Budget Bill Sells Spectrum Short, Says CEMA

The Consumer Electronics Manufacturers Association (CEMA) on October 19 criticized the U.S. Congress for a shortsighted use of the public's radio frequency (RF) spectrum in an effort to balance the federal budget. At issue is the spectrum composed of UHF TV channels 60-62 and 65-67 originally scheduled to become available in 2006 as part of the transition to digital television. A provision in the 1999 Department of Defense Appropriations Bill (HR 2561) mandates that the Federal Communications Commission (FCC) auction the 36 MHz of RF bandwidth by September 30, 2000 in order to have the money in the U.S. Treasury prior to the close of the fiscal year. Both the House and the Senate passed the 1999 Defense Appropriations Bill last week. ""Congress has once again intruded into spectrum management, setting the stage for a potential giveaway of what otherwise would be very valuable spectrum,"" said CEMA President Gary Shapiro. ""This accelerated timeline does not allow the FCC time to allocate the spectrum in the manner that best serves the public interest. The new date precludes the creation of new, innovative services for consumers and ensures that the public will not get full market value for the spectrum at auction.""Under the 1996 Telecommunications Act, the spectrum was not to be auctioned prior to January 2001 with no specific timetable for the FCC to complete the action. In a filing submitted to the FCC in July of 1999, CEMA urged the Commission to allocate this bandwidth for the creation of the mobile multimedia broadcast system (MMBS), a new service that would provide free, high-quality multi-channel digital audio, information and high capacity data services to mobile receivers. ""This spectrum would be of enormous value if the FCC had the time to adopt service rules and bidders had the opportunity to develop business plans for the optimum use of the spectrum,"" Shapiro continued. ""Our proposal to establish MMBS would provide high value for the spectrum, strong returns to the Treasury and exciting new entertainment and information services for consumers."" He also noted that the Congressional Budget Office is on record as questioning whether the spectrum auction can be completed in 2000 and scored its revenue potential at zero for FY 2000. ""Congress, by resorting to what some members call ëbudgetary gimmicks,' has established an artificial number that merely allows it to appear as if they are balancing the budget,"" said Shapiro. ""When in fact, their action assures that the spectrum will go for only pennies on the dollar."" ""Two years ago, CEMA raised concerns over a similar spectrum auction mandated by Congress, which was supposed to raise approximately $185 million but only raised about $13 million with some spectrum going for one dollar,"" Shapiro continued. ""Given the speed at which the FCC must set up the auction, it is anybody's guess how much revenue it will produce. It is time for Congress to get out of the business of micro-managing spectrum allocation or, at the very least, leave it to the Committees with the expertise and not with the appropriators.""