FCC Chairman Suggests Sequester Could Complicate Spectrum Auctions

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By Paul Barbagallo  

The budget sequester could complicate efforts by the Federal Communications Commission to auction spectrum to wireless carriers, the agency's chairman, Julius Genachowski, suggested in remarks to the Washington Space Business Roundtable March 19.

The FCC is crafting rules for the first-ever “incentive” auctions of spectrum, in which the agency will try to reclaim airwaves now used for broadcast television and auction them off to wireless carriers led by Verizon Wireless and AT&T Inc., with a portion of the proceeds paid to the broadcasters. The agency wants to finalize the auction rules this year, and conduct the auctions in 2014.

In his remarks, the chairman did not indicate specifically if the across-the-board cuts that took effect March 1 will change that timeline, but said the longer the sequester continues, the more the FCC will struggle to carry out initiatives to foster innovation and investment in the communications marketplace, including spectrum auctions.

“The FCC is at its lowest number of employees in 30 years. We're at a point where upgrading various licensing and other technologies that we use to provide faster service to the industry is really important,” Genachowski told the roundtable, a nonprofit that promotes commercial space business and education.

“We can delay; we can not hire people who will work on the issues that we're talking about. But that will have a negative return on investment for the American people,” he said.

According to a report released by the Office of Management and Budget, the sequester will cost the FCC about $17 million through Sept. 30.

“We can calculate this in all sorts of ways. On the auction side, the FCC has raised $50 billion for the U.S. Treasury directly. … Any spectrum that we put on the market that is used efficiently creates value for economy. … So from an economic perspective, [the sequester] will mean a negative ROI. From a national security and public safety perspective, it poses real risks. So we have to solve this. We have to get our fiscal house in order in the United States.”