Spectrum Provisions in Budget Deal Could Net $4.4 Billion

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By Lydia Beyoud

Oct. 27 — Spectrum provisions in the bipartisan draft budget agreement could net $4.4 billion in revenue over the next decade, according to the Congressional Budget Office.

Under the draft agreement, an additional 30 megahertz (MHz) of spectrum currently held by government agencies would be freed up for auction to wireless carriers desperate to get more bandwidth to satisfy consumer demand for streaming video and other data-heavy applications.

The provisions, part of a larger agreement published late Oct. 26 that lawmakers are expected to pass soon, would help accomplish two high-profile policy goals—generating revenue to offset government spending, and making more airwaves available for commercial wireless purposes.

The Federal Communications Commission would be required to start auctioning the spectrum, drawn from below the 3 gigahertz (GHz) band, by July 1, 2024. The agency would have its auction authority extended from 2022 through Sept. 30, 2025 under the draft agreement. Spectrum also could be shared by government agencies and the private sector under the draft.

The FCC and the National Telecommunications and Information Administration, which manages government-held spectrum, would be required by Jan. 1, 2024 to identify at least another 100 MHz of government spectrum below the 6 GHz band that could also be reallocated for commercial uses.

The draft also would provide for $500 million in funding from the Spectrum Relocation Fund (SRF) to give agencies the flexibility to conduct research and development to make more spectrum available. If enacted, a modification to the SRF would allow the Office of Management and Budget to dole out R&D funding in advance of agencies identifying specific bands for auction, and to help agencies manage spectrum more efficiently.

“This funding will increase the ability of the Federal government to identify opportunities for spectrum reallocation and sharing with commercial systems,” the House Appropriations Committee said in its summary of the bill.

Spectrum prices, particularly for frequencies best suited to adding network capacity, have risen rapidly as carriers prepare for a surge in mobile video use, Bloomberg Intelligence analysts John Butler and Matthew Kanterman said in a note Oct. 26. An auction of 65 MHz of government and privately held spectrum in January brought in $44.9 billion.

Mobile carriers have been pushing Congress and the FCC to identify additional spectrum that could be freed up for use by the private sector, with a particular eye on spectrum held by federal agencies. More than 60 federal agencies and departments combined have over 240,000 frequency assignments across all spectrum bands. Nine departments, including the Defense Department, hold 94 percent of all frequency assignments for federal use, the Government Accountability Office said in a 2013 report.

The legislation “is an important first step forward in meeting the wireless industry' long-term need for additional spectrum,” Meredith Attwell Baker, president and CEO of CTIA—The Wireless Association, said in an e-mailed statement. “In addition, important process and research reforms were included that will improve federal spectrum management,” Baker also said.

Yet even that amount isn't enough for the long term, Baker said. “As other countries around the world are allocating large paired blocks of spectrum for future broadband needs, it is disappointing that we were not able to do more now to meet Americans’ demands for 5G and the Internet of Things. It is incumbent on all of us to redouble our efforts to identify hundreds of MHz of additional spectrum to meet Americans future demand for mobile services so that America can remain the world leader in wireless,” she said.

Congressional Outlook

The initial 30 MHz target, reached through discussions between Capitol Hill and the administration, is an achievable target for 2022, though there's no reason even more spectrum couldn't be made available by then, a House Energy and Commerce GOP aide told Bloomberg BNA on background. The GOP staff on the committee is happy with the provisions of the draft bill, which the aide said should set up Congress, the administration and industry to benefit from future spectrum auctions.

Democratic House Energy and Commerce staff are still reviewing the spectrum provisions along with the rest of the draft agreement, a Democratic aide told Bloomberg BNA.

Spectrum provisions are an attractive ingredient in larger budget or spending bills because of the cash generated by auctions. Lawmakers previously included major spectrum auction provisions as part of the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96), which authorized the upcoming incentive auction of broadcaster-held airwaves in the 600 MHz band to wireless carriers.

No Additional Repacking Funds

The National Association of Broadcasters pushed hard—but failed—to get additional funds under the budget deal to cover the costs of relocating broadcast stations that participate in the FCC's 2016 incentive auction to new frequencies, two broadcast industry sources told Bloomberg BNA.

The NAB declined to comment on the issue. However, the broadcast trade association repeatedly has voiced concern over the course of the year that the existing $1.75 billion relocation fund is insufficient to fully compensate broadcasters for the cost of relocating their facilities.

The trade group is expected to continue pushing for the funding in other legislative vehicles.

Robocall Exemption

The draft budget deal also includes language to exempt debt collectors working on behalf of the federal government from recent FCC restrictions on automated “robocalls”.

Sen. Edward J. Markey (D-Mass.) said in an Oct. 27 e-mailed statement that the language could lead to a hike in the number of unwanted calls and texts to consumers. “The privacy protections provided by the Telephone Consumer Protection Act are important safeguards for Americans, and Congress should not weaken the law,” Markey said in his statement.

The provision, Subsection 301(a), would amend the Communications Act of 1934 to allow federally contracted debt collectors to avoid penalties under the TCPA. It would also authorize the FCC to issue regulations on the number and duration of the calls. The FCC would have to issue regulations to implement the provision within nine months after the budget deal is enacted..

Ceannate Corp., Continental Service Group Inc., Navient Corp., Performant Financial Corp. are among top debt collectors, primarily for delinquent student loans, according to Bloomberg News.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine in Washington at kperine@bna.com

For More Information 
Text of the draft budget deal is at http://src.bna.com/Lp.
Text of the House Appropriations Committee's section-by-section summary of the budget deal is at http://src.bna.com/Mi.