WASHINGTON-Senate Commerce Committee Chairman John McCain (R-Ariz.) joined the wireless industry in fighting back White House and congressional budgeteer efforts to add spectrum fees and toll-free number auctions to balanced budget legislation last week, while the private wireless sector suffered a major setback when spectrum lease fees were stripped from the Senate bill.
But even after tweaking House and Senate bills by requiring minimum bids and the conditional return of analog TV channels by 2006, budgeteers still fell short of the $26.3 billion GOP leaders and the Clinton administration expected from spectrum sales as part of their deal to balance the federal budget by 2002.
President Clinton originally called for $36 billion in spectrum auction revenue in his budget proposal earlier this year. A set-aside of 24 megahertz for public-safety communications, supported by the administration and Congress, remains intact in legislation.
“Just because auctions assign spectrum efficiently to its most valued use does not mean they can be guaranteed to produce a certain dollar figure,” said McCain.
Tensions between telecom and budget lawmakers came to a head when House and Senate Commerce Committee members were ordered by budgeteers last month to raise $26.3 billion from spectrum auctions during the next five years.
“We are very pleased the broad industry coalition was able to educate members as to the very damaging nature of the proposed fees,” said Jonas Neihardt, director of congressional affairs for the Cellular Telecommunications Industry Association.
Neihardt added, “We feel very strongly that fees like this would negatively impact competition in the wireless industry, would slow buildout in rural areas and hurt consumers by increasing their bills.
Neihardt gave McCain the most credit for keeping spectrum fees out of budget legislation.
Indeed, McCain-a possible GOP presidential candidate in 2000-carried the day for the wireless industry, refusing to succumb to pressure from Senate Budget Committee Chairman Pete Domenici (R-N.M.) and White House budget officials to include fees as insurance against an auction revenue shortfall.
“McCain went to bat for us,” said Rob Cohen, director of legislative affairs for the Personal Communications Industry Association.
Lawmakers on both sides of the Capitol reacted angrily when the Federal Communications Commission’s wireless communications services auction in April netted $13.6 million, some licenses selling for $1. The Congressional Budget Office predicted $1.8 billion from the WCS auction.
Sen. Bob Kerry (D-Neb.), seeking to avoid $1 licenses, added an amendment to require minimum bids.
During the past three years, the FCC has raised $22 billion mostly from the sale of digital paging and pocket telephone licenses.
Since the WCS auction fiasco, CBO has taken a no-nonsense approach to auction scoring; first, attaching an embarrassing $9.7 billion tag to the House auction plan and then putting the Senate measure at a more respectable $16 billion.
Now, having massaged both bills, congressional budgeteers believe $20 billion can be raised from spectrum auctions by 2002.
But it appears highly unlikely the FCC can capture that much money from the airwaves during that period, in large part because the return of analog TV channels from digital-bound broadcasters could be delayed well beyond 2006 and because the spectrum glut-which has produced a field of highly leveraged wireless start-ups with financial troubles-has devalued spectrum during the past year.
The powerful broadcast lobby, having cowered lawmakers into lending TV licensees a second channel during the digital transition instead of selling digital channels valued at between $20 billion and $70 billion, lobbied lawmakers to keep Congress from mandating a firm date for the return of analog TV channels.
And they halfway succeeded. Though broadcasters would be required to relinquish analog TV channels by 2006, there is a major loophole in the legislation that would keep that from happening if more than 5 percent of people are still tuned to analog broadcast TV by that time.
House and Senate budget bills, scheduled to be reconciled in conference after Congress returns from a week-long Independence Day recess, would extend (another five years) and expand the FCC’s auction authority.
That authority, which began in 1993 and ends in 1998, currently limits spectrum auctions to commercial, subscription-based wireless services, like paging, mobile telephone and radio dispatch.
An amendment by Sen. John Breaux (D-La.) would have protected private wireless spectrum from auctions by substituting spectrum leased fees.
Though Breaux’s amendment was not included in the McCain amendment on the Senate floor, McCain assured Breaux during committee markup that private wireless spectrum access would be addressed in conference committee negotiations.
“We still have heart beat, although it’s faint,” said Mark Crosby, president of the Industrial Telecommunications Association and a leading proponent of lease fees for private wireless spectrum.
Crosby said he is hopeful the issue will surface in conference committee, as promised by McCain. “The Fat Lady hasn’t sung yet,” he said.
The Breaux amendment was seen by some lawmakers as violating the so-called “Byrd rule,” a namesake provision written by Sen. Robert Byrd (D-W.Va.) that bans amendments not germane to the budget.
Given that spectrum lease fees would, in fact, raise money for the federal government, the explanation is confusing and somewhat misleading. Sources suggested the Breaux amendment got swept up in the strong backlash against spectrum fees generally. Further, spectrum lease fees were not universally supported within the private wireless industry.
