Obama Budget Addresses Spectrum Sought by LightSquared, User Fees

Obama described his budget as “a fiscally responsible blueprint for middle-class jobs and growth,” during a press conference Wednesday in the Rose Garden. Obama said his budget would replace the sequester’s “foolish across-the-board spending cuts” with “smarter ones, making long-term reforms, eliminating actual waste and programs we don’t need anymore.” The president’s budget would decrease the deficit by reforming tax rules, requiring some financial companies to pay a “financial crisis responsibility fee” for government bailouts, reducing some farm subsidies, and ensuring all Americans making over $1 million pay no less than 30 percent of their income in taxes, among other provisions, according to an Office of Management and Budget (OMB) report.

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The budget document contains few details on the 1675-1680 MHz band, but it does propose an auction or assignment of the band, which it estimates would raise $230 million in FY 2017 and FY 2018 (http://1.usa.gov/XD5FOq). In November, LightSquared filed a petition asking the FCC to “add a primary allocation permitting nonfederal terrestrial mobile use of the 1675-1680 MHz band as an alternative to use of the 1545-1555 MHz portion of the L Band” licensed to LightSquared (http://bit.ly/14XUbav). The GPS industry mounted a massive fight to keep LightSquared’s proposed network out of the latter band.

"What happened today is certainly consistent with our filings,” a LightSquared spokesman said of the budget. “We've always acknowledged that there would be costs associated with any sharing agreement for alternative spectrum. Whether it’s through an auction or a fee this spectrum would be paid for and it’s certainly consistent with what the company has expected."

The 1675-1680 MHz band is currently assigned to weather balloons and is to be used by a weather satellite slated for launch in 2015. The overall budget does not clarify what other spectrum would be used instead by the satellite or the balloons. The FCC’s budget for FY 2014 said the National Oceanic and Atmospheric Administration would move the weather balloons to another unspecified frequency, “allowing the spectrum to be repurposed for commercial use with limited protection zones for the remaining weather satellite downlinks.” Without the proposal, “these frequencies are unlikely to be repurposed to commercial use,” the FCC said (http://bit.ly/YLROE9).

Obama also proposed imposing user fees on commercial licensees, which has proved controversial in the past. “To promote efficient use of the electromagnetic spectrum, the Administration proposes to provide the FCC with new authority to use other economic mechanisms, such as fees, as a spectrum management tool,” the budget said. “The commission would be authorized to set charges for unauctioned spectrum licenses based on spectrum-management principles. Fees would be phased in over time as part of an ongoing rulemaking process to determine the appropriate application and level for fees."

These license fees could raise substantial dollars, according to a chart attached to the budget -- $4.8 billion between 2014 and 2023. The fees would raise $225 million in FY 2014, ramping up to $550 million in FY 2023. Overall, the budget projects spectrum auction proceeds of $4.76 billion in FY 2015, $9.4 billion in FY 2016, $7.3 billion in 2017 and $2.2 billion in FY 2018.

The budget also stresses the importance of expanding access to wireless broadband in general. “The Administration and the Federal Communications Commission are continuing their work in 2014 to expand availability of spectrum for wireless broadband use through incentive auctions and by identifying spectrum used by Federal agencies that could be repurposed for commercial use,” the budget said. “In addition, through the First Responder Network Authority, created by the Middle Class Tax Relief and Job Creation Act of 2012, the Administration is also working to develop a highly reliable, nationwide interoperable wireless broadband network for first responders."

Also rolled into the budget: $8 million to “monitor spectrum use by Federal agencies in high-priority markets to identify opportunities for repurposing spectrum through auctions."

Public Knowledge Senior Vice President Harold Feld said the spectrum fee proposal in particular is dead on arrival. “The proposed budget is typical of [the Office of Management and Budget], and therefore bears no relationship to either political reality or the reality of spectrum use,” Feld said. “The short version of this is ‘2003 called, they want their spectrum policy back.’ The spectrum fee proposal has become a standard accounting trick to book imaginary revenue with no realistic expectation this could be passed. If anything, the prospects for spectrum fees have become worse since submission of the last budget. Broadcasters would scream that they are being pressured into selling their spectrum at auction despite promises that it would be a voluntary participation -- and broadcasters were always the big target for fees. Who else are they going to charge, medical device users? Public safety and first responders?”

Feld also questioned why the budget “only wants to monitor federal use ‘for auction,'” despite the President’s Council of Advisors on Science and Technology’s report last summer on spectrum sharing. “Bottom line, OMB appears intent on continuing its fine tradition of irrelevance in spectrum policy,” he said. “Please call back when you have some new ideas."

"Consistent with our position on previous proposed White House budgets, NAB will strongly oppose spectrum fees that imperil the financial underpinnings of local television and the tens of millions of viewers that we serve,” said Executive Vice President Dennis Wharton.

PCIA President Jonathan Adelstein praised the budget for its emphasis on spectrum. “Spectrum will help, and the Administration recognizes that to fully address the ‘mobile data crunch,’ there must be a continued emphasis on getting wireless network infrastructure deployed quickly and cost efficiently,” he said. “Only by encouraging the build-out of the wireless networks that make use of any newly allocated spectrum can we truly meet Americans’ ever-increasing need for mobile data.”

Congressional Republicans were cool to the president’s budget, particularly his proposal to close certain tax deductions, but said there may be room for common ground on his proposed entitlement reforms. Senate Minority Leader Mitch McConnell, R-Ky., described the proposal as just “another reheated budget” and “not a serious plan,” during a floor speech Wednesday. Speaker of the House John Boehner, R-Ohio, said the president already “got his tax hikes” following the January fiscal cliff debate so “we don’t need to be raising taxes on the American people,” in a speech given Wednesday. But Boehner said the president “does deserve some credit for some incremental entitlement reforms that he has outlined in his budget. ... I'm hopeful in the coming weeks we'll have an opportunity, through the budget process, to come to some agreement,” he said. House Majority Leader Eric Cantor, R-Va., said he agreed there were some things in the budget, “beyond the tax increases,” where Republicans and Democrats “could find some agreement on,” according to an email statement. “We ought to see if we can set aside the divisiveness and come together to produce some results for the people who sent us here,” he said.

The president’s budget seeks to strengthen federal cybersecurity protections by providing DHS with $769 million to improve the National Cyber Security Division’s ability to protect government networks and increase federal cybersecurity outreach to state, municipal and U.S. critical infrastructure sectors, according to an OMB report. The budget also gives DHS $650 million to fund cybersecurity research and development, among others, the White House report said. The proposed allocations for “core homeland security functions” can be made by following through with “tough choices” that cut administrative expenditures, the report said. The budget would preserve funding for the Department of Defense’s U.S. Cyber Command and implement the agency’s strategy for operating in cyberspace, it said. Cybersecurity research funding for the Defense Advanced Research Projects Agency would be “slightly above” 2012 levels, OMB said.