska are owned by outside interests, as newspapers are today.”

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