Kerry Aide: No Consensus, No Incentive Auctions

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The message from an aide to Communications Subcommittee chairman John Kerry (D-Mass.) Thursday could not have been clearer: Unless the FCC, computer and wireless companies, and broadcasters can come to a meeting on the minds about freeing up mobile broadband, legislation giving the FCC the power to hold incentive auctions isn't going to happen.

He also said Congress would want to know how much they will be paying broadcasters.

That was the message from Kerry aide Danny Sepulveda at an FCC panel on the policy implications and imperatives in what the FCC says is a looming, if not already evident, spectrum crunch.

"If we are going to approve an incentive auction system and not know how much of the public's money is going to be transferred to private actors, that is going to be a real challenge for Congress," Sepulveda said, adding that there would have to be some kind of cap on the payment as well.

Kerry has co-sponsored a bill that would give the FCC the authority to hold an incentive auction, which would allow it to compensate broadcasters for giving over spectrum for wireless broadband.

Sepulveda said not to look for any action on that bill in the lame duck session, and suggested that a lot more needed to be done before it could pass, including getting all the panelists on the same page, educating the public about the spectrum crunch and giving Congress and broadcasters a better idea of how much money it was going to be transferring from the government to private industry.

"I think it is important to note that it will be important for broadcasters to understand what the parameters of the deal are. They are not jumping into this until they know 'what do I stand to make here," he said.

Sepulveda added that, at the end of the day, "legislators aren't going to jump in until they know the parameters as well." He says that by not jumping in and talking about the "series of values that come from holding [the spectrum], you dial up the price."

Sepulveda says that the Appropriations committee will matter a great deal in the discussions: "What we are talking about here is the transfer of public funds for the freeing up of a public good to a private party. So, in order to achieve that end, you have to give broadcasters a fair amount of money. And by that I mean both fair in the sense of fair to them, and fair in the sense of large."

He pointed out that there had been a hold put on the spectrum inventory bill because of what it would cost just to execute that bill, which he said "was nothing." He said that when you start talking about significant sums being transferred from taxpayers to broadcasters, a lot of other conversations are going to come up: "How much are you actually investing in local news. How much are you actually investing in local programming, have we looked at the public interest obligations of broadcasters in a while?"

Sepulveda explaine that that was why the bill would require a "longer conversation" than the lame duck session.

That congressional caution came against a background of urgency from the FCC, which held the summit in conjunction with announcing a number of technical steps to pave the way for auctions and reclamation of broadcast spectrum.

Panelist and broadcast attorney Jonathan Blake did not put it in the same terms, but agreed that one of the reasons broadcasters were not jumping at the offer was that it was not clear exactly what they would be jumping into. He argued that while the auction was billed as voluntary, the FCC's plans to repack the spectrum and move broadcasters from UHF to VHF were not voluntary, nor would a spectrum fee be, which the FCC brought up in connection with the auctions as part of its broadband plan. He said that there were technical issues that made moving to the VHF band unattractive to his clients. The FCC plans to issue a rulemaking proposal at its November meeting on spectrum that includes trying to make the VHF band more attractive as a new home, but Blake seemed to suggest that would be a tough sell.

Blake said that his clients were not interested in cashing in, though he said some others might be. He also said broadcasters were not opposed to incentive auctions, but that in looking at the spectrum issue, the government needed to have no sacred cows, and to look at the issue "scientifically, objectively, and factually."

One of those sacred cows, he said, was the 120 Mhz the FCC proposed to get from broadcasters. Blake said coming up with that figure before going through the analysis is like a referee starting a game by telling one side it would be losing by 20 points.

Blake said he was encouraged by the panel's talk of dealing with it as a national issue involving a host of players, and that one of the reasons the FCC spectrum proposal "got off on the wrong foot" with broadcasters was that they felt it was targeted to them.

He got some support for his position from top House Energy & Commerce Committee Staffer Amy Levine, who said that the key to the spectrum auction bill co-sponsored by House Communications Subcommittee Chairman rick Boucher (D-Va.) and ranking member cliff Stearns (R-Fla.) was that the auction be truly voluntary. She also said it would be important that if broadcasters were moved as part of the process, that they be compensated for that.

Ultimately, Blake said, consumer welfare had to be a paramount factor in the FCC's equation, consumers Blake argued are interested in Mobile DTV and served by local news and information that could be threatened by reducing broadcasters spectrum stake.

FCC Commissioner Michael Copps was not slated to appear at the spectrum summit, but weighed in at the end, including to say that the public interest news and information needs (broadcasters trump card in spectrum discussions) needed to be taken into account in what Blake had called the necessary balancing of the benefits of mobile broadband and the impact on broadcasters and the public.

While the FCC summit dealt mostly with finding more spectrum from broadcasters and others, Commissioner Robert McDowell, who introduced the panel, said that finding more efficient ways to use the spectrum already available also had to be a key part of the conversation.

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