FCC Gets Unlicensed White Spaces in Payroll Tax Bill

In a last-minute compromise reached by House and Senate leaders on Thursday, both sides agreed to auction off some $22 billion worth of television spectrum in order to pay for a tax cut and an unemployment benefits extension. As much as 120 MHz, from UHF TV channels 31 to 51, is expected to be auctioned off in the next 5-6 years to enable more spectrum for broadband cellular service.

HR 3630 cleared the Senate in a 60-36 vote less than an hour after the House approved it by a 293-132 margin. A majority of House Republicans and Democrats voted in favor of the bill, though 91 Republicans and 41 Democrats in the chamber voted no. Negotiators agreed to auction off some $22 billion worth of the spectrum, then siphon $7 billion of that into a fund for building and maintaining the nationwide “D-Block” LTE network for emergency first responders. The remaining $15 billion of auction revenue will pay for tax cuts and unemployment benefits.

President Obama is expected to sign the bill into law shortly after returning from a West Coast fundraising swing.

The bill doesn’t allow the FCC to prohibit major wireless providers from taking part in the auction, but does allow the FCC to limit the amount of spectrum a company can hold in a particular market. The FCC also retained the ability to assign some of the new television band for unlicensed use.

Numerous wireless companies and other advocates of releasing the spectrum have come out in favor of the bill.

  • The Wireless Association (CTIA), the cellular industry lobbying group, cheered the move. “This additional spectrum will help CTIA’s members meet Americans’ voracious appetite for mobile Internet anywhere and anytime,” said CTIA CEO Steve Largent in a prepared statement. “While current usage is significant with more than 340 billion MB of wireless data used in the first half of 2011, mobile data usage is expected to grow by a factor of 16 over the next five years.”
  • The Wireless Internet Service Providers Association (WISPA) applauded the agreement by Congressional negotiators today, affirming the FCC’s authority to designate wireless frequencies for unlicensed use.
  • “Sprint supports the bipartisan compromise announced this morning by the House and Senate leadership and we hope that Republicans and Democrats in both the House and Senate will support it with a vote for final passage,” said Vonya B. McCann, Sprint’s senior vice president for Government Affairs, in a statement provided to TPM.
  • Even AT&T, which had eyed the compromise with suspicion, applauded the decision. AT&T had been concerned that Congress would give the FCC too much power to dictate the rules of the spectrum auctions.

    “In our industry, there has been much focus in recent weeks on whether the FCC should or should not be able to exclude qualified wireless carriers from bidding in these spectrum auctions. The final legislation speaks clearly on this point: the FCC may not do so as part of any auction proceeding. Instead, it could only make such a decision through a separate public rulemaking with general industry applicability, and not through the backdoor of special auction rules. This provides procedural safeguards, and also an opportunity for a court challenge.

  • MetroPCS recognizes that the legislation in the conference report was a compromise. While we would like for more unused Federal government spectrum to be reallocated and auctioned in the near term, the enactment of the spectrum auction provisions in the conference report will start to relieve the “spectrum crunch,” help the economy grow and create jobs.

An alternative bill, introduced by Republican Representative Greg Walden of Oregon, called the Jumpstarting Opportunity with Broadband Spectrum Act, would have eliminated license-free use of the spectrum, provided the NAB with more money ($3 billion), given Public Service users less money, and targeted the remaining funds to pay off the national debt.

The new legislation will give the 700 MHz D block to Public Safety for a full 10X10 MHz swath of nationwide spectrum to establish a Public Safety Broadband network. Some $7 Billion of federal funding will assist in the building the network plus some R and D funds for future work. Motorola Solutions “is likely to be a critical supplier”, since Motorola controls more than two-thirds of the public safety communications market.

The Public Safety Spectrum Trust currently holds the license for Public Safety Broad Band spectrum in the 700 MHz band, but it has been restricted to a 5X5 MHz swath for LTE. The adjoining Public Service Narrow Band channel remains for voice communications using interoperable P-25 radios (at $5K a pop).

However, the 2012 Inspector General’s report on the Integrated Wireless Network (pdf), concluded the expense and limitations of P-25 radio networks is likely to bring the narrowband effort to a virtual halt, in favor of an integrated approach with both push-to-talk voice and broadband.

Some states, such as Oregon, planned to spend as much as $600 million on state-wide, narrowband networks. Some of those regional or state-wide efforts may now be re-directed into an integrated broadband approach. Construction of public service networks will be funded, in part, by revenue from “incentive auctions” of the unused TV channels between Channel 31-51.

Radio systems operating from 470 MHz to 512 MHz—the T-band—should not have to spend additional money to meet the FCC’s year-end narrowbanding mandate, according to NYPD deputy chief Charles Dowd. That’s because the new legislation dictates that those networks will have to be abandoned during the next decade. Lawyer Alan Tilles explains how the transition will work.

Rep. Joe Barton (R-Texas) said that extending benefits without spending cuts would starve Social Security, since the payroll tax funds Social Security.

“I’m not saying anything disparaging about the leadership on both sides of the aisle and the leadership in both bodies, but we are taking money away from the Social Security Trust Fund and we are substituting an IOU that may or may not ever be repaid,” Barton said.

Senator Jay Rockefeller (D-W.Va.) introduced a similar SB.911 bill, which passed the Senate. It also provided public safety spectrum, funds to build a network, and provided unlicensed spectrum, but it would have used the remaining auction revenues to pay off the national debt.

The FCC favored auctioning off the “D” block of spectrum. That might have raised $2.75 billion, according to the Congressional Budget Office (pdf). The first responder network would then have been built largely without taxpayer money and made available to all citizens through a shared public/private partnership.

In the end, neither Republicans or Democrats were willing stop extended unemployment benefits in an election year and used spectrum auctions to pay for it.

More than 100 organizations sent letters to Congressional leaders in both houses and both sides of the aisle, asking them not to eliminate the unlicensed airwaves. White space spectrum, the vacant airwaves between television channels, was opened by the FCC for unlicensed use in September 2010. The spectrum may pave the way for unlicensed wireless broadband, similar to WiFi, with slower speeds but much improved range, which may be particularly beneficial for rural users.

Due to intense lobbying from the NAB, the government will pay private broadcasters for spectrum they never owned in the first place. Broadcasters are satisfied that stations opting out of selling airwaves at incentive auctions would be protected and would get financial help if they are forced to move to another section of the TV band.

Roughly $1.75 billion will be available for the F.C.C. to compensate television stations that volunteer to give up their spot on the spectrum. The F.C.C., with some restrictions, can also move some stations around on the broadcast spectrum, allowing it to put together packages of contiguous bands of spectrum. Those would be more valuable than scattered pieces and thus should raise more money at auction.

Now the onus may be on private broadcast group owners who may try to “hoard” some of the 120 MHz of spectrum – spectrum which they paid nothing for – in order to maximize their profits.

Julius Genachowski, chairman of the FCC, said he was “pleased that Congress has recognized the vital importance of freeing up more spectrum for mobile broadband,” although the agency has less wiggle room in determining policy for potential spectrum bidders.

Blair Levin, architect of the FCC National Broadband Plan that proposed the auctions to provide up to 120 MHz of new spectrum, said the auction of tv spectrum could happen as swiftly as four or five years.

Levin is concerned that bill provides too much direction, and too little flexibility for the FCC to use its auction expertise. He would have preferred simply giving the FCC the authority to compensate broadcasters, which it currently lacks, and let the commission fill in the rest, particularly given the difficulty in predicting changes in technology that could affect a spectrum auction.

The “incentive auction” of channels in the UHF television band is expected to raise some $25 billion. About $15 billion of that will go towards the $30 billion extension in unemployment benefits. An additional $7 billion of auction proceeds will be used to build the public safety network.

The FCC auctioned 52 MHz in the 700 MHz band for $19 billion in March 2008. AT&T paid more for their piecemeal spectrum blocks then Verizon did for their nationwide (REAG) “C” Block licenses that cover large sections of the country. If 52 MHz of spectrum in the 700 MHz band generated $19 billion in proceeds, you’d think 120 MHz in the 600 MHz band would generate more than $22-$25 billion. But the FCC will be “lucky” to get 60MHz of spectrum from the incentive auctions, said Richard Bennett, a researcher at the Information Technology and Innovation Foundation.

It’s probably too early to pass judgement on the practical end user benefits of this legislation, but it was refreshing to see compromise and positive movement rather than bickering and vitriol.

Related Dailywireless articles include; FCC Gets Autonomy in Payroll Tax Bill, FCC Plans Improved Rural Wireless Broadband, Municipal Networks: Good for Cities?, Spectrum Legislation: Democracy Now!, White Space War, SF Approves Dedicated LTE Network for First Responders, FCC Plans Improved Rural Wireless Broadband, FCC Autonomy Under Fire, AT&T Competitors: No 700MHz Roaming, SF Approves Dedicated LTE Network for First Responders, Universal Service Reform Passed , FCC Reforms $4.3B USF Fund, FCC Reforms Universal Service, Will USF Funds Subsidize AT&T Buildout? White Space Legislation Goes Dark, White House: D-Block to Police/Fire, State of the Spectrum

Posted by Sam Churchill on .

Leave a Reply