Kennedy Grills Pai on C Band; Long Fight on Senate Appropriations Text Expected

Lead supporters and opponents of Senate Appropriations Committee-backed pro-public 3.7-4.2 GHz C-band auction language (see 1909190079) in the chamber's version of the FY 2020 FCC-FTC budget bill (S-2524) say they're not budging and expect a long fight. The dispute, which began last month, continued Thursday as Senate Appropriations Financial Services Committee Chairman John Kennedy, R-La., and others grilled FCC Chairman Ajit Pai on whether he favors a private auction similar to what the C-Band Alliance proposes. Kennedy and some other lawmakers favor public auction (see 1908230049). Pai is expected to propose a private auction plan for a vote at commissioners' Dec. 12 meeting (see 1910100052).

“I'm as serious as four heart attacks and a stroke” about the need to retain the nonbinding C-band language in S-2524, Kennedy said in an interview before the hearing. “I'm going to fight for it and I think I'm going to win.” Kennedy is facing off against Senate Commerce Committee Chairman Roger Wicker, R-Miss., and Communications Subcommittee Chairman John Thune, R-S.D., who want to nix the spectrum text on jurisdictional grounds (see 1909270024). Kennedy believes he has support of Senate Appropriations Chairman Richard Shelby, R-Ala., and Financial Services members for retaining the C-band language. Only two other lawmakers attended: Sens. John Boozman, R-Ark., and Jerry Moran, R-Kan.

Thune told us he expects the dispute with Kennedy “will be an ongoing discussion. I don't think it's going to be resolved anytime soon.” He and Wicker “still view [U.S. spectrum policy matters] as being fully under [Senate Commerce's] jurisdiction. We're very interested” in “continuing to figure out ways to get more spectrum available for commercial use.” Wicker simply said he's “taking a press hiatus.”

Kennedy told reporters he's considering what he will do to escalate if the FCC chooses to move on a C-band plan that mirrors CBA's proposal. He vowed to “raise fresh hell and I'm not going to stop.” Kennedy hopes to meet with President Donald Trump “and make sure he understands the tradeoffs” between a public and private sale. Kennedy wrote Trump in June adoption of the CBA proposal would be "our generation's 'high-tech'” equivalent of the U.S.' decision to give up control of the Panama Canal (see 1907190051).

Pai hasn't “made a final decision” on a C-band plan and has four “goals." A final plan should “quickly” make a “significant” amount of spectrum available for 5G, he said. It should “generate revenue for the federal government” and must ensure current C-band incumbents' services, including cable and broadcast programming “will continue to be delivered” to consumers. CBA is framing its proposal as a “win-win for the U.S. government as well for the various industries,” Pai said.

CAGW, TPA Opposed

Citizens Against Government Waste President Tom Schatz and Taxpayers Protection Alliance President David Williams testified in opposition to the CBA proposal. Schatz doesn't “see any reason” the FCC shouldn't hold a public auction as it has in the past, since “taxpayers” own the spectrum. “These are the people's airwaves” and CBA's proposal would be a “top 10” ripoff of taxpayers due to the group's inability to commit to an amount or percentage of auction proceeds it would send to the Treasury, Williams said.

Kennedy left unconvinced CBA's proposal or any other private C-band auction plan is an acceptable alternative to a public FCC-led sale but said during the panel his mind could be changed by convincing evidence. He's planning a second C-band hearing “very soon,” with testimony from FCC officials in charge of its spectrum auctions, aimed at addressing his concerns.

“Were talking about” a chunk of spectrum that could be worth upwards of $60 billion “and I just don't understand why we need a middle man” to run the sale and take a majority of the proceeds, Kennedy said. New Street Research pegged the spectrum's worth at about $50 billion (see 1909160013). Kennedy voiced skepticism on CBA claims it would make a voluntary contribution of a portion of spectrum sale proceeds to the Treasury.

It's unclear what the advantages are beyond CBA's argument that it will be able to do its sale of the spectrum faster than the FCC could, Kennedy said. He suggested the commission could hold an auction much sooner and Pai should fire staffers who claim that's not possible and “go on ZipRecruiter” to find personnel who can provide quicker turnaround. Pai couldn't provide a firm estimate of the timeline for an FCC-led auction process, saying it could take two to three years but couldn't rule out a seven-year timeline. It would be easier to provide a timeline if the spectrum weren't in use, he said.

“Speed is important here” because “we're in a race with some of our world's neighbors for 5G,” Kennedy said after the hearing. “But I don't understand how a private sale is going to be faster because a nanosecond after” the FCC decides to allow such an action, “there are going to be lawsuits filed out the wazoo.” Argument over whether a private auction would violate the FCC's Communications Act Section 309(j) authority (see 1909300038) “is going to the Supreme Court,” he said. “You can write that one down and take it home to mama.”

Kennedy also questioned other elements of CBA's proposal during the hearing, including whether the group already had a seller ready to buy the C-band spectrum if the FCC greenlights that plan. “What if they have it pre-sold to [Chinese telecom equipment manufacturer] Huawei?” he said in an exchange with Pai. “That would not be cool, Mr. Chairman. You’d get a call from [Trump] on that one.”

Boozman and Moran

The other two legislators present steered clear of Kennedy's worries.

Boozman and Moran concentrated on concerns about potential interference caused by new entrants on both the C-band and 6 GHz band. Both noted the effect interference on the 6 GHz band would have on utility and public safety incumbents on those frequencies. The S-2524 report spectrum language also addresses the FCC's proceeding exploring opening up the 6 GHz band for Wi-Fi and other unlicensed use. The agency took comment earlier this year on 6 GHz and saw lots of opposition to sharing with unlicensed (see 1902250054).

CBA countered after the hearing, writing Kennedy and Senate Appropriations Financial Services ranking member Chris Coons, D-Del., that its proposal has been “misrepresented in certain quarters,” including by Schatz and Williams. CBA “has repeatedly and consistently committed to return a share of any transaction to the public as part of the implementation of its proposal,” said Executive Vice President-Advocacy and Government Relations Peter Pitsch. “CBA has been clear about this point, and we do not waiver.” A public auction “cannot match the speed and time-to-market that the CBA proposal offers,” he said. “The CBA plan remains the surest way for the United States to win the global race to 5G.”

House Communications Subcommittee Vice Chair Doris Matsui, D-Calif., a Congressional Spectrum Caucus co-chair, told Pai she's still “concerned” about potential FCC adoption of a CBA-like auction plan, which would “funnel proceeds to private parties rather than taxpayers and trigger time-consuming legal challenges.” Only the agency “can fulfill its requirements under the Communications Act to distribute licenses in a fair, efficient, and equitable manner while protecting the public interest,” she wrote. “The Commission cannot cede this authority to private parties -- especially parties that have a financial interest in the outcome -- while fulfilling its obligations.”

Americans for Tax Reform President Grover Norquist now backs the CBA plan after earlier opposing it. “We are encouraged by the changes they have made to their proposal, which is now more transparent, clears more spectrum, and acknowledges taxpayer interests,” he wrote Senate Appropriations Financial Services Wednesday. “In many circumstances private spectrum sales can be appropriate, and government should make sales, trades, and swaps between willing buyers and sellers in the marketplace as frictionless as possible.”