Lawmakers Shift C-Band Focus to Allocating Auction Proceeds

FCC Chairman Ajit Pai's Monday decision to pursue a public auction of spectrum on the 3.7-4.2 GHz band (see 1911180026) has shifted some lawmakers' attention from forcing the commission's hand to ensuring proceeds from the sale are allocated for rural broadband deployments and other telecom priorities. Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., and House Communications Subcommittee Chairman Mike Doyle, D-Pa., are aiming to continue advancing the Clearing Broad Airwaves for New Deployment (C-Band) Act (HR-4855/S-2921) as a potential proceeds allocation mechanism. Kennedy discussed potential pay-for options for C-band proceeds during a Thursday Senate Appropriations Financial Services hearing.

Senate Communications Subcommittee ranking member Brian Schatz, D-Hawaii, Senate Commerce ranking member Maria Cantwell, D-Wash., and Sen. Ed Markey, D-Mass., meanwhile, bowed their Investing in America’s Digital Infrastructure Act Thursday. It would require “nearly all” C-band auction proceeds to be deposited into a Digital Divide Trust Fund that would be used to fund rural broadband and next-generation 911 projects. The measure would require the FCC to auction at least 200 MHz of C-band spectrum. “Our bill will raise billions so that more people can access the internet,” Schatz said in a news release. “We have a once-in-a-lifetime opportunity to advance 5G services and at the same time generate revenue to close the digital divide and upgrade our nation’s 9-1-1 call centers to next-generation technology -- all through a proven, transparent process,” Cantwell said.

“We made it pretty clear what Congress' intent was and that was for the FCC to do a public auction,” Doyle told us. He originally filed HR-4855 in October in a bid to require a public FCC-led auction of C-band spectrum given concerns about the possibility the commission would choose to allow the type of private auction sought by the C-Band Alliance (see 1910240046). The bill would direct the FCC sell rights to use 200-300 MHz of “contiguous” spectrum in the C band by Sept. 30, 2022. It would require the auction to occur in a way that ensures incumbents “receive equal or better service as before” the sale “continuously throughout the transition process.” The measure would reserve a 20 MHz guard band.

“The next step is to move forward with this legislation because we want to create a pay-for for what we want to do with broadband deployment” and other priorities, Doyle said. “If we don't do that, the money just goes to the Treasury” and there will be no guarantee it will be allocated for telecom projects. “There's a lot of things we can do with that kind of money,” including “closing the digital divide” and funding 911 upgrades, he said.

S-2921 will ensure “all of the money is going to go to the American people” through the Treasury, with the first $10 billion “dedicated to rural broadband” funding, Kennedy told reporters. “Everybody's going to get to take the trip together. We're not going to end up in a situation where we only have 5G in cities. This is a lot like rural electrification the 1930s. The people who don't live in big cities count, too.”

Kennedy hasn't secured a Democratic co-sponsor for S-2921, but “I know I'm going to get a lot of Republican and Democratic support." Sen. Chris Van Hollen of Maryland confirmed to us he's still “thinking about” becoming the measure's lead Democratic sponsor, but he's “not sure the bill is necessary at this point,” given Pai's decision. HR-4855 has two GOP co-sponsors -- Greg Gainforte of Montana and Bill Johnson of Ohio.

Doyle and Kennedy want HR-4855/S-2921 to pass before the C-band auction. The FCC's “confident we can commence this auction before the end of 2020,” said Office of Economics and Analytics acting Chief Giulia McHenry during the Senate Appropriations Financial Services hearing. “We want to get” the bill passed as soon as possible because “it's important that we get the pay-for” in time for the auction, Doyle told us. “I'm going to work it hard,” Kennedy told reporters. His main intent in Thursday's hearing was to “dispel the fiction that it will take the FCC seven years” to conduct the auction.

Senate Commerce Committee Chairman Roger Wicker, R-Miss., and House Commerce Committee ranking member Greg Walden, R-Ore., are also thinking about C-band proceeds. “We'll continue to discuss the merits” of different “paths” for allocating money from the auction, Wicker told us. He and Senate Communications Subcommittee Chairman John Thune, R-S.D., filed their 5G Spectrum Act (S-2881) after Pai's announcement. The bill would require the FCC to hold a public auction of at least 280 MHz of C-band spectrum, and require the sale start by Dec. 31, 2020. The measure would require the FCC return at least 50 percent of proceeds to the Treasury.

“I'm going to reserve” judgment on the best way to allocate C-band proceeds until “I get back into” researching the situation, Walden told us. “There will be lots of discussion moving forward on how the money gets allocated” and “we'll be watching” that process. Pai's decision “had to be a close call because there are arguments to be made on both sides about what gets you the mid-band [spectrum] available the soonest,” he said. “I'd prefer a public, transparent process generally when it comes to spectrum auction sales, but having been a radio broadcaster, I know there's a lot at stake.”