FCC Grilled By Congress Over Spectrum Auction

Published on: 15th April 2008

WASHINGTON -(Dow Jones)- All five members of the Federal Communications Commission appeared before Congress Tuesday to testify about what went wrong with a key aspect of the agency's recently completed radio spectrum auction, and to hear lawmakers' views of what to do next.

At a hearing of the House Telecommunications Subcommittee, Kevin Martin, the commission's Republican chairman, was credited by lawmakers for the fact the March auction raised more than $19 billion.

But Martin was criticized by members of his own party on the House panel for imposing conditions on some of the spectrum which may have decreased the value of the lucrative commodity.

Meanwhile, Democrats, including Rep. Edward Markey, D-Mass., the subcommittee chairman, asked tough questions about what the FCC intended to do now with a section of the spectrum that didn't sell at all.

Democratic lawmakers also said they were disappointed by the fact that large incumbent players in the wireless industry were the big winners in the auction, rather than a new competitor in that marketplace.

The swath of unsold spectrum would have given the winner a nationwide license of 10 megahertz. Had someone acquired it, they would have been obliged to work with the public safety community to build a national wireless broadband network primarily for their use.

The licensee could then lease any spare capacity on that broadband network to the commercial industry.

The hope was the country's first responders' inability to communicate effectively in times of crisis could be resolved without a significant outlay of public funds. That inability was clearly shown during the attacks on Sept. 11, 2001, and in the wake of Hurricane Katrina in 2005.

Despite the fact that no company came forward to bid for the spectrum, both Markey and Martin said they believed the public-private partnership envisaged by the D-Block, which is the official name of the 10 megahertz license section, was the best option available.

"Obviously, the D-Block is disappointing, yet I believe pursuing ways for public safety entities and the private sector to partner....remains our best option going forward," Markey said in his opening statement.

"In the absence of the financial resources for public safety to build out their own network, we should continue to try to explore ways in which we can help facilitate using the D-Block as a tool to achieve a national interoperable public safety network," said Martin, in prepared opening remarks.

Some Republican members on the committee said they believed the 10 megahertz of spectrum should be sold off to the commercial wireless industry, and part of the proceeds then given to public safety so they could solve their communications shortcomings on their own.

Those who advocate this solution have argued that public safety entities already control more than enough spectrum allocated to them by Congress over the years, but that it is being used ineffectively.

Rep. John Dingell, D-Mich, the chairman of the overarching House Commerce Committee, of which the telecommunications panel is part of, said he disagreed with this solution.

"I am presently unmoved by suggestions that we should simply auction the 10 megahertz D-Block for purely commercial use and hand the proceeds to public safety," Dingell said at the hearing.

In their opening statements, Martin said he would have preferred that Congress had used some of the proceeds of the auction to provide funds to public safety.

Michael Copps, the senior Democratic member of the FCC, said his first choice would have been for a publicly-funded new broadband network for public safety's use.

Markey and Dingell expressed their disappointment that the auction didn't result in a new major player in the commercial wireless industry, as had been hoped by many.

AT&T and Verizon Wireless were the largest winners of new spectrum. The two are the dominant incumbents in the wireless industry.

In total 62 megahertz of radio spectrum was sold off to the wireless industry. The $19 billion raised in the auction was the highest total ever in the 15-year history of FCC spectrum auctions. It was widely seen as the last chance for a new entrant to the wireless industry to acquire significant amounts of spectrum.

The airwaves came available due to a move by television broadcasters' plans to move to a digital signal from their current analog signal in February 2009. Broadcasting in digital requires roughly half the spectrum that analog does, which freed up the spectrum.

-By Corey Boles, Dow Jones Newswires; 202-862-6637; corey.boles@dowjones.com

(END) Dow Jones Newswires

 

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