WASHINGTON-The Bush administration last week proposed to delay key spectrum auctions and to phase out programs designed to bridge the Digital Divide, components of the president’s $1.96 trillion budget that signals the White House’s desire to improve spectrum management and its intention to end corporate telecom subsidies.
Bush’s spectrum plan, which would force broadcasters to pay $200 million in annual lease fees and employ other band-clearing incentives, indicates the new White House is serious about forcing TV broadcasters to relinquish frequencies that mobile-phone carriers need for third-generations wireless systems.
In previous years, similar TV spectrum fee proposals have been snuffed out with ease by the powerful broadcast lobby. But all that could change.
The political and economic grounds have begun to shift. The sharp focus on digital TV by policy-makers during the 1980s has given way to an intense emphasis on Internet and wireless technologies in the new century. The spotlight is now on a third-generation mobile-phone model that promises to combine the best of Internet and wireless technological breakthroughs.
“A Blueprint for New Beginnings,” a 207-page Bush budget summary, is to be followed by a more detailed spending package in April. At that time, the Bush administration will send Congress legislative spectrum-auction and TV-band-clearing proposals.
The immediate impact of Bush’s plan would be to give the Federal Communications Commission the option to postpone the 700 MHz auction from Sept. 1 to 2004 and to delay the auction of additional broadcast spectrum-TV channels 52 to 59-from 2002 to 2006.
In the past, the FCC has been hamstrung by congressionally mandated auction deadlines that have undermined spectrum management and budgetary goals alike.
As such, according to administration and congressional sources, the Bush administration wants to give the FCC more flexibility in conducting spectrum auctions. The delays, they said, recognize that Congress needs time to write new spectrum-auction legislation and the FCC needs time to implement it.
A policy designed to reclaim broadcast frequencies and to give the FCC more leeway in scheduling auctions may not only result in better spectrum management-a top wireless industry issue-but likely will lead to higher auction receipts for the U.S. Treasury.
“While we never like to see spectrum auctions postponed for budget purposes, this proposal is steeped in an overriding telecommunications policy,” said Steven Berry, senior vice president of government affairs at the Cellular Telecommunications & Internet Association.
The date for the 700 MHz auction, a moving target for months, was rescheduled a fourth time last month to start Sept. 12.
Broadcasters, which today occupy valuable spectrum the government wants to sell to mobile-phone firms and others, are struggling to move from analog to digital technology. Congress gave broadcasters an extra channel of six megahertz for that transition to ease the financial burden on consumers who have not purchased digital TVs. While the digital TV transition limps along, mobile-phone carriers are denied additional frequencies they say they need for 3G.
Bush’s budget foresees raising $7.5 billion from spectrum auctions between 2002 and 2011 and generating $1.4 billion in broadcast lease fees during the digital TV transition.
Elsewhere, the Bush administration received strong criticism for cutting programs aimed at putting new information technology in the hands of low-income, minority and rural citizens-segments of the U.S. population that have tended to be left behind in the digital revolution.
Bush’s budget would reduce spending on the Commerce Department’s Technology Opportunity Program (TOP) from its current $42.5 million level to $15 million. Bush also wants to ax the Advanced Technology Program at Commerce.
Though not spelled out in his budget blueprint, the president has proposed to overhaul the discount Internet program for schools and libraries. Bush wants to roll the $2.25 billion-a-year E-rate program into the Department of Energy and transform it into block grants for states. To do so would make E-rate dependent on annual appropriations from Congress.
New House telecom subcommittee Chairman Fred Upton (R-Mich.) has taken strong exception to the proposed TOP budget cuts at the Commerce Department.
“Eliminating nearly two-thirds of the program’s entire funding would have a devastating effect on our efforts to ensure that innovative technology-and all the opportunity it affords-is available to all Americans,” said Upton in a Feb. 15 letter to Office and Management Director Mitchell Daniels Jr., after the budget cut was leaked to the press.
Upton added: “Technology skills are fast becoming basic life skills. Now is the time to open this door of opportunity for more Americans not slam it shut on those who need it the most.”
Rep. Rick Larsen (D-Washington), a co-sponsor of a bipartisan broadband access bill designed to help rural and underserved communities, accused the Bush administration of trying to cut government technology programs “to pay for [his] excessive tax package.”
The Bush budget also seeks to eliminate the Rural Telephone Bank, a Department of Agriculture unit set up in 1972 to make low-interest loans for upgrading telecom infrastructure in rural America. The RTB is run under the auspices of the Rural Utilities Service. Last July, new RUS rules were issued that make all wireless carriers eligible for low-interest loans. The objective is to entice wireless firms to bring telecom service to unserved rural areas that local landline telephone companies overlook because of financial constraints.
“The need for the program has never been greater, with policy makers everywhere demanding the full deployment of broadband services throughout rural America. Such an expensive endeavor will never be completed without the assistance of the RUS telecommunications loan programs,” said Michael Brunner, chief executive office of the National Telephone Cooperative Association.
Christopher McLean, a former RUS director and now a telecom lobbyist, said the Rural Telephone Bank-a private-public partnership that costs taxpayers $3 million a year and that leverages $175 million in rural telecom loans annually, works well. McLean and others said privatizing the RTB is possible, but it will be a challenge.
