Walden Urges FCC to Focus on Revenue for Public Safety Network, U.S. Treasury

Partisan strife flared in a House Communications Subcommittee hearing Wednesday over the FCC framework for the spectrum incentive auction. Republican lawmakers and FCC commissioners sparred with Democrats over how the government should acquire and reallocate some of the nation’s most valuable airwaves. Partisan differences over how much spectrum should be preserved to protect licensed spectrum and be used for lower-power unlicensed activities played out in recent days in commissioners’ prepared testimony (CD Dec 12 p7). Democrats separately expressed disapproval of a draft order that would relax media cross-ownership rules (CD Dec 12 p5), which they said would have a negative impact on media diversity and localism.

The FCC’s spectrum incentive auction will be a “failure” if it doesn’t raise significant revenue to fund the creation of a nationwide interoperable public safety network, said House Communications Subcommittee Chairman Greg Walden, R-Ore. He and Republican colleagues on the subcommittee urged commissioners to minimize unlicensed spectrum guard bands and allocate the airwaves to carriers to satisfy consumers’ increasing demand for mobile services. Walden objected in his opening remarks to an “unnecessary expansion” of unlicensed spectrum in bands when there is such a need for licensed services. He was particularly upset by the commission’s proposal in the FCC’s September notice of proposed rulemaking to create “fat bands” to guard against interference. The NPRM sought to expand the width of the 6 MHz guard bands to in some cases 10 MHz. “My concern is that if we take spectrum off the table, there won’t be revenues potentially to pay for things we already committed to,” Walden said.

Subcommittee Democrats urged commissioners to construct a band plan that maximizes the benefits of both licensed and unlicensed spectrum and ensure the auction promotes greater competition in the wireless market. Ranking Member Anna Eshoo, D-Calif., said the language of the Middle Class Tax Relief and Job Creation Act is clear and doesn’t require the FCC to auction guard bands. She characterized the majority’s call to minimize unlicensed spectrum and guard bands as an attempt to “rewrite the law” that should be rejected by the commission. Commerce Committee Ranking Member Henry Waxman, D-Calif., said the FCC is “off to a good start” in implementing the auction rules and reaffirmed his belief that the auctions should promote competition in the wireless market. “The FCC must have the authority to write auction rules to ensure that a concentration of spectrum does not fall into the hands of a settled few,” he said.

FCC Chairman Julius Genachowski continued to stump for the preservation of unlicensed spectrum bands. “Both licensed and unlicensed spectrum have contributed to U.S. leadership in mobile, and I believe both will be essential parts of the landscape in the future,” he said in opening remarks. “Unlicensed spectrum has a powerful record of driving innovation, investment, and economic growth -- hundreds of billions of dollars of value creation for our economy and consumers.” There’s a “a choice now -- do we expand on this good idea or do we let other countries do it before us?"

Rep. John Shimkus, R-Ill., said the debate over how the FCC handles guard bands raises the “historical aspect” of LightSquared. “I love GPS, but I think they cybersquatted … we lost this great opportunity.” Genachowski later said that “until we change the laws of physics, we are going to have to have guard bands.”

Commissioner Robert McDowell said maximizing revenue is part of the legislation’s mandate, and he remains “cautious” about how much money will actually be raised from an auction. “The markets where we need spectrum the most” are the “large cities … that is also where broadcasting is the most profitable,” he said. “To yield 60 MHz, say at 6MHz per TV station, that is 10 TV stations that would have to go dark … that is a lot.” McDowell reaffirmed his concern about spectrum caps and said commissioners should be cognizant that technological advances would be held back by rigid rules. “Spectrum is a lot like real estate, so we have to look at each transaction on its own unique case-by-case characteristics,” he said.

Commissioner Ajit Pai said it’s time for the agency to revisit the framework of the spectrum screen, which he said creates uncertainty. Pai said there will likely be complications with creating a successful framework to reallocate broadcast spectrum to carriers. Some of the participants in the reverse auction may not be well versed in the process, and on the forward side bidders might not know what they are bidding on, he said. “There will be some challenges there.” Commissioners Jessica Rosenworcel and Mignon Clyburn said the FCC is seeking to create a more efficient spectrum market, where both federal and private bands are used to their greatest potential. Clyburn said one of the goals of FCC is to craft the auction rules to ensure that the framework and environment promotes competition.

At least three subcommittee Democrats expressed concern about the commission’s draft order to relax media ownership rules and urged commissioners to delay action until more data is collected about the impact to media diversity and localism. Undermining diversity and democracy in media ownership rules is “not something to fiddle around with,” Eshoo said. “There should be an underlying principle that in a democracy there should be as many voices as possible.” Rep. Mike Doyle, D-Pa., said he continues to be concerned that the FCC would relax cross-ownership rules before it completes its study about what impact it would have on diversity. “It’s important to know the impacts before we move forward … because it’s hard to put the genie back in the bottle,” he said. Genachowski said media diversity “remains a core obligation of the commission.” He said the FCC has a media ownership study under way and has requested funding to do additional studies in coming years.

Rep. Marsha Blackburn, R-Tenn., engaged Genachowski in a heated exchange over the FCC net neutrality order and the Title II reclassification proceeding. “Entrepreneurs are distressed that so many federal agencies are trying to solve problems that don’t exist,” she said. She asked Genachowski whether the commission has had a discussion about reclassification if it loses the U.S. Court of Appeals for the D.C. Circuit case of Verizon vs. FCC. Genachowski said the FCC has not discussed what steps it would take if the court ruled against the commission: “If we can preserve what we have now, it will be a win for the country."

The incentive auction can be a success if the commission successfully implements the relevant provisions of the Middle Class Tax Relief Act, said a news release by Preston Padden, executive director of the Expanding Opportunities for Broadcasters Coalition. The group, representing more than 25 TV stations in top markets, said broadcasters are willing, “under the right circumstances,” to contribute some of their assets to the auction. TechFreedom urged subcommittee members to pursue the reallocation of more government spectrum through greater incentives. “Rather than a regulatory slow dance, we need a tango of more dynamic policies to make more spectrum available to the private sector as quickly as possible,” said President Berin Szoka and Matthew Starr, a TechFreedom legal fellow.