Congress paves way for broadcast spectrum auctions

It turned out to be a need for cash rather than a change in communications policy that ultimately persuaded Congress, but Democrats and Republicans have struck a compromise that will now legally allow auctions of broadcast television spectrum.

The election year need for money to partly cover the extension of the payroll tax cut and long-term unemployment benefits cemented the deal. Nevertheless, the “New York Times” called it “a generational shift in the country’s media landscape” that trades off television stations for additional Internet bandwidth.

The deal will push President Obama’s broadband agenda and result in faster connections for smartphones, iPads and other Internet-connected mobile devices. It allows the FCC to free the use of more unlicensed spectrum and permits the commission to ensure more competition. It also drops a House-passed provision that would have limited the FCC’s authority to set licenses conditions—such a net neutrality provisions—on auctioned spectrum.

Due to intense lobbying from the NAB, the historic deal resulted in the government compensating private broadcasters with the proceeds from an auction of publicly owned property once loaned to television stations. That has never happened before. The spectrum auctions are expected to raise more than $25 billion.

The deal will also create a nationwide communications network for emergency workers, strongly desired since 9/11, which would allow police, fire and other first responders from various departments and jurisdictions to talk with each other directly.

Before the auctions are held, the FCC must come up with rules. Estimates are it will take one to two years before that happens. However, most of the government programs the legislation will pay for will be covered immediately. Congress has given the FCC until 2022 for the process to be completed.

The payroll tax exemption will be extended through the end of this year, providing a worker earning $50,000 annually with $1,000 more in take-home pay over that time. The legislation will also prevent a reimbursement cut for doctors who accept Medicare.

The compromise was remarkable because it had nothing to do with communications policy. Instead, it resulted from hard nose politics in an election year. Both parties had to find a way to extend the benefits and Republicans insisted that the $30 billion cost of extending unemployment insurance be paid in full. The only area both sides could agree on was the sale of broadcast spectrum.

FCC Chairman Julius Genachowski, although pleased by the deal, expressed concern about some of the language of the legislation, which he told the “New York Times” “could limit the FCC’s ability to maximize the amount and benefits of recovered spectrum.” That included a provision in the bill, pushed by broadcasters, that sets limits on what actions the FCC can take to reclaim airwaves and it prohibits the commission from excluding from the auctions companies like AT&T and Verizon.

However, the legislation does allow the commission to write formal rules that set limits on how much spectrum one company can hold in a given market. It also provides for the creation of bands of unlicensed airwaves—white spaces—around segments of auctioned spectrum. This can be used for huge Wi-Fi networks in urban areas and by mobile operators who need to temporarily ease crowding on their networks.

The legislation also said that nothing in the bill “affects any authority the Commission has to adopt and enforce rules of general applicability, including rules concerning spectrum aggregation that promotes competition.’’

Seven billion of the auction proceeds will be used to build the public safety network. About $1.75 billion will be available for the FCC to compensate television stations that volunteer to give up their spot on the spectrum. An earlier Republican version of the bill wanted $3 billion for broadcasters and commercial broadcasters had asked for $2 billion.

The commission, with some restrictions, can also shift some broadcast stations around on the spectrum, allowing it to put together packages of contiguous bands of spectrum. That spectrum would more valuable at auction than scattered pieces of airwaves. Northern border protection for the broadcasters as well as making all reasonable efforts to replicate coverage areas for stations will remain in the legislation.