Obama hopes to raise $4.8B by imposing spectrum license fees on wireless providers: Congress will have to pass legislation to enact the proposal

President Obama called for spectrum license fees in a record $3.9 trillion budget, released today, reviving a proposal that has failed to move in the past. But with the new Democratic administration intending to halve the projected $1.7 trillion budget deficit by 2013, the latest campaign to levy a fee on wireless carriers and other spectrum license holders could get more traction this time around in the Democratic-led Congress.
Wireless providers, which have paid billions of dollars to acquire licenses in government auctions since the mid-1990s, have opposed spectrum fees in the past and are expected to do the same as lawmakers take up the Obama budget.
“We are currently reviewing the details of the proposal and look forward to participating in the next stages of this issue,” stated cellular industry trade association CTIA.
The president’s 140-page budget plan amounts to a broad overview. More information on the proposed spectrum fee – which would require legislation to enact – and other telecom-related provisions is expected when the administration releases a more detailed budget package in the spring. As such, the four national wireless providers – Verizon Wireless, AT&T Mobility, Sprint Nextel Corp. and T-Mobile USA Inc. – said they were not in position to comment on the spectrum licensee fee proposal.
Though details on the Obama budget are few and far between, some information was made available. The administration estimates that spectrum license fees would raise $4.8 billion over the next 10 years. And the budget projects $1.4 billion in receipts from spectrum auctions over the same period, reflecting the reality of the dwindling supply of airwaves that are left to be sold.
The administration also wants Congress to give the FCC the green light to authorize the auction of domestic satellite spectrum, hoping to generate $200 million from such bidding by 2019.
As for universal broadband access, Obama’s budget blueprint had nothing new. However, references were made to the $7.2 billion earmarked for broadband grants in the economic stimulus bill that Obama recently signed into law.
A history of things to come?
Interestingly, Obama’s spectrum fee plan will play out in political and economic circumstances that are strikingly similar to those of the early 1990s, when the Federal Communications Commission was first given authority to utilize auctions to award wireless licenses.
Democrats – which controlled Congress in the early 1990s when former President Clinton was attempting to erase a less oppressive budget deficit – authorized spectrum auctions for the first time. Democrats had consistently opposed spectrum auctions proposed by Republican administrations.
It was only when Clinton proposed spectrum auctions in his first budget that Democrats had a change of heart over a revenue-raising licensing mechanism they had regarded as radical in prior years.