Congress Will Auction Public Airwaves to Pay for Benefits

By Edward Wyatt and Jennifer Steinhauer, The New York Times

20 February 12

he need for revenue to partly cover the extension of the payroll tax cut and long-term unemployment benefits has pushed Congress to embrace a generational shift in the country's media landscape: the auction of public airwaves now used for television broadcasts to create more wireless Internet systems.

If a compromise bill completed Thursday by Congress is approved as expected by this weekend, the result will eventually be faster connections for smartphones, iPads and other data-hungry mobile devices. Their explosive popularity has overwhelmed the ability, particularly in big cities, for systems to quickly download maps, video games and movies.

The measure would be a rare instance of the government compensating private companies with the proceeds from an auction of public property - broadcast licenses - once given free.

The auctions, which are projected to raise more than $25 billion, would also further the Obama administration's broadband expansion plans and create a nationwide communications network for emergency workers that would allow police, fire and other responders from different departments and jurisdictions to talk to each other directly.

Public safety officials have wanted such a seamless communications system ever since the 9/11 terrorist attacks. The sweeping changes are even more remarkable because they resulted not from an effort to address communications policy, but from a hard-fought bipartisan compromise to extend a payroll tax holiday and jobless benefits. Republicans insisted that the extension of the unemployment insurance - a cost of roughly $30 billion - be paid for in full, and one area that both sides could agree on was spectrum sales.

The spectrum auctions are at least one to two years away, but most of the programs they pay for would be covered immediately. Consumers are unlikely to see additional charges since the auction would add new spectrum rather than adding to the costs of existing spectrum.

The payroll tax exemption would be extended through the end of this year, providing a worker earning $50,000 annually with $1,000 more in take-home pay over that time. The bill would also prevent a reimbursement cut for doctors who accept Medicare.

The legislation is the result of an unusual degree of cooperation between two parties that have fought bitterly over recent issues, and members of the conference committee that negotiated the deal played to the cameras on Thursday. One by one, members filed into the office of the committee's chairman, Representative Dave Camp, Republican from Michigan, to sign the papers splayed out neatly on a large table that rested under an ornate chandelier.

Mr. Camp and his chief negotiating partner, Senator Max Baucus, Democrat of Montana, linked hands for the cameras, as Mr. Baucus said helpfully for anyone who did not get the visual cue: "Working together!"

Not everyone agrees on the ultimate benefit of the new policies. Democrats, telecommunications companies and public safety officials have argued that the auctions of public airwaves will create thousands of jobs and billions of dollars of investment to build the systems.

But the House speaker, John A. Boehner, was more lukewarm in his enthusiasm for the measure. While saying that the compromise was "one that I support," he added: "Let's be honest. This is an economic relief package, not a bill that's going to grow the economy and create jobs."

Some members of Mr. Boehner's party disagreed. Representative Fred Upton of Michigan, chairman of the Energy and Commerce Committee, and Representative Greg Walden of Oregon, who leads a communications subcommittee, said in a joint statement that the bill would be "an economic game-changer."

"With 13 million Americans still seeking employment, job creation is a driving force behind efforts to expand wireless broadband," the congressmen said in their statement. "Spectrum auctions are not only good public policy for the communications and technology sector, they will produce meaningful job creation when we need it most."

Julius Genachowski, chairman of the Federal Communications Commission, who for much of the last two years has pushed the idea of reclaiming what he called inefficiently used airwaves from broadcasters, said he was "pleased that Congress has recognized the vital importance of freeing up more spectrum for mobile broadband."

But he expressed caution about some of the bill's language, which he said "could limit the F.C.C.'s ability to maximize the amount and benefits of recovered spectrum."

He was referring to a provision in the bill, pushed aggressively by broadcasters, that sets limits on what actions the F.C.C. can take to reclaim airwaves from broadcasters. The bill prohibits the F.C.C. from excluding from the auctions companies like AT&T and Verizon, which already hold large chunks of spectrum for their networks.

The bill does allow the F.C.C. to write formal rules that set limits on how much spectrum one company can hold in a given market, however.

The legislation also provides for the creation of bands of unlicensed airwaves, so-called white space, around each segment of auctioned spectrum for use in building large Wi-Fi networks in urban areas and for use by cellphone companies in temporarily easing crowding on their networks.

About $15 billion of the $30 billion extension in unemployment benefits will be paid for with the proceeds of the incentive auctions.

Another $7 billion of auction proceeds will be used to build the public safety network on a block of spectrum that, had it been sold, might have raised another $2.75 billion, according to the Congressional Budget Office's evaluation of the bill.

Roughly $1.75 billion will be available for the F.C.C. to compensate television stations that volunteer to give up their spot on the spectrum. The F.C.C., with some restrictions, can also move some stations around on the broadcast spectrum, allowing it to put together packages of contiguous bands of spectrum. Those would be more valuable than scattered pieces and thus should raise more money at auction.

Public safety departments pressed to include in this bill a dedicated nationwide network, since fire and police departments in New York found that their radio systems couldn't talk to each other during the attacks on the World Trade Center on Sept. 11, 2001. The 9/11 Commission endorsed such a project in 2004, and emergency units continued to have the same problems after Hurricane Katrina in 2005 and the BP oil spill in 2010.

The F.C.C. had favored auctioning off the section of spectrum that now will be turned over for emergency services, letting it be developed by cellphone companies that would agree to give first priority to public safety transmissions during an emergency.

The conditions for the auction, however, resulted in no company bidding the required minimum, and the block of spectrum has sat largely unused for several years.