Talk to the hand!

The FCC was told again to back off any heavy-handed approach to "voluntary” spectrum surrender. A proposed bill from Senator Rockefeller, D-WV, S.3756, includes language that would prevent Genachowski’s crew from forcing TV stations to relinquish spectrum.

Virtually all of the bill is focused on creating a structure to build and fund a nationwide public safety broadband network. In the bill, users would be provided an additional 10MHz of spectrum along with $11 billion, or more, in funding.

In part, the proposed legislation would require the FCC to:

• reallocate the 700MHz D block spectrum for use by public safety agencies;

• integrate D block spectrum with existing public safety spectrum;

• identify and reallocate at least 25Mhz of contiguous spectrum between 1.675Ghz and 1.710Ghz and spectrum between 2.155Ghz and 2.180Ghz;

• develop licensing, operational rules and technology to ensure “interoperability;” and

• permit public safety agencies to, in essence, sell or rent access to their frequencies to others on a “preemptible” basis;

• adopt rules that permit “…public safety networks to roam onto commercial networks and to gain priority access to commercial networks in an emergency.” In other words, the local cops, fire department or almost any government agency could demand that your phone company lock you out so they can use the spectrum. The only requirement is that the agency claim the action was “consistent with the public interest.” (Recall the phrase, “Shut down the Internet.”)

The money part

Of course, everything takes money, and Rockefeller has waved his political magic wand and poof, here comes the money. And because he wants this project to come out of the gate quickly, Rockefeller seeds the fund with a $2 billion line of credit from the general treasury. It’s a loan, scheduled to be repaid without interest by December 2014 from auction proceeds. This money is just a down payment.

The bill creates two key funds. The first is called the “Public Safety Interoperable Broadband Network Construction Fund” and the second the “Public Safety Interoperable Broadband Network Maintenance and Operation Fund.” Each fund receives $5.5 billion — to start. That’s $11 billion. More money gets added later from auction proceeds.

Any money left in the “construction” fund after the completion phase is transferred to the “operational” fund. One might think any leftover money would be returned to the treasury. Well, that could happen, but the FCC gets to keep all the money for 10 years beyond the system’s completion date. Then, if there still is any money left, it goes back to the treasury. (Anyone familiar with government/education agency spending recognizes the familiar “budget year-end spending spree.” That’s the spend it or lose it mentality.) And, if the public safety network system is never officially completed, and what bureaucratic system ever is, the U.S. taxpayer never gets repaid.

The money won’t just go to police, fire and emergency agencies. It can also be used to improve “existing commercial and noncommercial networks and facilities.” In other words, existing phone companies may be able to tap the funds to improve their own facilities. Think Sprint, Verizon, AT&T, T-Mobile, etc. See this example of how the FCC is currently supporting your local phone company.

Spectrum auction

Once the projects begin, the FCC conducts an auction of 25MHz of “contiguous spectrum at frequencies located between 1675MHz and 1710MHz, inclusive.” This auction will be conducted by Jan. 31, 2013.

Rockefeller believes the $5.5 billion seed money in the construction fund won’t be enough. So, although previous estimates put the cost of a nationwide public safety network at $6 billion to $7 billion, this bill greatly boosts the total money available by adding back most of the auction proceeds.

How much money? No one really knows. The first auction of the D block spectrum drew a single bid of $472 million, which was only one-third of the FCC’s minimum bid.

The first $5.5 billion in auction proceeds goes to the “construction” fund. The next $5.5 billion goes to the “maintenance” fund. And, if the auction nets more than $11 billion, the money goes for “growth-enhancing infrastructure projects, including the NextGen aviation navigation system, developing of high-speed rail transportation and Smart Grid” technology.

With this amount of money and few controls, it is easy to envision a gold-plated public safety network. Government (local, state and federal) agencies may have little incentive to be cost-efficient in system design or equipment purchase. That is especially the case if the agency in question has no “skin” in the game. Witness the FBI’s multiyear, billion-dollar computer fiasco. So how about requiring a financial match?

No matching money required

Folks who work at noncommercial stations are familiar with CPB and other federal grants. These grants usually require what is called a “match.” The applicant puts up a specific portion of the total project cost, from 10 percent to 50 percent, and the government funds the rest. This ensures that the applicant has at least some financial interest in the project’s success.

Senate bill S.3756 specifies that the feds won’t pay more than 80 percent of any project, so the match would be 20 percent. However, read a bit closer and we discover that is not true because the bill contains a waiver clause. The “Assistant Secretary may waive, in whole or in part, the requirement of subparagraph (A) [the required match] for good cause if it determines that such a waiver is in the public interest.”

So, if your local police department decides it needs an all new digitally-encrypted, video-enabled, high-speed, car-to-car, data-focused, fingerprint checking, cloud backed-up communications system and doesn’t want to risk any of its own money, no problem. No match required.

Protection for TV stations

The section of the proposed legislation that protects TV stations from any Genachowski strong-arm tactic appears as almost an afterthought. That protective language doesn’t appear until page 23 of the 26-page bill.

Under the section, “Extension of auction authority” the bill states “The commission may not reclaim frequencies licensed to broadcast television licensees or other licensees, directly or indirectly, on an involuntary basis for purposes of section 309(j)(8)(F) of the Communications Act of 1934.”

It continues, “Nothing in this act or in amendments made by this act shall be construed to permit the commission to reclaim frequencies of broadcast television licenses or any other licensees directly or indirectly in an involuntary basis for the purchases of that section.”

Talk to the hand Genachowski.

Of course, egregiously high licensee renewal fees could still be used to induce stations to “voluntarily” participate in Uncle G’s spectrum grab.