Pai Seen Holding Firm on No Auction Until Auction Deposits Issues Resolved
Wireless industry lawyers see no wiggle room on FCC Chairman Ajit Pai's position that the agency won’t hold any spectrum auctions until Congress approves legislative language that would allow auction deposits to be sent directly to the Treasury Department (see 1710240065 and 1710250026). The stance raises questions about when the FCC will hold the first auction of high-frequency spectrum, which is a key building block of 5G. AT&T and other industry players want an auction of the 28 GHz and 37-40 GHz bands by December (see 1711150022).
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The House Commerce Committee plans to “pivot” to a focus on the Spectrum Auction Deposits Act (HR-4109) and other spectrum-related issues soon, but the committee’s “immediate focus” is on broadband infrastructure issues, given preparations for House work on a broader infrastructure bill, a House Republican aide said. HR-4109, from Congressional Spectrum Caucus co-Chairmen Brett Guthrie, R-Ky., and Doris Matsui, D-Calif., would require bidders' deposits in future spectrum auctions to be placed with the Treasury Department.
House Commerce Chairman Greg Walden, R-Ore., told us the committee “will always have an interest in doing more on spectrum,” and House Communications Subcommittee Chairman Marsha Blackburn, R-Tenn., separately lumped in spectrum issues with a desire to “look at broadband expansion and other things” early this year. House Communications Republicans were in the midst Tuesday of rolling out a series of broadband bills to guide that work ahead of the White House's anticipated release of its legislative package (see 1801110058 and 1801160048).
Broadband issues do appear to be congressional Republicans’ “top priority” for now, but Walden and other telecom-focused lawmakers are well aware of Pai’s concerns about the spectrum auction deposits process, one industry lobbyist said. Lawmakers are making broadband their immediate focus because they want to “work in tandem” with the White House on infrastructure issues, another lobbyist said.
“No one seems to question the FCC’s seriousness on this front -- they are not going to have an auction until this is resolved,” said a former spectrum official. But once questions are resolved, the FCC could move quickly to announce the dates of the next auction, the former official said. “Are there any bands ready for auction?” asked a second former spectrum official. “Do we have final rules for any of the bands at this point?” Other industry officials are asking if there's really no work around possible, such as not requiring upfront deposits as part of the auction.
“It’s hard to believe that there is not a work-around that would enable a 5G” and 3.5 GHz auctions this year, said BTIG’s Walter Piecyk. “But Pai controls the agenda and if he believes an act of Congress is needed, then it appears we will not have any spectrum auctions until this is resolved, which likely means no spectrum auctions in 2018.”
“The chairman and his staff have made clear their position on future spectrum auctions,” said Steve Berry, president of the Competitive Carriers Association. “It has to be fixed.” The Spectrum Auction Deposits Act, which would require the Treasury Department to accept bidding deposits for spectrum auctions, has bipartisan support and Congress seems focused on addressing the issue, he said. “CCA supports Congress moving forward expeditiously to pass this common sense legislation, as spectrum auctions bring numerous benefits to the economy, competition and, most importantly, consumers,” Berry said. “Spectrum auctions also represent a prime opportunity for competitive carriers to access additional spectrum resources that may not be readily available on the secondary market.”
“The good news is that there could be a growing bipartisan consensus in Congress to fix this,” said Robert McDowell of Cooley, senior policy adviser to Mobile Future. “Policy regarding spectrum auctions still appears to be one area where both sides of the aisle can generally agree. So there’s hope.” A fix shouldn’t be difficult, agreed Roger Entner, analyst at Recon Analytics. “I don't think this is a major issue, but one of the important accounting rules that need to be squared away,” he said.
“Auctions deliver billions of dollars in revenue to the Treasury, while also unlocking much needed spectrum,” said Kelly Cole, CTIA senior vice president-regulatory affairs. “CTIA welcomes the opportunity to work with the commission, Congress, and all stakeholders to address this.”
Commissioner Brendan Carr told us last week that the FCC hasn’t fallen behind, at least at this point (see 1801100027). But Commissioner Jessica Rosenworcel tweeted last week the FCC needs to keep up on 5G and right now doesn’t have a single spectrum auction in the works. “This is not leadership,” she said. “It needs to change.” Rosenworcel offered more on her views in TechCrunch. “We need to get back on track,” she wrote. “We need to schedule our next auction now. The world is not waiting.”
Preston Padden, who advised broadcasters during the incentive auction, defended Pai. “This is a cheap political shot,” Padden tweeted in response. “Congress has to change law before FCC can schedule auction.” The FCC didn't comment.