Daines Eyes AWS-3 Sale in Funding Supplemental to Pay for Rip-and-Replace Shortfall

Daines confirmed Wednesday that he’s looking at a rip-and-replace amendment to the national security supplemental but told us it’s “a work in progress.” His proposal would pay for rip and replace by authorizing the FCC to reauction the 197 AWS-3 licenses that Dish and affiliated designated entities returned to the FCC last year after the agency denied them $3.3 billion in bidding credits (see 2307280046), Competitive Carriers Association President Tim Donovan and other officials told us. Daines’ office is searching for a Democratic co-sponsor for the proposal but is ready to move forward without one, lobbyists said.

Daines asked Senate Minority Leader Mitch McConnell, R-Ky., to make the rip-and-replace amendment a priority in negotiations on the supplemental, lobbyists told us. The broader bill faces a range of hurdles, including disagreements over immigration issues and potential aid to Ukraine amid Russia’s invasion of the country. Congressional leaders are considering the supplemental separately from the FY24 appropriations talks. A new continuing resolution enacted last week extends FY 2023 funding levels for the FCC, FTC, NTIA and other Commerce Department agencies, and DOJ through March 8 (see 2401190061).

Senate Commerce Committee ranking member Ted Cruz, R-Texas, backs the Daines amendment but panel Chair Maria Cantwell, D-Wash., hasn’t signed off, lobbyists said. House Commerce Committee leaders are unlikely to “stand in the way” of the Daines language if it advances out of the Senate, even though it would conflict with their Spectrum Auction Reauthorization Act (HR-3565), one lobbyist said. HR-3565 proposes lending additional rip-and-replace money to the FCC and using future spectrum auction revenue to repay it (see 2305240069).

Spectrum Considerations

“I’ve heard [Daines has] made some noise” about attaching rip-and-replace funding to the supplemental, Cantwell said in an interview. She believes an amendment to the supplemental that would deal with rip and replace separate from other spectrum-funded items could be “premature, but I know everybody wants” to find a way to address the FCC’s $3.08 billion funding shortfall. Cantwell confirmed she's also exploring how to reconfigure a broader spectrum legislative package so it can pay for rip and replace and the FCC’s affordable connectivity program.

“I think we’re still trying to get” the Congressional Budget Office to score the value of a range of spectrum auction revenue issues “in the wake of” the DOD’s study of how commercial 5G use on the 3.1-3.45 GHz band would affect incumbent military users (see 2312040001), Cantwell told us. She wants CBO to look at the possibility of spectrum sharing on the lower 3 GHz band along with other frequencies that could go on sale. “We’ll have to figure out” some solution for rip and replace since “we don’t want people to be without” connectivity access because program participants can’t afford to complete the process of replacing suspect equipment absent full FCC reimbursement, Cantwell said in an earlier interview.

“Our team is in conversation with folks on” Senate Commerce “to try to find a way” to pay for additional rip-and-replace funding, including via FY24 spending legislation, said Senate Appropriations Financial Services Subcommittee Chairman Chris Van Hollen, D-Md. He wasn’t aware of the Daines proposal, but said, “I’ll look at” it.

If Senate leaders move forward on the supplemental next week, “we’re really going to be making a push that” the rip-and-replace program “is a national security mandate created by Congress and should be included in that package,” Donovan told us. Including more funding for it in the Appropriations Financial Services bill, which covers the FCC, was always going to be a “challenge” because it’s “not one of the larger appropriations bills.” Lawmakers would need “an offset somewhere else” to cover the rip-and-replace money, which “is really hard to find,” Donovan said. He pointed to Defend Our Networks Act (S-1245), which would reallocate 3% of unspent and unobligated funding from the FY 2021 appropriations omnibus, the 2021 American Rescue Plan Act and other COVID-19 aid packages to make up rip-and-replace's deficit (see 2304210069), as another option.

'Legit Issue'

Providing the FCC with the additional $3.08 billion for rip and replace is a “very legit issue” because “there’s still a lot of stuff out there in those networks that needs to be gotten rid of,” said Senate Communications Subcommittee ranking member John Thune, R-S.D. He backs using the appropriations process for rip and replace but also suggested “if we do another spectrum auction” authorization for the FCC, “that could be a way to get some revenue” to pay for it instead. Thune in the past has criticized HR-3565’s proposal for spending future auction revenue (see 2311070050).

The spectrum auction revenue proposal included in HR-3565 “has always been front and center” as House Commerce’s preferred “way of getting that money” for rip and replace, but appropriations legislative talks are “all still fluid,” said House Communications Subcommittee Chairman Bob Latta, R-Ohio. The issue came up in two House Communications hearings this month, including during a panel eyeing development of U.S. open radio access networks (see 2401170078).

“We need to do something” to ensure the rip-and-replace program’s success, even if it means allowing direct appropriation of the $3.08 billion, said House Communications ranking member Doris Matsui, D-Calif. The ORAN hearing showed “everybody understands how important it is that we” complete the process of removing “nefarious hardware” from U.S. networks. “People feeling the urgency” of rip and replace could make it easier to reach a deal to attach money to an appropriations package, she said.

The National Emergency Number Association and eight other groups urged Congress Tuesday to pass legislation “consistent with the framework” included in HR-3565 allocating up to $14.8 billion in future auction revenue for next-generation 911 tech upgrades. That funding would “assist state and local authorities in upgrading their 9-1-1 systems and help to ensure greater system reliability, improved location capabilities, and interoperability amongst 9-1-1 centers,” NENA and the other groups said in a letter to House Speaker Mike Johnson, R-La., Senate Majority Leader Chuck Schumer, D-N.Y., and other congressional leaders. “These benefits would be achieved without any impact to the federal budget, as NG911 upgrades would be paid for by future spectrum auctions.”