Ross Backs 'Legislative Solution' on Incentives to Free Federal Spectrum

The exchanges came ahead of a planned Senate Commerce markup Tuesday for Mobile Now (S-19), spectrum legislation reintroduced early this month by Senate Commerce Committee Chairman John Thune, R-S.D., and ranking member Bill Nelson, D-Fla. Thune’s initial version included provisions that would have provided financial incentives for agencies to give up spectrum, based on the Federal Spectrum Incentive Act. The Obama administration strongly objected to the provisions (see 1612160062 and 1612200031), resulting in a scaled-down version without incentives that died last month at the end of the previous Congress. The Obama administration warned of the provisions’ “unnecessary risks,” it said in a private critique to the committee.

But Ross, a billionaire investor, repeatedly cited the merit of incentives and congressional action. “I think it would probably need to be a legislative solution,” Ross told Sen. Ed Markey, D-Mass., when asked about the Federal Spectrum Incentive Act. “To the degree that there’s going to be an incentive given, I think it would absolutely have to be legislated.”

Ross mentioned the concept during his opening statement, and several senators from both parties pursued the issue. “We need more spectrum in the private sector,” said Ross at the outset, pledging he would go to agencies “to convince” them to allow it “to be commercialized.” The Commerce Department's NTIA plays a key role in coordinating federal spectrum holders, and Ross will oversee the incoming NTIA chief. Sen. Mike Lee, R-Utah, said he appreciated the willingness, citing “significant needs” in his state. “Ditto on the spectrum issue,” said Thune, who mentioned the issue in his own opening statement. Sen. Ted Cruz, R-Texas, lauded Ross’ remarks and said agencies are “notoriously reluctant” to give up spectrum. Sen. Deb Fischer, R-Neb., who with Markey backed the Incentive Act last Congress, mentioned her membership on the Armed Services Committee, which is sensitive to the spectrum needs of agencies like the Department of Defense and was engaged in negotiation to scale down Mobile Now last Congress. She questioned Ross on the balance between the commercial sector and prioritizing national security.

“For sure, the vast majority of the federally occupied spectrum that’s unused now is in the hands of the Department of Defense,” said Ross. “First objective has to be ‘do no harm.’ … But we also need to be rational and it can’t be that there’s hoarding.” The question is how to provide incentives, Ross said: “That’s the trickiest part, how to motivate them to do so, and that’s something we should all give some thought to.”

Cruz pressed him on working with other cabinet members to give up spectrum. “It’s absolutely essential, Senator, that we do that,” Ross told him, referring to agencies’ “natural tendency” to want to hold on to spectrum and saying Congress may need to play a role. Sen. Jerry Moran, R-Kan., cited a past GAO report that suggested to him that NTIA was “often pushed around” by the bigger government spectrum holders. “I don’t intend to be pushed around by anyone,” countered Ross.

Spokespeople for Markey and Fischer didn’t comment Wednesday on whether they would try to restore stronger incentives language during the Mobile Now markup. Thune told us last month a revived Mobile Now might pick up “new wrinkles” depending on different dynamics with a Trump administration (see 1612220020). Sen. Cory Gardner, R-Colo., cited his work with Sen. Marco Rubio, R-Fla., on federal spectrum transparency and value and that he hopes to continue. Their provisions haven't become law.

Broadband 'Essential'

The confirmation hearing’s wide range of topics also included several other telecom issues -- including a commitment from Ross that broadband should be part of any Trump administration infrastructure proposal.

“Broadband is an essential part,” a “path to the future,” Ross told Communications Subcommittee Chairman Roger Wicker, R-Miss. He said he would work with Wicker to focus on rural broadband deployment. Moran said any package before Congress -- which President-elect Donald Trump has said could be up to $1 trillion -- must include broadband funding, with a focus on rural and unserved. Sen. Shelley Moore Capito, R-W.Va., was also pleased. “The rural areas are really behind here,” she said. “I appreciate you raising broadband,” said Sen. Amy Klobuchar, D-Minn., noting she would be submitting written questions on the topic and alluding to her dig once broadband proposal.

“Wilbur Ross's statement today that broadband must be a critical part of the new Administration’s infrastructure plans is both appreciated and timely,” USTelecom President Jonathan Spalter said in a statement. “We don't have a moment to waste to ensure our government does everything in its power to advance opportunities for broadband access, investment and innovation.”

Vice President-elect Mike Pence called Trump this week to say he was speaking before the U.S. Conference of Mayors' winter meeting and Trump said, “Tell them we’re going to do an infrastructure bill, and it’s going to be big,” Pence said Tuesday at that event.

Details of the proposed infrastructure stimulus haven't been released. Ross told Sen. Roy Blunt, R-Mo., of the merits of advancing it “in a relatively low interest rate environment,” facilitating project potential. There’s a need for “government to play a direct role” at times, he said. “It won’t be one-size-fits-all.” Sen. Richard Blumenthal, D-Conn., said the concepts of an infrastructure bank and public financing are important: “There has to be a robust public investment in our infrastructure.” Sen. Cory Booker, D-N.J., tried to get Ross to commit to “direct federal spending,” beyond tax breaks to private investors. “I think there will be some necessity for it,” said Ross, not specifying precise forms but saying it could be as direct guarantees. A Trump team list of prioritized projects “has not been refined as yet,” said Ross, naming Richard LeFrak and Steven Roth as the Trump officials who “will play a big role in helping him determine what are the key projects.”

Sen. Brian Schatz, D-Hawaii, probed Ross on what he called “thorny” issues dealt with by Commerce under President Barack Obama -- the Internet Assigned Numbers Authority transition and the transatlantic U.S.-EU Privacy Shield data flows agreement. Schatz asked if Ross would provide continuity. Ross sees “no real alternative” now in light of what happened with the IANA transition, he told Schatz. “I think going forward, there will be a tension between privacy on the one hand and the problems of localism of data and the implications that they have for the internet as we go forward. I think it will be a very tricky balancing act.” The Electronic Privacy Information Center sent a letter to committee leadership urging questions on the Privacy Shield. Cruz opposed last year’s IANA transition and asked if Ross shared his concerns about free speech protection on the internet. Ross is “a little surprised” the U.S. seems to be “essentially voiceless in the governance of that activity,” he said. “That strikes me as an intellectually incorrect solution.” But he was unsure what could be done and said he would be interested in a reasonable alternative to present circumstances.

“Mr. Ross’s experience turning around businesses should help him anticipate and mitigate the risks of major programs like FirstNet, the independent authority charged with creating a nationwide broadband network for first responders,” Thune said in his opening statement. His final question to Ross was whether he would commit to being engaged on FirstNet -- an independent authority but within NTIA -- and alert the committee of any waste, fraud and abuse. “I certainly support the concept of FirstNet,” said Ross, noting “some controversy in some states about it” and “some technical issues.” He lauded “the right direction” of the network idea overall: “To the degree there are issues with it, I’ll do my best if confirmed to figure out how to overcome them.”

Smooth Hearing

Ross faced virtually no pushback from committee Democrats, unlike other Trump nominees. “You have comported yourself quite well,” Nelson told him, saying his answers weren't evasive. “This hearing is a piece of cake compared to some of the other nominees.” He predicted Ross would be a “very, very influential voice” in the administration. Thune also lauded Ross and said his answers on trade policy were “somewhat reassuring,” since Trump team talk of tariffs “spooked” some people. Nelson said in his opening statement that Ross’ role over trade policy is “a departure from past commerce secretaries and the roles they played,” a big expansion. Majority Leader Mitch McConnell, R-Ky., said he hopes to have several cabinet nominees confirmed by the end of the week.

When Fischer cited her Digit Act, a reintroduced IoT bill also slated for markup Tuesday, Ross said it wasn't a simple subject: “All aspects of internet need encouragement.” He referred to Trump’s meeting with tech CEOs after the election, which Ross attended and said he left impressed. Some of the tech executives followed up with Ross after with “more specific suggestions,” he said. Markey said the IoT could be “the internet of threats, to the security, to the privacy of all Americans,” inquiring about Ross’ views and recommendations. “I’ve had some direct experience with it,” replied Ross, citing his investments in small and medium-sized banks subject to cyberattacks. “It’s the unfortunate flip side to interconnectedness,” Ross said, saying there’s a need for extreme vigilance. Industry is likely becoming “more and more sensitized to the problem,” Ross said. “I’m a very big proponent of cloud,” Ross told Moran when considering the state of the Commerce Department’s IT. He said the cloud is more efficient and “probably more secure for lots of very complicated technical reasons,” stressing the need for interoperability.

Ross also met with Patent and Trademark Office Director Michelle Lee Tuesday, he said. He asked how she dealt with matters involving Google, her former employer, he told Blumenthal during the hearing. Lee told Ross of her ideas for “determining recusal” and he would hope to “match the standard that she has set,” he said.

Ross repeatedly referred to regulatory overhaul during the hearing. Cost-benefit analysis “would be very useful” in determining “what should be rolled back,” he told Sen. Dean Heller, R-Nev., declining knowledge of which regulations Trump planned to remove. Heller backed the cost-benefit analysis idea. “I’ve been arguing for that since I’ve been here in Congress,” said Heller, who tried to advance such requirements without success through his FCC Process Reform Act.

Ross’ interest in the role is partly due to telecom, he said in written testimony. The Commerce Department "auctions spectrum and helps bring access to broadband to communities nationwide,” Ross said. “In some small way I have direct experience with broadband deployment. Before this nomination, I was the vice chair of the Utilities Undergrounding Task Force where I live in Southern Florida. The Task Force is eager to move to fiber optics and telecommunications to our community. In order to do so the Task Force had to do it in way that was not damaging to the Everglades.”