[Congressional Record Volume 158, Number 29 (Friday, February 24, 2012)]
[Extensions of Remarks]
[Pages E237-E239]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    CONFERENCE REPORT ON H.R. 3630, MIDDLE CLASS TAX RELIEF AND JOB 
                          CREATION ACT OF 2012

                                 ______
                                 

                               speech of

                            HON. FRED UPTON

                              of michigan

                    in the house of representatives

                       Friday, February 17, 2012

  Mr. UPTON. Mr. Speaker, Congress passed the Middle Class Tax Relief 
and Job Creation Act of 2012 on February 17, 2012. As House majority 
conferees, as well as chairmen of the House Energy and Commerce 
Committee and its Subcommittee on Communications and Technology, we are 
pleased that the spectrum auction provisions in Title VI, Subtitle D, 
of the legislation are based on the Jumpstarting Opportunity with 
Broadband Spectrum, JOBS, Act of 2011. We helped pass the JOBS Act in 
the House on December 13, 2011, as part of the Middle Class Tax Relief 
and Job Creation Act of 2011. Like the JOBS Act, Title VI, Subtitle D, 
of the Middle Class Tax Relief and Job Creation Act of 2012 is designed 
to spur the next generation of wireless investment and innovation, to 
bring in federal revenue in the form of auction proceeds, and to 
promote significant new job creation. Among other things, Subtitle D 
allows the FCC to share proceeds with licensees, like broadcasters, 
that voluntarily return spectrum to be re-auctioned to meet the growing 
demand for commercial mobile broadband services. To prevent the Federal 
Communications Commission from picking winners and losers, Subtitle D 
prohibits the agency from excluding qualified bidders from 
participating in the auctions. To protect taxpayers, Subtitle D also 
requires the FCC to auction spectrum it has used federal funds to 
clear. What follows is a section by section explanation of some of 
Subtitle D's significant spectrum provisions.
  Section 6401. This subsection establishes clearing and auction 
timelines for spectrum in 1915 1920 MHz and 1995 2000 MHz (the PCS H 
Block), 2155 2180 MHz (the AWS 3 block), 15 MHz from the government 
spectrum at 1675 1710 MHz, and 15 MHz to be determined by the FCC.
  Section 6402. This section amends the Communications Act to grant the 
FCC authority to conduct incentive auctions under which it shares some 
of the proceeds with licensees that return spectrum to be re-auctioned 
for commercial use. Such auctions must have

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competition on the ``reverse'' side--the portion of the auction that 
sets the buy-out price. To do otherwise would provide insufficient 
market competition to minimize costs and would create little more than 
a substitute for a license transfer.
  Section 6403. This section grants the FCC special authority to 
conduct an incentive auction for television broadcast spectrum.
  Subsection (a) governs the ``reverse'' side of the auction. 
Broadcasters may propose to relinquish their licenses to leave the 
market completely, to share a license with another broadcast licensee, 
or to move from a UHF channel to a VHF channel. The reverse ``bids'' 
they place represent the amount of money they would accept to exit, 
share, or move from a UHF channel to a VHF channel. The FCC is directed 
to maintain the confidentiality of auction participants until 
reassignments and reallocations are complete so as not to prejudice the 
ongoing business operations and relationships of broadcasters, 
including broadcasters whose bids may not ultimately be accepted. 
Spectrum recovered through this mechanism is to be auctioned for 
licensed services under section 309(j) of the Communications Act. This 
subsection also defines the retransmission consent and must carry 
rights of licensees who choose to channel share.
  Subsection (b) governs the relocation of broadcast incumbents who do 
not leave the market through the incentive auction process. This allows 
the FCC to reorganize the remaining broadcast channels in a way that 
makes the cleared spectrum most valuable for re-auction, both in terms 
of monetary value and usefulness for licensed broadband services. To 
protect broadcasters, however, subsection (b) prohibits the FCC from 
involuntarily relocating broadcasters from UHF channels to VHF 
channels. It also requires the FCC to make all reasonable efforts to 
preserve relocating broadcasters' coverage area and population served. 
Subsection (b) also qualifies for reimbursement of reasonable 
relocation costs those broadcasters that are not being compensated 
through the reverse auction, cable systems that must retune or relocate 
their systems in order to receive the signals from the newly relocated 
broadcasters, and channel 37 incumbents (provided the entirety of 
channel 37 can be cleared for less than $300 million). Section 6402 
limits to $1.75 billion the amount the FCC can spend to reimburse 
relocating broadcasters, cable operators, and incumbents on channel 37. 
Section 6403(b) also provides broadcasters the option of requesting 
specific regulatory relief in lieu of recovering relocation expenses. 
Finally, this subsection makes clear that while low-power broadcasters 
without class A status cannot participate in the incentive auctions, 
the incentive auction relocation authority under subsection (b) does 
not change the rights of low-power broadcasters.
  Subsection (c) governs the forward auction of new licenses made 
available by the reverse auction and relocation process. The spectrum 
made available by the purchase of licenses through the reverse auction 
and reallocated under this section must be auctioned for commercial 
services through the mechanisms detailed in this subsection. This 
subsection ensures that the auction is both self-funding and generates 
a profit for the U.S. Treasury. This subsection also encourages the FCC 
to assign licenses in a variety of geographic sizes.
  Subsection (d) allows the FCC to borrow in advance up to $1 billion 
of the $1.75 billion available for relocation costs.
  Subsection (e) allows the FCC to conduct only one special incentive 
auction for the broadcast spectrum. It does so to encourage the FCC and 
broadcasters to make best efforts to ensure success of the special 
auction rather than await the results of a first attempt. Broadcasters 
may still participate in general incentive auctions authorized under 
Section 6402, although certain offsetting FCC flexibilities and 
broadcaster protections in Section 6403(b), (g), and (h) do not apply.
  Subsection (f) leaves to FCC discretion whether to conduct the 
reverse and forward broadcast incentive auctions contemporaneously or 
separately.
  Subsections (g) and (h) work in concert with the provisions of 
subsection (b) to create offsetting FCC flexibilities and broadcaster 
protections to facilitate the broadcast incentive auction. Subsection 
(g) creates certain limitations on the FCC's ability to relocate 
broadcasters or modify their spectrum usage rights during the pendency 
of the broadcast incentive auction. Subsection (h) limits broadcasters' 
rights to protest license modifications made pursuant to the broadcast 
incentive auction provisions.
  Subsection (i) clarifies that the FCC's November 8, 2008, ``White 
Spaces'' order continues to apply to vacant channels in the 
reconstituted television broadcast band after the incentive auction, 
reorganization of the broadcast channels, and re-allocation of spectrum 
for broadband use.
  Section 6404. This section prevents the FCC from excluding qualified 
bidders from participating in spectrum auctions so long as they abide 
by the auction procedures. Such ``prior restraints'' would be 
antithetical to the notion of open auctions, which use a competitive, 
market-based approach to allocate spectrum to those entities that will 
put the spectrum to its highest and best use. By maximizing the amount 
of spectrum available for auction and offering a variety of geographic 
licenses and license sizes, the FCC can help ensure all potential 
bidders--local, national, and regional; urban and rural--have an 
opportunity to obtain spectrum to address the exponential increase in 
demand for spectrum caused by the increased use of smartphones and 
tablets by U.S. consumers.
  Under this section, the sole qualifications of bidders are that they 
abide by the auction procedures and other requirements to protect the 
auction process, and that they meet the technical, financial, 
character, and citizenship requirements under sections 303(1)(1), 
308(b), and 310 of the Communications Act at the time of bidding or, if 
they submit a winning bid, before grant of the license. The phrase 
``auction procedures'' refers to the mechanics of the auction, such as 
the ``activity rule.'' The phrase ``other requirements to protect the 
auction process'' refers to rules to protect auction integrity, such as 
those restricting collusion.
  The FCC should not be picking winners and losers: the market should. 
As demand for spectrum grows exponentially in the mobile broadband age, 
all carriers will need additional spectrum, and artificially limiting 
access to certain entities or skewing auctions to favor them will lead 
to inefficient outcomes that ultimately hurt consumers. Moreover, 
recent history demonstrates that attempting to ``shape'' the market by 
micromanaging auctions leads to unintended consequences that hinder 
competition, harm spectrum policy, reduce auction proceeds, and result 
in valuable spectrum lying fallow for years.
  This section also makes clear it is not intended to affect any 
remaining authority the FCC has to adopt and enforce rules of general 
applicability, as opposed to rules regarding particular carriers, 
particular classes of carriers, or particular auctions. The rigor of a 
notice and comment rulemaking conducted separately from a particular 
auction better ensures that all interested parties participate, not 
just parties courting particular spectrum. It also helps ensure that 
the FCC rigorously examines whether there is any need for action, as 
well as the pros, cons, and potential unintended consequences of any 
proposed measures. Conducting such a proceeding separately also ensures 
parties have a more realistic opportunity for appeal. Challenging rules 
adopted in the lead up to an auction are logistically challenging in 
that time is typically short, in that courts are likely reluctant to 
delay an auction or invalidate it after the fact, and in that if courts 
do, they potentially affect interests of all the auction participants, 
not just the challenging party.
  It is not intended, however, that the FCC act in a way that would 
override or undermine the fundamental purpose of this section--ensuring 
open and wide participation in spectrum auctions in order to put 
spectrum to its highest and best use and to increase auction revenues. 
The reference to ``rules concerning spectrum aggregation that promote 
competition'' is not meant to confer any new authority on the agency, 
but merely to illustrate that the FCC retains authority to adopt such 
rules in an industrywide rulemaking to the extent such authority can be 
found elsewhere in the Communications Act and does not conflict with 
the prohibition on excluding bidders.
  Section 6405. This section extends the FCC's auction authority 
through 2022.
  Section 6406. This section instructs the FCC and NTIA to pursue 
additional secondary allocations of spectrum for unlicensed use by 
evaluating the viability of sharing spectrum with government operations 
in the 5 GHz band.
  Section 6407. This section clarifies that nothing in sections 6402 or 
6403 shall be construed to prevent the FCC from using relinquished or 
other spectrum to implement band plans with guard bands. Such guard 
bands shall be no larger than is technically reasonable to prevent 
harmful interference

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between licensed services outside the guard bands. The FCC may permit 
unlicensed use in such guard bands. Unlicensed use shall rely on a 
database or subsequent methodology as determined by the FCC. The FCC 
may not permit any use of a guard band that would cause harmful 
interference to licensed services. Thus, this section makes clear that 
the FCC is free to create guard bands and allow secondary, unlicensed 
use in spectrum it has cleared with federal funds and auctioned under 
sections 6402 or 6403, so long as such guard bands are no larger than 
technically reasonable to prevent harmful interference between licensed 
services outside the guard bands and the use does not interfere with 
the licensed uses.
  Section 6408. Over the last 20 years, licensees trying to use their 
spectrum as authorized have started to experience limitations on 
service because adjacent spectrum users are relying on receivers that 
are not sufficiently tailored to focus just on the spectrum allocated 
for their adjacent use. The result has been lower power limits, 
restricted uses of spectrum, and a proliferation of guard bands. This 
section requires the GAO to submit a study to Congress not later than 
one year after the passage of the Middle Class Tax Relief and Job 
Creation Act of 2012 detailing current spectrum uses and whether 
changes to receiver performance, changes to operational aspects of 
existing spectrum uses, and narrowing of existing guard bands can help 
make more efficient use of the scarce spectrum resource.
  Section 6409. This section streamlines the process for siting of 
wireless facilities by preempting the ability of State and local 
authorities to delay collocation of, removal of, and replacement of 
wireless transmission equipment. It also increases access by 
establishing a uniform process for access to Federal rights-of-way and 
easements. It establishes a master contract process for siting wireless 
facilities on Federal Government owned property and buildings.
  Section 6410. This section amends the NTIA Organization Act to make 
efficient use of spectrum by federal agencies one of the NTIA's core 
responsibilities. As we search for the 500 MHz of spectrum that the 
National Broadband Plan recommends we find to address the Nation's 
growing wireless broadband demands, it is critical to ensure that 
government users maximize the use of the spectrum devoted to their 
missions. Government users represent a significant portion of the use 
of spectrum below 3 GHz. Ensuring that agencies use this resource 
efficiently should be a tenet of the NTIA's stewardship of this 
important public resource.
  Section 6411. This section requires OMB to update section 33.4 of OMB 
Circular A 11 to reflect recommendations in the January 11, 2011, 
Commerce Spectrum Management Advisory Committee Incentive Subcommittee 
report. OMB Circular A 11 currently requires agencies to integrate the 
cost of spectrum into their capital planning and management process. 
The CSMAC Incentives Subcommittee recommended changes to that circular 
that make the spectrum use analysis more robust, including whether new 
federal spectrum uses will share spectrum with other systems, a 
detailed explanation of the efficiency gains compared to the prior use, 
and consideration of non-spectrum based systems and commercial 
alternatives. Moreover, agencies must show that the chosen solution is 
the most spectrum efficient or explain why it is seeking to implement a 
solution that is less spectrum efficient.
  Section 6412. This section requires the GAO to study the use of the 
11 GHz, 18 GHz, and 23 GHz microwave bands with a focus on whether the 
spectrum is being used efficiently and whether commercial alternatives 
to the FCC licensing of such bands are sufficiently incentivizing 
efficient use.
  Section 6413. This section establishes the Public Safety Trust Fund, 
where most auction proceeds under this Act are deposited. It also 
establishes a cascading series of priorities for use of auction 
proceeds. First priority is given to repayment of funds borrowed 
against the $7 billion authorized elsewhere in the title to establish 
the First Responder Network Authority and the State and local broadband 
offices. Next in priority is the remainder of the $7 billion for 
buildout of the public safety broadband network and $100 million for 
research and development related to public safety broadband 
communications, followed by $20.4 billion for deficit reduction. From 
any remaining auction revenues produced above approximately $27 
billion, $115 million is used to fund the Next Generation 9/11 
provisions under subtitle E of this title and an additional $200 
million may be used for further wireless research and development of 
public safety broadband communications.
  Section 6414. This section requires the GAO to study the capabilities 
and use of amateur radio operators in times of emergency and to make 
recommendations to improve integration of amateur radio operators in 
disaster response.

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