Incentive Spectrum Auctions Are Part of Payroll Package

Incentive spectrum auctions have made it into the compromise payroll tax bill package hammered out by Republican and Democrat conferees late Thursday night, which means the auctions to reclaim broadcast spectrum for wireless broadband could be approved as soon as Friday.

At a press conference on the spectrum legislation, Senator Chuck Schumer (D-NY) pointed out that the bill was not a done deal just yet. He said that only 53 senators were committed to the compromise package at press time, and it would take 60 for passage..

At a FCC hearing Thursday morning, Rep. Greg Walden (R-Ore.), backer of the House version of auction legislation, said it had been a late night Wednesday as they worked on the auction portion of the package. Sen. Jay Rockefeller's office said Thursday that "the outline" of Rockefeller's bill to create an interoperable broadband communications network, a bill that also created incentive auctions to pay for it, was part of the compromise payroll deal, with a vote likely on the package on Friday.

A Republican aide familiar with the negotiations confirms that auctions are in the package, calling it a big victory, but did not have details. Those include whether conditions limiting future unlicensed spectrum allocations and conditions on auction bidders, which House Republicans had favored and Democrats strongly opposed.

According to a draft of the bill, it contains language preventing the FCC from excluding any bidders for the broadcast spectrum, but does not change the FCC's authority to limit specific providers' participation in the auction through a "notice and comment rulemaking." The draft bill language says 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.''

There also appears to be a compromise on unlicensed spectrum, allowing its use in guard bands, which separate different spectrum users, so long as that use would not interfere with licensed users.

A broadcasting source said the Walden version of the bill was the baseline for the compromise legislation, including Northern border protections for broadcasters -- a big victory for the National Association of Broadcasters -- as well as language requiring the FCC to make "all reasonable efforts" to replicate the coverage areas and interference protections for the stations that remain after reclamation.

According to the draft, the transition fund to compensate broadcasters -- and cable operators -- for repacking has been cut from the $3 billion the House bill had proposed, with sources putting it at $1.75 billion. Commercial broadcasters had asked for about $2 billion, while noncoms had sought the higher figure.

Some broadcaster who do not relinquish spectrum for auction will have to be moved - repacked -- to free up swaths of contiguous, cleared spectrum for auction. They will be compensated out of that transition fund for those moves, as will cable operators for costs associated with retransmitting the signals. Broadcasters can opt not to take relocation payments and instead use some of their spectrum for non-broadcast services so long as they continue to broadcast on their primary channel.

Some broadcasters have argued that they can use that spectrum to help offload wireless traffic during peak loads, in that way both easing spectrum congestion and retaining their broadcast service.

Broadcasters have to volunteer to participate in the incentive auctions, and UHF station owners who do not volunteer cannot be made to move to a less-desirable VHF channel as part of repacking. Stations that share channels each retain their must-carry rights.

Nothing will happen immediately, with the FCC still needing to come up with auction rules. It will likely take anywhere from five to 10 years to complete the process. Congress has given the FCC a decade -- until 2022 -- to complete the reverse auction, in which broadcasters will submit their asking price for spectrum, and the second auction of that spectrum, likely to wireless carriers.

"NAB salutes the tireless efforts of Congress to ensure that local broadcasters have a vibrant and robust future," said NAB President Gordon Smith. "Special thanks go to Chairmen [Fred] Upton and [Greg] Walden for steering this bill to conclusion, and to Reps. Dingell and Bilbray for a critically important amendment guaranteeing continued viewer access to TV station signals along the Canadian and Mexican borders."

"Tens of millions of Americans rely every day on local TV broadcasters for news, entertainment, sports and life-saving weather warnings. We look forward to working with Congress and the FCC to implement an incentive auction program that does not jeopardize that service."

"Today's action to make repurposed broadcast spectrum available for wireless broadband service is vital to ensuring America's wireless industry remains the world's leader in the deployment of 4G services," said a pleased Steve Largent, president of CTIA-The Wireless Association. "As the Administration, Members of Congress, the FCC and other policymakers have recognized, making additional spectrum available for wireless broadband services will spur infrastructure investment, encourage job creation and foster innovation."

Below is a House Energy & Commerce Committee Democartic staffer summary of the bill:

The Auction Provisions

The auction provisions in the final legislation are largely the same as those in H.R. 3630 as passed by the House with two significant exceptions: (1) the provisions relating to unlicensed spectrum and (2) the provisions relating to FCC auction authority.

Unlicensed Spectrum: Unlicensed spectrum has been an engine of economic innovation and growth, enabling new forms of communication like WiFi and Bluetooth. Many advocate that allowing unlicensed use in the broadcast frequencies could lead to new breakthroughs like Super WiFi. The conference report advances this goal in three ways: (1) it gives the FCC the authority to preserve existing TV white spaces; (2) it gives the FCC the authority to optimize these white spaces for unlicensed use by consolidating them into more optimal configurations through band plans; and (3) it gives the FCC the authority to use part of the spectrum relinquished by TV broadcasters in the incentive auction to create nationwide guard bands that can be used for unlicensed use, including in high-value markets that currently have little or no white spaces today. Nationwide, unlicensed access to guard bands will enable innovation, promote investment in new wireless services, and enhance the value of licensed spectrum by protecting against harmful interference and allowing carriers to "off-load" data to alleviate capacity concerns.

FCC Auction Rules: Under current law, the FCC has broad authority to craft auction rules in the public interest. The agency has used this authority to ensure that communications markets remain competitive and spectrum is not concentrated in the hands of only one or two providers. H.R. 3630 would have restricted the FCC's future ability to limit participation in spectrum auctions, regardless of the size or market dominance of potential bidders. The conference agreement modifies this prohibition by expressly preserving the FCC's ability to ensure competition through spectrum aggregation limits and other rules.

The legislation also drops a provision in the House-passed bill that would have limited the FCC's authority to set license conditions, such as open-internet requirements, on auctioned spectrum.

The Public Safety Provisions

The conference report provides our nation's first responders with access to the spectrum and advanced wireless broadband communications they need to protect the public and to communicate with each other across the country. The legislation provides for the construction of a nationwide public safety broadband network, as envisioned in the Senate bill, with an "opt-out" option for states that demonstrate the capacity to build their own networks and connect them to the national network.

The legislation creates a First Responder Network Authority (FirstNet) within the National Telecommunications and Information Administration (NTIA) and provides FirstNet with $7 billion and a license to use the "D Block" and adjacent public safety spectrum to build the nationwide public safety network. To ensure national interoperability, the legislation also creates a technical advisory board at the FCC to develop interoperability standards. States that want to construct their own portion of the national public safety network have the option to apply for federal grants to build and operate the radio access network in the state if they can demonstrate to the FCC that the network will meet the interoperability standards and to NTIA that they have the resources and capability to provide comparable coverage and security and maintain ongoing interoperability.

Unlike the House-passed bill, the legislation does not require public safety officials to return the important 700 MHz "narrowband" spectrum to the FCC for auction. Instead, the legislation requires the return of less efficient spectrum known as the "T-band." This transition occurs 11 years from the date of enactment, and public safety relocation costs will be reimbursed from any auction proceeds.

Finally, the legislation provides funding for critical public safety research and development activities and deployment of Next Generation 9-1-1 services, which will complement the advanced broadband capabilities of the public safety network by enabling the delivery of voice, text, photos, video, and other data to 9-1-1 call centers.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.