Final tax deal includes spectrum auctions, preserves FCC flexibility

Congressional negotiators struck a deal late Wednesday to extend payroll tax cuts that would authorize the Federal Communications Commission (FCC) to auction television airwave licenses to wireless carriers.

The FCC would split some of the auction revenue with the television stations that choose to participate. The airwaves, known as spectrum, are worth billions of dollars to wireless carriers, which are struggling to meet the growing data demands of smartphones and tablet computers.

The legislation's spectrum provisions would generate an estimated $15 billion in revenue to help offset the cost of extending unemployment benefits, which is also part of the deal. 

The bill largely preserves the FCC's authority to structure the spectrum auctions—a win for Democrats, who warned that tying the FCC's hands would allow AT&T and Verizon, the largest carriers, to buy up all of the airwave licenses.

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House Republicans had argued that Congress should prohibit the FCC from picking winners and losers in the auctions. As a compromise, the bill bars the FCC from excluding any one company from bidding, but allows the agency to set conditions to promote a competitive marketplace.

AT&T, which had lobbied for tough restrictions on the FCC's oversight of the auctions, endorsed the compromise.

“In our industry, there has been much focus in recent weeks on whether the FCC should or should not be able to exclude qualified wireless carriers from bidding in these spectrum auctions," Jim Cicconi, AT&T's vice president of legislative affairs, said in a statement. "The final legislation speaks clearly on this point: the FCC may not do so as part of any auction proceeding."

He said the legislation would allow his company "to create more jobs and support next-generation services for our customers."

Sprint, which had lobbied to protect the FCC's ability to promote competition, also applauded the deal.

"While we didn’t see the need to amend the statute, the compromise language approved by the conferees preserves the FCC’s ability to promote competition as it conducts future wireless spectrum auctions," Vonya McCann, Sprint's vice president for government affairs, said.

The legislation also sets aside a portion of spectrum and provides funds for a nationwide broadband network for first responders.

The public safety network, which would help first responders from different agencies communicate during emergencies, is one of the last outstanding recommendations of the 9/11 Commission Report.

Sen. Jay Rockefeller (D-W. Va.), who has fought for the public safety network for years, called its inclusion in the legislation a "historic milestone."

The deal allows the FCC to set aside spectrum in guard bands for unlicensed use. Unlicensed spectrum, which can be used by any company for free, powers technologies such as Wi-Fi, garage door openers and remote controls.

The original House spectrum bill, authored by Rep. Greg Walden (R-Ore.), would have prohibited the FCC from setting aside additional unlicensed spectrum. Walden argued that the government shouldn't pay to reclaim spectrum from broadcasters that it would then give away for free. But tech companies including Google and Microsoft said additional unlicensed spectrum would promote innovation and economic growth.

The compromise removes a provision from Rep. Marsha Blackburn (R-Tenn.) that would have barred the FCC from imposing net neutrality conditions on wireless companies that buy the spectrum licenses at auction. The FCC's controversial net neutrality rules prohibit Internet providers from slowing down or blocking access to legitimate websites.

Rep. Henry Waxman (D-Calif.) had called Blackburn's anti-net neutrality amendment "poison."

Lawmakers won the support of television broadcasters after including several provisions to ensure that no television station is forced off the air against its will. The package includes a $1.75 billion fund to cover the costs of television stations that have to move to new broadcast frequences.

Both chambers of Congress must still vote to approve the package.

--Updated at 5:34 p.m.