House Spectrum Bill Moves On, NAB Pleased

By a 17-6 vote, the House Communications Subcommittee passed proposed legislation today that would grant the FCC authority to conduct incentive auctions of TV spectrum and share the proceeds of those auctions with broadcasters that voluntarily relinquish their spectrum.

For TV broadcasters, the measure is considered a major improvement over other incentive auction proposals since it contain protections for stations that chose not to give up their spectrum.

“Some of the issues we have raised have been resolved,” says Gerry Waldron, a communications attorney with Covington & Burling, whose clients include the CBS and NBC affiliate organizations.

The draft bill, authored by Communications Subcommittee Chairman Greg Walden (R-Ore.), passed with a majority of the subcommittee’s Republicans voting in favor while Democrats objected to provisions dealing with the allocation of the so-called D-block spectrum to establish a national broadband public safety network.

(All of the subcommittee’s Republicans and one Democrat, John Barrow (Georgia), supported the measure.).

House Democrats, led by Henry Waxman (D-Calif.) and Anna Eshoo (D-Calif.), are seeking revisions affecting the governance of the public safety network.

Democrats also don’t like Walden’s measure because it prohibits allocating spectrum from incentive auctions for unlicensed use. And they are troubled by language that prevents the FCC from restricting who can buy the spectrum broadcasters give up.

Waxman and Eshoo, who wanted to postpone the subcommittee vote, failed in their attempts to amend the measure during the subcommittee’s deliberations.

The subcommittee’s Republicans also irritated Democrats by adding a controversial net neutrality amendment. Offered by Republican Marsha Blackburn of Tennessee, it would prohibit the FCC from applying its net neutrality rules to any new spectrum holder.

The hotly contested issue of net neutrality could affect the overall fate of the incentive auction measure.

But despite those differences, broadcast lobbyists say an incentive auction bill might hit President Obama’s desk sooner rather than later. Indeed, during the Subcommittee markup, Chairman Walden said he is fully “committed to getting legislation done by the end of this year.”

There is a possibility that a full House Commerce Committee vote could occur next week, which means the bill could go to the House floor before the chamber’s targeted recess on Dec. 16.

Meanwhile, in the Senate, Commerce Committee Chairman Jay Rockefeller (D-W.Va.) is pushing hard to see his version of incentive auction legislation, S. 911, move forward. The Rockefeller bill, adopted by the Commerce Committee earlier this year, contains some protections for broadcasters but they don’t go as far as those in the House measure.

Rockefeller is pushing hard to attach S. 911 to a must-pass funding measure before lawmakers leave this year.

“There are various ways in which this bill could become law pretty quickly if it were attached to some other must-pass piece of legislation,” Waldron says.

Congress faces a mountain of unfinished business including passage of  major appropriations bills for numerous government agencies. Lawmakers are also expected to vote on several tax provisions including measures that would extend jobless benefits and the so-called payroll tax holiday.

A debt reduction package could also move through Congress and might serve as a vehicle for an incentive auction bill. However, some broadcast industry lobbyists think such shortcuts are a long shot and that the legislation will go nowhere until after the holidays.

But one way or another, incentive auctions will pass, Waldron says. “There is too much money at stake.”

House Republicans say their bill will help reduce the federal deficit by $15 billion.

The FCC has been the driving force behind efforts to gain authority to conduct incentive auctions, believing TV spectrum could be put to better use for wireless broadband services.

For the most part, broadcasters are pleased with Walden’s bill.

National Association of Broadcasters President Gordon Smith issued a statement earlier this week saying the measure takes a “major step forward in ensuring that local television stations will continue to be able to serve our vast and diverse audiences with local news, entertainment, sports and emergency weather information.’’

“I think there is a level of comfort among broadcasters with the Walden bill,” says one industry source. “It addresses TV broadcasters’ core concern that this is a one-time auction and that the FCC’s auction authority sunsets in 10 years.”

Also important to broadcasters is that the legislation instructs the FCC to make “all reasonable efforts to preserve … the coverage area and population served” of broadcasters that choose to hang on to their spectrum and not participate in the spectrum action.

A top priority for local TV broadcasters has been guaranteeing that their service areas will remain unaffected by the channel reassignments or “repacking” that will occur in connection with the auction.

The House allocates up to $3 billion to compensate broadcasters for costs associated with repacking. However, during the markup, the subcommittee’s Democrats complained about the $3 billion compensation fund. Instead they argued that the fund should only be $1billion as recommended by the Congressional Budget Office.

Chairman Walden insisted that the $3 billion was merely a cap and that it does not mean the entire fund would be spent by broadcasters. “This is not a blank check to broadcasters,” he says.

The House measure also states that the FCC cannot move stations from a UHF channel to a VHF channel or from a high VHF channel to a low VHF channel.

Walden’s bill makes clear that both full-power TV stations and Class A low-power stations can participate in incentive auctions. And it states that the FCC must use a “reverse auction system’’ as a means to establish a price at which TV stations would give up their license and then conduct a “forward auction’’ of the TV spectrum.

Most important, if the proceeds are insufficient to cover the incentive payments and relocation costs, the auction fails. And stations that participate in a channel-sharing arrangement retain must-carry rights.

Despite the partisan split over the Walden measure, there was one area Democrats and Republicans could agree on — and it was good news for broadcasters.

They unanimously passed an amendment offered by Democrat John Dingell ( Michigan) and Republican Brian Bilbray (California) that directs the FCC to address issues that could affect TV stations with service areas bordering Canada and Mexico before it relocates those broadcasters to another channel.

Following the subcommittee vote, NAB’s Smith praised Chairman Walden for his “outstanding leadership in shepherding this legislation through the subcommittee.’’

NAB “strongly endorses’’ the spectrum provisions in the incentive auction bill, Smith said.

He also said  NAB “salutes’’ Bilbray and Dingell for their amendment “ensuring that U.S. TV stations along the Canadian and Mexican borders aren’t repacked out of business.’’