Lawmakers Reexamine Spectrum Revenue to Fund Broadband

The administration wants Congress to raise the corporate tax rate to 28% from the 21% set in 2017, Biden said Wednesday. “No one s­­­­­hould be able to complain about that. It’s still lower than what that rate was between World War II and 2017. Just doing that one thing will generate $1 trillion in additional revenue over 15 years.” Biden also wants Congress to set a 21% "global minimum tax" rate for U.S. corporations, which he believes would also generate $1 trillion.

The tax proposals drew swift GOP criticism last week. It’s “an out of control socialist spending spree,” said Senate Republican Conference Chairman John Barrasso of Wyoming. “It would burden the American economy with tax increases as our country attempts to recover from economic hardship,” said Senate Public Works Committee ranking member Shelley Moore Capito of West Virginia.

The Broadband Reserve Fund Act (S-592) “would be an excellent” way to pay for new broadband spending, Senate Commerce Committee ranking member Roger Wicker, R-Miss., told us before Biden unveiled his proposal. The measure, which Wicker filed in early March (see 2103040076), would allocate up to $65 billion in C-band proceeds for the FCC and NTIA to use on congressional connectivity priorities. Wicker didn’t want to specify a use for the money in S-592 because it’s “something we should look at” separately. He later raised concerns that Biden’s proposal could lead to overbuilding existing broadband infrastructure.

Wicker said he wants to try again to allocate the C-band proceeds, since such money ought to be directed toward the FCC and NTIA, “rather than the [Treasury] general fund.” He and other lawmakers floated several proposals to allocate the C-band money last year but failed to agree before the auction began (see 2007130054). Bringing the matter back up now is “better late than never,” Wicker said. There were “a lot of conversations” before recess about infrastructure funding, but S-592 was “not at the center of the radar screen.”

Senate Commerce Chair Maria Cantwell, D-Wash., told us she hadn’t had a chance to read S-592 but planned to “take a look at it” and consider whether it’s a feasible way of paying for broadband. “People want us to play a participatory role in making sure there’s efficient return on what we’re putting out there into trying to solve broadband access problems,” she said. Cantwell, other Senate Democrats and then-Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., favored legislation during the last Congress to allocate most C-band proceeds to pay for rural broadband and next-generation 911 (see 2001280063).

Senate Communications Subcommittee Chairman Ben Ray Lujan, D-N.M., told us he hasn’t talked with Wicker about S-592. Wicker's “thoughtful in how he shares the same goal” here “of wanting to get to 100% connectivity across” the U.S., Lujan said. “As we look at the USF, we are all going to have to work together to make sure that we have the revenue necessary to make investments to support programs" like E-rate and Lifeline. “We’re going to have to look at different alternatives and different ways to put a package together to hit these goals," he said.

“I’ve got to take a look” at S-592 “and talk to [Wicker] about it,” Kennedy told us. “I’m just glad” the federal government got the bulk of the more than $81 billion the C-band auction generated when bidding closed in February (see 2102180041).

NTCA CEO Shirley Bloomfield believes S-592 shows some potential as a funding source, though she’s unsure “how much you can get” from the C-band proceeds. “That’s a really intriguing way of looking” at ways “to be able to support” buildout, she told us. “It certainly makes it more palatable than simply” placing it within the general fund, “and it keeps it within the sphere of” expanding communications infrastructure.

“Taking auction revenues and reinvesting them into” connectivity infrastructure generally “is better than having those revenues flow back” to Treasury, said Public Knowledge Director-Government Affairs Greg Guice. “We’d be supportive” of “using additional revenue sources to help with those deployments.” The “challenge now is, diverting those revenues post-auction would likely mean” the Congressional Budget Office “would have to score the bill,” he said: “To take that money out” now that it has gone to the general fund “is the same as if you were trying to allocate new money.”

“It’s definitely worth having other ideas on the table” to pay for broadband spending, though it’s unclear how feasible it is for Congress to specifically reallocate the C-band proceeds now that the auction is over, said Americans for Tax Reform Federal Affairs Manager Katie McAuliffe: “I definitely prefer it” over tax increases. ATR is among the groups raising concerns about even the broad contours of the Biden proposal’s broadband language. Before the C-band auction, the group favored allowing sale proceeds to go to Treasury to “help reduce the debt" (see 1912240001).

“Having more funds available in a more flexible way for unserved areas is the most useful strategy," said McAuliffe. If that's what Wicker is trying to do, "that’s a good thing,” she said. “We need to look more at the long term,” including exploring a switch for funding USF from the current fee-based system to outright congressional appropriations. “We don’t know how long we’re going to be doing spectrum auctions,” though it’s not “something that’s going to disappear in the near future,” McAuliffe said.