WASHINGTON-The GOP-led Congress, squeezed by tight spending limits and determined not to lose another embarrassing budget battle to Democrats, is once again banking on spectrum to bail it out. And in doing so, lawmakers are headed down two divergent paths on U.S. spectrum policy that are about to collide.
On one path are three Department of Defense bills that would let Pentagon budgetary considerations determine the timing of a wireless auction and otherwise wreak havoc on spectrum policy for years to come.
On the other path is a bill being crafted by Sens. John Breaux (D-La.) and Slade Gorton (R-Wash.)-both influential Commerce Committee members-that would give the FCC additional regulatory tools for wireless licensing.
Today, federal regulators are virtually limited to auctions from pools of competing wireless applicants. The private wireless industry, which is partially covered by 1997 expanded auction authority, favors spectrum lease fees in lieu of competitive bidding.
Unlike the DOD Senate appropriations bill, in which spectrum licensing is budget driven, the Breaux-Gorton measure would be based on telecom policy considerations.
The backdrop to the spectrum policy controversy is a huge budget battle brewing between Republicans-who run Congress-and Democrats, who occupy the White House.
Despite operating in a surplus environment, congressional appropriators are hamstrung by strict 1997 budget caps and a Social Security hands-off policy at a time when they want to increase spending for defense to pay for Balkan and Middle East wars and to beef up the U.S. armed forces overall.
To do that, Republicans must reduce spending on domestic programs championed by Democrats and secure revenues from other sources-like spectrum auctions. Some observers see another budget train wreck in the making.
What is emerging out of the budget morass is a fight for the heart and soul of U.S. spectrum policy. The stakeholders are powerful and many. U.S. spectrum policy is being pulled in different directions from congressional appropriators, the White House, telecom lawmakers and telecom interest groups. U.S. spectrum policy is up for grabs.
The DOD bills in the middle of the budget fight would require the Federal Communications Commission to sell 36 megahertz (from TV channels 60-69 in the 700-800 MHz band) this year instead of in (or after) 2001; give DOD spectrum co-primary super status; and accord the Pentagon priority use of the global positioning system to the likely detriment of land- and space-based wireless systems.
The measures are moving ahead with a full head of steam in Congress and are being teed up for House-Senate conferences. The Pentagon denies pushing for the GPS and accelerated auction provisions. According to interviews with government and industry sources, it appears DOD is telling it straight.
Still, top military brass are not going out of their way to get the controversial items removed from the legislation.
The wireless industry, fearing DOD spectrum provisions will undercut U.S. spectrum policy and hurt some wireless carriers more than others, were furiously lobbying Capitol Hill lawmakers last week to get spectrum provisions removed or at least watered down.
There could be some wiggle room for compromise, according to industry lobbyists who are against lawmakers and staffers on armed services committees.
Wireless carriers and manufacturers are uniformly opposed to the GPS and spectrum priority provisions in DOD bills.
“It [DOD spectrum priority] will put hundreds of billions of dollars of telecommunication infrastructure investments at risk,” said Steven Berry, senior vice president of the Cellular Telecommunications Industry Association.
Carriers, however, are divided on the question of accelerated auctions. Emerging wireless start-ups are against more spectrum being dumped into the market this year, while incumbent mobile phone operators have mixed feelings about it.
“We’re not taking a position on that [accelerated auctions].”We have some members that like it and some members that don’t like,” said Steven Berry, CTIA’s senior vice president of congressional affairs.
The Office of Management and Budget believes that if the 36-megahertz auction were held this year rather than after Jan. 1, 2001, (the latter date established in the 1997 balance budget act) it could raise $2.6 billion in fiscal 2000, which begins Oct. 1.
The Congressional Budget Office, the official number cruncher of Capitol Hill, sees things differently. CBO, in its analysis of President Clinton’s budget, did not score the auction for FY2000 because it believed it would take longer than expected to develop rules, hold the auction and then collect receipts in fiscal 2000.
Instead, CBO estimates an accelerated auction would bring about $1.6 billion in fiscal 2001.
Some larger established carriers, however, are not opposed to an accelerated auction schedule because they could lock in that spectrum for third-generation wireless services.
“PCIA is opposed to the Stevens [Senate Appropriations Committee Chairman Ted Steven’s (R-Alaska)] amendment,” said Dave Murray, director of legislative affairs for the Personal Communications Industry Association.
“It’s not good policy to auction this spectrum in the name of balancing the budget. We don’t think the market needs this spectrum. We don’t think the American taxpayer would get all the money right now. The spectrum would be under valued.”
Indeed, the last time Congress mandated a date for an auction some bidders walked away with $1 wireless licenses.
That hasn’t stopped congressional and administration budgeteers from trying. They’ve managed to get around a 1993 law that created auctions and stated the FCC could not make spectrum policy on “expectation of federal revenues from the use of a system of competitive bidding.”
Thus, the FCC-an independent agency-cannot be swayed by anticipated auction revenue, but apparently Congress and the White House can.
