WASHINGTON-President Clinton, setting up a confrontation with top telecom lawmakers, proposed
in his fiscal 2000 budget last week to let the Federal Communications Commission confiscate licenses of bankrupt
wireless firms.
The White House plan is designed to avoid a repeat of the C-block personal communications
services auction in which the three top winners, NextWave Telecom Inc., Pocket Communications Inc. and General
Wireless Inc.-which accounted for $6.6 billion of the $10.2 billion bid for licenses-filed for bankruptcy.
The C-
block factor
In so doing, scores of licenses have been tied up in protracted bankruptcy proceedings.
Rep. Dick
Armey (R-Texas) and top House telecom lawmakers oppose the administration’s proposal, saying it would compromise
licensees’ bankruptcy options and lead to more litigation.
Wireless industry sectors have differing views on the
Clinton bankruptcy plan, though none appear to have settled on firm positions.
Some claim a new bankruptcy law
that favors the FCC could inject a level of uncertainty that could chill license bids in the C-block re-auction in March
and in future auctions.
“If you are a business, spectrum is your No. 1 asset,” said Mary McDermott,
senior vice president and chief of staff for government relations for the Personal Communications Industry
Association.
Others, like Steve Berry, senior vice president for congressional affairs at the Cellular
Telecommunications Industry Association, observed it is not necessarily fair that FCC licensing rights be usurped by
bankruptcy judges.
The American Mobile Telecommunications Association, which represents dispatch radio
operators, is studying the issue.
In a Jan. 27 letter to Office of Management and Budget Director Jacob Lew, House
Majority Leader Dick Armey, House Commerce Committee Chairman Thomas Bliley (R-Va.), House telecom
subcommittee Chairman Billy Tauzin (R-La.), Rep. John Dingell (D-Mich.) and Rep. Edward Markey (D-Mass.)
warned the administration against pushing for bankruptcy legislation and inflating projected receipts from C-block PCS
license sales.
The lawmakers suspect the Clinton administration is refusing to concede that C-block licenses have
depreciated because doing so might be seen as supporting bankrupt wireless firms’ claims against the FCC. In addition,
a lower OMB score for C-block PCS licenses could undermine the administration’s ration-ale against bailout legislation
and its push for FCC primacy in bankruptcies.
It is unclear whether the budget’s re-estimate of $4.6 billion for C-
block PCS license sales will satisfy House members.
Overall, the administration projects $21 billion in revenue
during the next 10 years from spectrum auctions.
TV lease fees
A big chunk of that total is expected to come
from analog spectrum returned by TV broadcasters after converting their systems to digital technology and from the
transfer of 120 megahertz from the federal government spectrum to the private-sector pool of frequencies overseen by
the FCC.
To entice broadcasters to complete the technology transition, the government would hit TV licensees with
$200 million a year total in analog spectrum lease fees.
The fees would be used to upgrade federal, state and local
public-safety wireless communications, including the construction of a narrowband network for the Justice
Department.
Once the analog spectrum is returned, TV broadcasters would be out from under the levy.
The
lease-fee initiative has potential benefits for the wireless industry if it can survive a lethal assault from the powerful
broadcast lobby.
For example, by reclaiming analog TV channels with beneficial propagation characteristics, the
FCC could make them available for commercial wireless, private wireless and public-safety licensing.
Moreover,
the White House plan could help private wireless users make their case for spectrum lease fees in lieu of
auctions.
The potential downside is the spectrum lease fee could open the way for the federal government to levy
fees on all wireless users in the future if the newfound budget surplus reverts back to a deficit.
CALEA
connection
Elsewhere, despite the White House budget’s heavy emphasis on fighting crime, only $15 million was
proposed for implementing the underfunded digital wiretap law.
In recent budgets, the Clinton administration has
proposed $100 million a year for the Communications Assistance and Law Enforcement Act. But fighting between the
FBI and telecom industry over technical standards and implementation deadlines (carrying stiff penalties for carriers)
has made appropriators reluctant to free up funds, which would compensate telecom carriers for making network
modifications required by CALEA.
In all, only about $100 million of the $500 million authorized for CALEA has
been appropriated since 1995.
“Over $100 million in balances still remain from prior-year appropriations for
this effort. We expect that these balances, with the additional resources provided in the FY 2000 budget, will support
some of the initial implementation of CALEA,” the Justice Department stated.
In the president’s $1.77 trillion
budget, $231 million is earmarked for the FCC and $17.2 million for the National Telecommunications and
Information Administration.
