WASHINGTON-With the federal deficit giving way to an anticipated surplus, congressional and White House number crunchers are less apt to be as preoccupied with spectrum budget policy as they have been in recent years.
Spectrum auctions became a hot topic of debate during budget battles between the GOP-led Congress and the Democratic White House after auction licensing became law in 1993.
The bickering was not partisan; it had to do with turf. House and Senate Commerce Committees, which have jurisdiction over the telecommunications industry, became resentful of congressional and White House budgeteers who-having witnessed the $20 billion pledged toward wireless licenses-got into the habit of relying on auctions to help erase the budget deficit during the 1990s.
But times have changed. Suddenly a budget surplus is on the horizon, at least until baby boomers start tapping into Social Security and Medicare funds.
No major surprises are expected in the fiscal 1999 budget proposal President Clinton is set to unveil in a few weeks. Sources say auction revenue estimates in the White House budget should be consistent with last year’s budget bill, which projects $21.4 billion in auction receipts during the next five years.
In the meantime, the Congressional Budget Office-at the request of the Senate Budget Committee-will produce two reports on the viability of spectrum fees this year.
The private wireless industry has advocated spectrum fees in lieu of auctions. Sen. John Breaux (D-La.) introduced a spectrum fee bill last year but the measure succumbed to compromise in the budget bill that exempts certain private wireless sectors from auctions.
The Clinton administration has unsuccessfully tried to levy spectrum fees on wireless carriers and TV licensees and to sell telephone numbers.
Whether the Federal Communications Commission can raise $21.4 million from auctions by 2002 is another question.
The liberal infusion of spectrum (120 megahertz) in the wireless marketplace, increased competition and financial problems of some wireless startups that spent heavily on personal communications services licenses have conspired to drive down the value of the air waves.
Indeed, some wireless communications service licenses sold for as little as $1 last year. Some blame the embarrassing disaster on the artificial deadline Congress set for holding the auction. Others say FCC auction rules were at fault. Still others maintain license valuations were driven down by the oversupply of spectrum.
Despite auction troubles at the FCC, spectrum continues to bring the U.S. Treasury cash.
The 800 MHz specialized mobile radio auction late last year netted the government nearly $100 million, most of which was paid by Nextel Communications Inc.
Perhaps a better indicator of spectrum value will come in the auction of local multipoint distribution service licenses early this year. A court battle is ongoing over limits on local telephone company and cable TV operator participation.
In May, the FCC will auction 220 MHz licenses. After that, the agency plans to reauction C-block broadband PCS licenses and to sell 39 GHz, 929-931 MHz paging, 800 MHz SMR (lower 80 channels and general category channels), location monitoring services, public coast stations and analog radio and TV licenses.
