WASHINGTON-The Bush administration last week proposed setting user fees on un-auctioned spectrum regulated by the Federal Communications Commission, but the agency refused to disclose which wireless services would be subject to new government taxes.
The user fee proposal, included in a new White House budget plan aimed at reducing a massive federal deficit, is projected to raise $3.6 billion during the next decade. Meantime, the White House’s 2007 budget blueprint anticipates $25 billion could be generated from spectrum auctions over the next five years. The Congressional Budget Office said a good chunk of that total-approximately $15 billion-could come from the sale of advanced wireless services licensees (90 megahertz in the 1700 MHz and 2100 MHz bands) scheduled for June, and from smaller auctions afterward.
“Spectrum assignment policy has not kept pace with the changing market. Service providers using different technologies to deliver a similar product can face different spectrum license acquisition costs,” the budget stated in justifying the rationale for spectrum user fees. “The lack of parity in spectrum assignment creates incentives that can diminish the overall utility of the spectrum.”
The Office of Management and Budget said radio channels reserved for Wi-Fi and cordless telephones are off the table insofar as spectrum user fees. President Bush, who views wireless technology as key in achieving his goal of universal and affordable broadband access by 2007, likely would face strong opposition from wireless and high-tech companies were he to attempt to extract fees from the use of Wi-Fi and other unlicensed technologies.
The debate over whether Wi-Fi spectrum should be exploited by manufacturers and users free of charge is not new, and is apt to only heat up as mobile-phone carriers offering high-speed wireless Internet service face potential competition from municipal Wi-Fi networks in which citizens receive free or subsidized broadband access.
“The FCC would be provided with the discretion to implement the fee authority in accordance with public interest and spectrum management principles,” said OMB. “The payer of the fees would be license holders who acquired a license through an assignment mechanism other than auction. This could be firms who acquired their license before auctions were implemented, or those that hold a license for a service that the FCC does not auction. Satellites are one example, taxi companies are another. The FCC would make the ultimate determination on where the fees would be assessed.”
OMB said the Bush administration is working to develop legislation similar to the version sent to Congress three years ago.
An OMB spokesman said the FCC-as a would-be beneficiary and administrator of extended spectrum auction authority and new user fee authority-could provide more detail on how spectrum license fees might be implemented.
But the FCC was at a loss to explain its intentions regarding a spectrum fee issue that could be highly unpopular and controversial in transportation, satellite, broadcast and other business sectors.
Indeed, Fred Campbell, a wireless adviser to FCC Chairman Kevin Martin, was unable to provide any details. Neither could Chelsea Fallon, a spokeswoman for a Wireless Telecommunications Bureau whose future remains clouded.
Bush’s $2.77 trillion spending package proposes $302 million for the FCC in fiscal 2007. Most of the agency’s budget would be underwritten by regulatory fees.
Bush again called for the elimination of the Telecommunications Development Fund, describing it as “a poorly performing venture-capital enterprise financed by interest earned on spectrum auctions.” The TDF was included in the 1996 telecom act, which celebrated its 10-year anniversary on Feb. 8.
The Bush budget plan calls on Congress to make the research and development tax credit permanent, and requests $137 billion for federal research and development. The White House, among other things, wants congressional appropriators to make more money available to the National Science Foundation, the National Institute of Standards and Technology and the Department of Energy’s Office of Science.
The proposal drew cheers from a major trade group representing wireless and other telecom manufacturers.
“TIA is dedicated to seeing our nation retain its leadership in communications-specific basic research, and the president’s proposed budget helps support this goal,” said Matthew Flanigan, president of the Telecommunications Industry Association. “TIA will be working hard to ensure that these agencies indeed receive the proposed increases, and more importantly, we will advocate that these budget increases fund, in part, communications-specific, long-term, basic research.”
