WASHINGTON-Despite Congressional passage of a six-year balanced budget plan last week that assumes $19.2 billion from auctions, telecom policymakers are growing concerned that fiscal and political forces are increasingly driving spectrum auction policy on Capitol Hill and that the Federal Communications Commission has become overzealous in applying the auction statute.
“The commission is perhaps being a little bit aggressive in implementing the auction statute and failing to use engineering techniques and sharing techniques to minimize the instances where mutual exclusivity would raise the need to do an auction,” said David Leach, a Democratic staff member on the House Commerce Committee, at a conference here last week.
Under the 1993 auction law that expires in 1998, the FCC cannot auction licenses unless there are competing applications for subscriber-based common carrier offerings such as narrowband and broadband personal communications services that have accounted for the lion’s share of the $20 billion taken in by the U.S. Treasury so far.
Leach also criticized the FCC for prolonging a paging application freeze imposed in February and a specialized mobile radio application freeze imposed in August 1994, while regulators craft market-area licensing and auction rules for the two services.
“When that happens, the wheels of commerce grind to a halt,” said Leach. “That’s just wrong.”
Michele Farquhar, chief of the FCC Wireless Telecommunications Bureau, replied that moving wireless services to an auction regime is difficult and that new interim paging rules should help to mitigate the slow-down created by the paging freeze.
Leach said “it is a question of political will or backbone on the eighth floor,” where FCC Chairman Reed Hundt and the other four agency members reside.
Michael Regan, majority counsel to the House Commerce Committee, said he expects panel chairman Thomas Bliley (R-Va.) to take a comprehensive examination of spectrum policy next year in terms of telecommunications policy rather than budget policy.
The changing mood in Congress about auctions comes at a time when a major spectrum reform bill is being shaped and at a moment when the two presidential candidates-President Clinton and retired Senate Majority Leader Robert Dole (R-Kan.)-are advocating tax proposals underwritten in part by spectrum auction revenues that were not coordinated with authorizing committees or the Office of Management and Budget in Clinton’s case.
Michael Oxley (R-Ohio), ranking majority member of the House telecommunications subcommittee, said such proposals worry him.
“I remind my good friend John Kasich (House Budget Committee chairman from Ohio) from time to time, who knows diddly about communications and about auctions,” said Oxley. “All he knows is there’s a pot of gold at the end of that auction.
“It’s important that the authorizing committees be much more steadfast in our ability to try to make members understand how important this is-not just as a revenue producer because that is obviously a plus-but more importantly how we manage that spectrum and how we deal with the spectrum now and in the future in terms of creating this vision of what we want to see happen,” added Oxley.
“Every time the budgeteers get a hold of this and drive it toward the other way,” he continued, “I think it demeans the process we have set up in terms of the ability to participate in this wireless revolution that many times would be truncated if we simply look at the money that’s going to be raised by the auction.”
Meanwhile, a White House proposal to auction new 888 toll-free telephone numbers has created a firestorm in the industry and is meeting resistance in Congress. A compromise between the Hill and the White House is said to be in the works.
The seven-year balanced budget bill passed by the GOP-led Congress last year and subsequently vetoed by Clinton would have expanded the FCC’s auction authority and made the law permanent.
Private wireless users, ranging from small plumbing firms to large oil companies that are currently exempt from auctions under the 1993 law, would have been subjected to competitive bidding if that budget bill had succeeded.
Those entities argue that auctions are inappropriate for assigning their licenses but say they’re willing to pay fees for use of the spectrum. It appears they have won over Sen. John Breaux, a conservative Democrat from Louisiana and one of Congress’ leading moderate voices.
While attempts have been revived to extend auction authority, it is unclear whether the FCC will receive the broad rights to auction spectrum that initially were contemplated.
The telecommunications reform bill enacted in February was held up for weeks over Dole’s insistence that digital TV broadcast spectrum not be given away. The controversy has died down somewhat, but is expected to heat up when spectrum reform legislation is pursued further in the Senate and the House early next year.
Leach, who works closely with former House Commerce Committee Chairman John Dingell (D-Mich.) said there has been talk of repealing the five-year auction sunset to prevent budget writers from rewriting auction law to their liking. But he said he doesn’t expect it will happen.
“The people who are making the decisions know relatively little about communications policy in general and spectrum policy in particular,” said Leach.
