WASHINGTON-Spectrum licensees that may-or may not-bid on frequencies made available with the transition to digital TV could be forced to make up a $10 million shortfall next year, according to a Senate Commerce Committee staff draft widely circulated late Thursday.
The draft bill directs the Federal Communications Commission to begin auctioning spectrum reclaimed as part of the DTV transition on Jan. 28, 2008. This posed a dilemma for the Senate Commerce Committee since the Senate Budget Committee directed it to “deposit” $10 million in fiscal-year 2006. To get around the two-year problem, the Senate bill directs the FCC to assess “extraordinary fees” on licensees. The bill gives the FCC the power to decide which licensees-TV, radio, satellite and/or wireless-would have to pay and how much each would have to pay, said Melanie Alvord, communications director for the Senate Commerce Committee.
The January 2008 auction date is one year before the Senate aims to complete the transition to digital television. Hoping to capitalize on the triple-play TV-buying season of Christmas, the Super Bowl and the NCAA basketball championship known as March Madness, the Senate draft sets the hard date on April 7, 2009.
Having the auction a year before the spectrum is available allows companies to do necessary planning, said Janice Obuchowski, executive director of the High Tech DTV Coalition. “To the extent that companies have thought about it, this would be good,” said Obuchowski. “This enables the winners to buy the hardware, prepare their business models and get the necessary real estate and be ready to go when the spectrum becomes available.”
Rather than deposit the auction revenues into the general treasury to be used for any purpose, the Senate draft directs the money to be deposited into the Digital Transition and Public-Safety Fund. This fund would finance Senate Commerce Committee priorities, including the Enhanced 911 bill passed last year and a converter box program deemed necessary for the DTV transition to be successful.
Congress is expected to consider a firm date for the DTV transition as part of the 2006 budget reconciliation process. Due to the focus on Hurricane Katrina, the budget reconciliation process, which usually occurs in September, was delayed by a month. The Senate Commerce Committee is scheduled to begin its process Wednesday at a markup that also includes 911 and emergency-alert bills. The House is expected to consider its proposal the week of Oct. 24. The current House draft sets the hard date on Jan. 1, 2009.
“This is likely to be the most significant auction-and one of the most significant government actions affecting communications networks-since the government auctioned PCS spectrum in 1994-95,” said Legg Mason in a research note sent Friday morning.
There likely will be two bills passed by Congress dealing with the DTV transition, one that establishes a hard date and sets a timetable to auction the spectrum and one that deals with related issues not specifically tied to the budget. The draft released late Thursday did not deal with the other ancillary issues.
