Rockefeller, Hutchison Staff in ‘Heads-Down’ Negotiations on Spectrum Bill

The Rockefeller and Hutchison offices are working to combine their spectrum bills, and the committee plans to mark up the merged bill before the Memorial Day recess which starts May 30, a Senate aide said. No date is set, but the markup is unlikely to be early in the month, said another Senate aide. The two offices are in a “heads-down meeting,” including “some of the other interested members, and hammering out this comprehensive approach,” said another Senate aide. “We have broad agreement between the principals on the major elements of the bill,” but working out more in-the-weeds aspects has been labor-intensive and time-consuming, the aide said. The negotiators have made “good progress, and hope to have something in weeks, not months."

The Rockefeller bill (S-28) and the Hutchison draft both would reallocate the D-block to public safety and authorize voluntary incentive auctions, but they differ on funding of the public safety network and other details. While several others on the committee also have spectrum bills, including Communications Subcommittee Chairman John Kerry, D-Mass., and Sen. Olympia Snowe, R-Maine, getting the ranking member Hutchison on board is likely Rockefeller’s top priority, a broadcasting lobbyist said.

The Rockefeller and Hutchison offices have a “technical difference of opinion that we're working through” on how to fund the public safety network, said one Senate aide. Rockefeller and Hutchison agree that network construction would be funded by spectrum proceeds, but while Rockefeller’s bill would tag a portion of incentive auction proceeds, Hutchison questions designating one specific spectrum auction, especially one with unsettled procedural details, the aide said. The two sides are also still deciding whether funding is for construction only or also maintenance and operation, the aide said.

While a window is open for spectrum legislation, Hutchison’s office is pushing for a comprehensive bill that does as much as possible, a Senate aide said. If a bill is finished, and its not comprehensive, some issues may languish since Congress may not take up spectrum policy for a few years, the aide said.

Macro budget negotiations shouldn’t slow the committee’s progress, said the aide. But the budget is “hanging like the Sword of Damocles” over the larger process, the aide said. “There will be a difference potentially in how much you need in overall deficit reduction to come from this bill for it to be a viable instrument when it gets to the floor or … be taken seriously by the House."

Another Senate staffer told us one big question remains whether some of the more conservative members of the Senate will have deep concerns about broadcasters being compensated for spectrum they never paid for in the first place. Any legislation addressing incentive auctions will require floor time so conservatives like Sen. Tom Coburn, R-Okla., can have their say, the staffer said.

Members of the Senate will have to speak for themselves, said Seton Motley, president of Less Government. “I will say that it would be a little strange to ‘compensate’ broadcasters for spectrum for which they never paid,” Motley said Monday in an email. “If there’s some broadcaster cost incurred due to some shifting around they have to do to clear spectrum, then that should be reimbursed. But if they got it for free, and never really used it, it’s hard to see how massive compensation payments are genuinely warranted."

But other free market advocates say those criticisms could be misplaced. “It’s literally true that broadcasters don’t pay the treasury for spectrum rights, but they do invest in equipment on the assumption that the terms of the grant will hold, so in an indirect sense, they do pay something for it,” said Richard Bennett, senior fellow at the Information Technology and Innovation Forum.

"While this impulse may be understandable, it would be looking at the issue in the wrong way,” said Randolph May, president of the Free State Foundation. “From a public policy perspective, we want the spectrum to be used in the way that most advances overall consumer welfare. How the broadcasters, or anyone else, acquired the spectrum is now water under the bridge. From a policy perspective, what matters most now is designing an auction that will facilitate the spectrum being put to its highest value use -- which is probably mobile services."

The discussion may become more politically charged, Medley Global Advisors analyst Jeff Silva said. “It appears the notion of incentive auctions, particularly with respect to broadcast spectrum, is becoming increasingly complicated as lawmakers come to better understand the big money and political/policy implications that are implicated,” Silva said. “At a very fundamental level -- irrespective of possible benefits to deficit reduction and growth-prone mobile broadband -- it may boil down to partisan politics. Congressional passage of legislation authorizing incentive auctions would, at its political essence, represent a victory for the Genachowski FCC and the Obama Administration. As we move deeper into the 2012 election cycle, Republicans may be reluctant to helping Democrats achieve such a victory.”