Kerry Says Senate Commerce Absence on Conference Could Hurt Spectrum Bill

Sen. John Kerry worries about a one-sided negotiation over spectrum in the House-Senate conference working on the payroll tax cut extension, the Senate Communications Subcommittee chairman said Tuesday. The extension bill, due by month-end, is expected to include spectrum auction authorization to pay for the bill. While the House and Senate Commerce committees have developed individual spectrum bills, the conference has three members from the House Commerce Committee and zero from Senate Commerce. In a speech Tuesday at a New America Foundation event, Massachusetts Democrat Kerry said he’s particularly concerned with a provision in the House bill prohibiting the FCC from setting spectrum aside for unlicensed use.

The House-Senate conference includes three House Commerce Committee members: Chairman Fred Upton, R-Mich., Ranking Member Henry Waxman, D-Calif., and Communications Subcommittee Chairman Greg Walden, R-Ore. But the Senate Commerce Committee is not represented on the panel. Last week, Walden said that membership dynamic could make it tricky to negotiate the spectrum portion of the bill. Waxman opposes the GOP’s spectrum bill, but Walden has said he’s done negotiating with the House Democrat (CD Jan 26 p5).

Kerry worries about “the dynamics of the payroll tax process because I'm not sure that everybody engaged in that shares quite the same sensitivities that is represented here in this room and elsewhere.” Not having anyone from the Senate Commerce Committee on the conference does make it “a little harder for [the conference] to maintain that sensitivity, knowing how things work,” Kerry told reporters afterward. Kerry, a member of the Joint Select Committee on Deficit Reduction, the so-called super committee, noted in his keynote that he and super committee colleague Upton had made a lot of progress on spectrum before deficit reduction talks failed.

But Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., doesn’t think the lack of Senate Commerce representation will be an issue, he told us after the Senate policy lunches Tuesday. “We think it will be fine,” Senate Commerce Committee spokesman Vincent Morris told us. “It’s got broad, bipartisan support and we're in close contact with leadership offices in both houses. Plus Senator Rockefeller has spent many years on Finance and will make sure they know how important spectrum legislation is.” Finance Committee Chairman Max Baucus, D-Mont., is a conferee.

It seems likely that the conferees will consult the Senate Commerce Committee, said Michael Calabrese, senior fellow at the New America Foundation. Having Upton, Walden and Waxman as conferees means the House is likely to lead the discussion, Calabrese said. “It might be asking a lot of non-Commerce senators to engage deeply on things like unlicensed spectrum and FCC auction policy,” Guggenheim analyst Paul Gallant said. “That could help the House side a bit, but there are lots of cross-currents, and subject matter expertise is just one piece of the puzzle."

House Bill Criticized

Kerry wants some spectrum set aside for unlicensed use like Wi-Fi, he said at the New America event. Those who seek to auction unlicensed spectrum instead are “missing a lot,” he said. With “enormous growth” in Wi-Fi, unlicensed spectrum could bring in $37 billion in revenue per year, he said. It is “unbelievably short-sighted” to sell the spectrum now rather than to allow innovators to use it on an unlicensed basis, he said. Sen. Jerry Moran, R-Kan., agreed in a speech following Kerry. Moran questioned the GOP argument that auctioning all spectrum, including unlicensed, would maximize revenue. “I think you could make an awfully good argument” that one could create more revenue by leaving “some spectrum available to allow competition,” he said. “The companies that then grow up out of that unlicensed spectrum create jobs, pay taxes and [contribute to] a growing economy.” Congress should give the FCC flexibility to decide the rules for the auction, he said.

Former FCC Chairman Reed Hundt urged rejection of the House spectrum bill. The House bill would “stifle” innovation, kill jobs and reduce the gross domestic product and tax revenue, Hundt said at the event. “It is the single worst telecom bill that I have ever seen,” he said. “It covers just one topic in a very narrow way and it gets everything about that topic upside-down.” Telecom legislation should set goals and objectives for the FCC but allow the commission to work out the details in an open rulemaking, Hundt said. The House wants Congress to “act like an agency,” he said.

Hundt objected to several parts of the House bill. By restricting the FCC’s ability to condition auctions, it allows people to “monopolize spectrum,” he said. Auction rules should not be fixed in statute, he said. The bill should not auction unlicensed spectrum, he said. The bill restricts FCC ability to negotiate treaties with Mexico and Canada, he said. It constrains FCC ability to repack broadcast spectrum, he said. The bill limits the amount of money the FCC can receive from taxpayers by “interfering with the methodology.” And the House bill “has various methodological requirements that would greatly delay the entire process,” he said.

Walden argued last week that the FCC can decide after an auction that a winning bidder should not get spectrum for public interest reasons. But Hundt said that won’t work because people won’t bid nearly as much money if the FCC tells them there’s a chance that they won’t be able to keep the spectrum. The House GOP argument is “idiotic,” said Mark Cooper, research director of the Consumer Federation of America.