Cruz, Thune Seen Resisting FCC Using 2.5 GHz Licenses as Spectrum Deal Leverage

Senate Commerce Committee ranking member Ted Cruz, R-Texas, and Communications Subcommittee ranking member John Thune, R-S.D., declared themselves at odds Monday with the FCC’s decision to delay awarding the spectrum licenses T-Mobile bought last year in the commission’s 2.5 GHz auction while its sales authority remains lapsed (see 2303220077). The senators’ opposition highlights a growing view among Republicans that the FCC is delaying action on the T-Mobile licenses to spur on slow-moving congressional talks on a spectrum legislative package that would restore the commission’s auction authority (see 2308070001), Senate aides and others told us.

“The FCC appears to be holding onto T-Mobile’s $304 million payment while providing nothing in return,” Cruz and Thune said in a letter to Chairwoman Jessica Rosenworcel we obtained (see 2308130001). “If it had been a private company that accepted payment and then refused delivery of goods or services, a customer would be well within its rights to sue for breach of contract. This circumstance is similar, but it is perhaps even more egregiously unfair given the power dynamics: a government regulator is withholding a legitimately obtained good from a regulated” entity. “We have received and are reviewing the letter,” an FCC spokesperson emailed.

A Senate GOP aide told us Cruz and Thune didn’t send the letter at T-Mobile’s behest. T-Mobile has repeatedly asked the FCC to grant the 2.5 GHz licenses amid what’s become a multimonth fight on Capitol Hill over reinstating the FCC’s auction mandate while talks on a broader spectrum deal have continued (see 2308100058). A range of other communications policy stakeholders are also backing T-Mobile, including the Digital Progress Institute, Free State Foundation (see 2307270055) and Public Knowledge. T-Mobile praised Cruz and Thune for "drawing attention" to the pending licenses.

The FCC “should do what it can to ensure that this valuable mid-band spectrum is put to use as quickly as possible,” but if the commission does “not act promptly to issue these licenses, we request a full accounting for your failure to do so,” Cruz and Thune said. They want the FCC to provide by Aug. 28 a detailed “legal reasoning for not granting temporary licenses under every source of special temporary authority” available under the Communications Act apart from the expired auction mandate under Section 309(j). The FCC argued in July it couldn’t grant STAs for the 2.5 GHz licenses because of the Section 309(j) lapse, while T-Mobile argues the commission must grant them under Communications Act sections 307 and 309(a) if the body finds such an action to be in the public interest (see 2307070042).

“While you claim to be unsure of the FCC’s authority to grant these licenses due to the lapse of FCC spectrum auction authority, legal experts have held that the FCC retains power to grant licenses irrespective of whether it has authority to auction spectrum,” Cruz and Thune told Rosenworcel. “However, this authority did not necessarily displace the FCC’s preexisting power to issue licenses after mutual exclusivity concerns had been resolved. Such a reading of the law is supported by the Commission’s own practices: following review of an auction winner’s ‘long-form application’ … the Commission has historically granted licenses pursuant to its authority to grant licenses under section 309(a) rather than its authority to conduct spectrum auctions under 309(j).”

Cruz and some others on Capitol Hill “can’t help but suspect that the reason why there’s opposition at the FCC at the moment to granting the licenses is because they want to put pressure on Congress to turn the auction authority back on,” a Senate GOP aide said. “That’s a losing strategy because it’s been turned off now” for more than five months, since early March (see 2303100084), so “it’s pigheaded in my view that they continue to insist on it.” HR-3565’s backers view Cruz as an impediment to reaching a deal on a spectrum package that has broad support among Senate Commerce Democrats and both parties’ members on House Commerce (see 2306120058). Senate Commerce Democrats didn’t comment.

Cruz wants “a more market-oriented approach to high-speed internet access” than Congress has been willing to use over the last decade, a Senate GOP aide said. T-Mobile and others are trying to make the market “more competitive,” and giving the wireless carrier the additional spectrum will further that goal. Cruz’s concerns about HR-3565 are conversely about its proposal to allocate some future spectrum auction proceeds to telecom projects and “making sure the incentives are there to remove potential squatters of” frequencies they currently occupy, the Senate aide said.

“The near unanimous bipartisan consensus across Washington is that the FCC should give T-Mobile the licenses it paid for, either under special temporary authority or under” Section 309(a), “neither of which involve auction authority or the Anti-Deficiency Act,” emailed Cooley’s Robert McDowell. “It appears that no one would criticize the FCC let alone try to litigate against the agency if it issued the T-Mobile licenses.”

Digital Progress Institute President Joel Thayer said he’s hopeful the letter from Cruz and Thune will “move the needle” at the FCC. “There’s really no reason for the commission to not move and having congressional members weigh in saying” the authority exists “only helps its case if the chair decides to” act, he said.

“The case for the FCC’s authority to issue the licenses is very strong,” said FSF President Randolph May: “I don’t understand the agency’s reluctance to do so and defend its decision in court if it’s challenged. We are only talking about licenses that already have been bought and paid for.”