WASHINGTON-Verizon Wireless wants 700 MHz spectrum and it thinks it has a plan that will enable it to bid on the spectrum sooner and give public safety money from the auction sooner-but still keep the hard date in 2009.
The nation’s second-largest carrier is proposing that Congress set the auction for 700 MHz channels during the first quarter of 2007-about two years before the spectrum is set to become available under existing law and several months before new congressional proposals would free up the frequencies. The spectrum is tied to the transition of digital TV.
Under Verizon’s proposal, winning auction bidders would be required to make a down payment-perhaps 20 percent- and that money would be earmarked for public safety to help it get ready for the 24 megahertz of spectrum it plans to receive as part of the DTV transition.
“If we were the winner of the auction, we would be very happy to have Congress earmark our downpayment for immediate use by public safety-to put funds in the hands of public safety to enable public safety to begin the process of planning, to acquire the hardware, software and other systems necessary to be able to hit the ground running once the spectrum is made available to them,” said Steve Zipperstein, Verizon Wireless general counsel, during his quarterly press briefing.
Zipperstein said that the effort to set a hard date-a major stumbling block to auctioning this spectrum-has coalesced around 2009, so today the focus is on how to use the money that comes from auctioning the spectrum.
Both the House and Senate have set aside money for various priorities-including public safety-but that money would not be available until the spectrum was available. Zipperstein acknowledged that “there are a lot of complexities and competing interests” vying for the auction revenues, but he said the Verizon Wireless plan would get the money into the hands of those who want it two years earlier. He said the Federal Communications Commission could come up with rules to make sure that all of the money from the winning bids was paid by the time the spectrum was available.
Congress is considering a hard date for the DTV transition as part of the 2006 budget reconciliation process. This could be the major roadblock to the Verizon proposal. The Senate has passed its budget reconciliation bill setting the hard date at April 7, 2009, with the auction starting Jan. 28, 2008. The House Commerce Committee has passed its bill setting the hard date at Dec. 31, 2008, and the auction beginning Jan. 7, 2008, but members arguing over priorities have stalled consideration of the budget in the House.
Once the House passes its budget bill, assuming it does, the two versions will have to be reconciled or changed-which is where the Verizon Wireless proposal comes in. If the House doesn’t pass its budget bill, there is a small chance the House will try to move the DTV bill separately, said Rep. Joe Barton (R-Texas), chairman of the House Commerce Committee.
“We could yet get an agreement in the broader budget-reform package, that would be what we would hope for,” said Barton.
“We would be willing to write the check,” said Verizon Wireless’ Zipperstein, noting “the obvious benefit is that we would have certainty” as to when TV broadcasters would be required to relinquish the spectrum they were given to facilitate the DTV transition.
In 1997, Congress said that in 2007 broadcasters would have to return the extra 6 megahertz of spectrum, but TV broadcasters could keep the spectrum if more than 15 percent of the homes in their viewing areas could not receive digital signals. The hard date would eliminate this caveat.
The Congress Budget Office has estimated the DTV spectrum is worth around $10 billion-that would mean $2 billion would be set aside, said Zipperstein. Private estimates of the value of the spectrum have reached as high as $30 billion. Zipperstein rejected suggestions that the value of the spectrum could be reduced if the auction comes too close to a planned auction of third-generation wireless spectrum in the 2 GHz band, slated for 2006.
“We’ve really taken a careful look at the spectrum market and the interplay between the two auctions, and we do not believe that a nine-month acceleration will have any negative impact on the 700 MHz spectrum,” said Zipperstein.
