Spectrum auction compromise part of payroll tax cut bill

It looks like Congress will finally authorize incentive spectrum auctions.

Today, Republicans and Democrats in the U.S. House of Representatives and Senate agreed on legislation that will authorize the extension of the payroll tax cuts and the unemployment benefits. And they also authorized the Federal Communications Commission to auction off wireless spectrum as part of the package. Revenue from the incentive auctions will be used to help pay for the tax cuts and unemployment benefits.

The spectrum auction was proposed as part of the 2010 National Broadband Plan. It calls for TV broadcasters who have wireless spectrum they aren't currently using to give up that spectrum in exchange for a cut of the proceeds from the auctions.

The 120MHz of spectrum that is expected to be volunteered for auction will be made available to wireless carriers looking to acquire new spectrum to keep up with demand for mobile broadband services.

"Today's action to make repurposed broadcast spectrum available for wireless broadband service is vital to ensuring America's wireless industry remains the world's leader in the deployment of 4G services," Steve Largent, president of CTIA, the wireless industry's trade association said in a statement. "As the Administration, Members of Congress, the FCC and other policymakers have recognized, making additional spectrum available for wireless broadband services will spur infrastructure investment, encourage job creation and foster innovation."

While the auctions themselves have had bipartisan support, getting authorization from Congress has been a long and winding road. Republicans in the House had drafted a bill that would have limited the FCC's ability to put conditions on the wireless spectrum auctions. Democrats in the Senate largely opposed this measure.

In the legislation agreed to today as part of the payroll tax cuts, there are no outright limits on how the FCC designs the spectrum auctions. Instead if the FCC wants to impose restrictions on the auction, it will have to do so through a "notice and comment rulemaking." The FCC will no longer be able to apply subjective rules that limit participation by certain service providers.

AT&T, which pushed Congress to limit the FCC's authority in designing the spectrum auctions, seemed to accept the compromise.

"This provides procedural safeguards, and also an opportunity for a court challenge," said Jim Cicconi, head of legislative affairs for AT&T, said in a statement. "We take the FCC Chairman at his word when he says there is no intent to have closed auctions that deny AT&T and other carriers the ability to fairly and fully participate, but we also feel it important that Congress has now made its views clear as well."

Sprint, which had supported the FCC, said it also accepted the compromise.

"Sprint agrees with the Federal Communications Commission that all wireless carriers--small, regional and large--should have a meaningful chance to participate in wireless spectrum auctions," Vonya B. McCann, senior vice president of Government Affairs for Sprint, said in a statement. "While we didn't see the need to amend the statute, the compromise language approved by the conferees preserves the FCC's ability to promote competition as it conducts future wireless spectrum auctions."

In addition to authorizing the spectrum auctions, the legislation also gave public safety the 10MHz of spectrum left over from the 700MHz spectrum auction. Originally, this spectrum was to be sold at auction and the commercial owner would have shared it with public safety. But the minimum bid was never reached in the earlier 700MHz auction, so the D Block spectrum was unused.

Now public safety will get the spectrum along with $7 billion to build out the network. The National Telecommunications and Information Administration will oversee the construction of the new network.

The legislation also will allow the use of unlicensed spectrum in the broadcast TV spectrum. The FCC will have discretion in leaving a reasonable buffer for this TV "white space" spectrum.