Spectrum auctions not in debt ceiling agreement

Authorization for spectrum auctions was not part of Congress's debt ceiling agreement that will be voted on, but it could still become part of a broader legislative plan to generate more cash for the government.

The proposed debt ceiling bill that Congress is expected to pass in the next day or so will not give the Federal Communications Commission authority to auction additional wireless spectrum. But that doesn't mean that wireless incentive auctions are dead.

Wireless experts in Washington, D.C. say Congress could tack on the authorization for the FCC to conduct spectrum auctions to a package that may emerge later this year from the bipartisan deficit-reduction panel created by this week's debt agreement. President Obama said the "super committee," which will consist of six Democrats and six Republicans, will prepare a bill by November 23 that can be voted on without any amendments by December 23. This new legislation must find a way to make cuts for reducing the deficit that total $1.5 trillion.

Wireless spectrum auctions could be a good way to add some money to the government's coffers without increasing or adding new taxes. One lobbyist for the wireless industry put it like this:

"Every dollar that we can provide Congress with through the sale of spectrum the closer they are to reaching their target, and they don't have to cut anything or increase taxes to do it," said one lobbyist who didn't want to be named.

Paul Gallant, an analyst with MFGlobal, agreed that spectrum authorization would be a good candidate for inclusion in the "Super-Congress" bill.

"While heavy lobbying will continue in the next three months, we still expect Congress to give the FCC spectrum auction authority and provide new funding for a public safety network in late 2011 (likely as part of phase 2 of the deficit reduction process)," he said in a research note today. "Because of the strong fiscal and policy (i.e. public safety) appeal of the spectrum provisions, we believe the Special Committee is likely to include spectrum auction authority in the bill it presents to Congress for a straight up-or-down vote on December 23, 2011."

The lead Democrat in the Senate, Harry Reid, had originally included the the wireless auction authorization in his proposal because it offered revenue without much of a downside. Under his proposal the Congressional Budget Office estimated the government could make $12 billion in revenue from wireless auctions, which would include spectrum that TV broadcasters would voluntarily give up to the FCC in exchange for a cut of the proceeds. The spectrum would then be auctioned to wireless broadband providers.

But the provision was not included in the deal that Democrats and Republicans hammered out over the weekend. And it's unlikely that it will make its way in before the voting. TV broadcasters may view this as a victory. They did not want spectrum auctions included in the debt ceiling bill because it would have lacked detailed plans to ensure that the remaining spectrum used for TV broadcast would not be harmed.

The National Association of Broadcasters breathed a sigh of relief that spectrum auctions are not included in the current debt ceiling plan.

"We are pleased that the negotiated debt ceiling bill, to be considered by Congress, does not threaten free and local broadcasting," NAB President Gordon Smith said in a statement. "NAB will continue working with lawmakers on incentive auction legislation that is truly voluntary. Our goal is to ensure that TV stations choosing not to go out of business will be held harmless, and that tens of millions of Americans who enjoy local news, entertainment, sports and life-saving weather warnings from broadcasters will not be penalized."

Reid's proposal also would have left out funding for public safety as part of the auction requirements. By contrast a standalone bill sponsored by Sens. Jay Rockefeller (D-W.Va.) and Kay Bailey Hutchison (R-Texas) has already passed through the Senate's Commerce Committee this June and allocated some spectrum worth roughly $3 billion to be donated to public safety to build a nationwide first responder wireless network. The bill also included about $12 billion in funding to build the network.

That said, the idea of auctioning off spectrum to make money for the government already has a lot of support from members of Congress on both sides of the political aisles. The Rockefeller-Hutchison spectrum bill passed through the Senate Commerce Committee by a 21-4 vote, which Gallant said is an indication that there is strong bipartisan support. The Obama Administration has also made expanding wireless spectrum as a priority. As such, Gallant said in his note that even if the bill doesn't make it into the special committee's legislation, "the odds would still favor passage of a spectrum bill through the normal committee process."

The two big questions are when would legislation pass authorizing the FCC to go ahead with the auctions and how much money would it make for the government? These are the details that will likely get worked out over the next few months as Congress' "super committee" works on a plan. Meanwhile, Rockefeller and Hutchison will likely continue to push their bill further. And House Republicans Reps. Greg Walden (R-Ore.) and Fred Upton (R-Mich.) are also working on drafting legislation to authorize spectrum auctions.

 

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