[Congressional Record (Bound Edition), Volume 148 (2002), Part 3]
[Senate]
[Pages 3775-3776]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 THE ADMINISTRATION'S SPECTRUM PROPOSAL

  Mr. McCAIN. Mr. President, as ranking member of the Senate Committee 
on Commerce, Science and Transportation, I would like to discuss an 
issue I have discussed before, an issue that was addressed by the 
administration's proposal in the 2003 budget to delay the auction dates 
for spectrum being used by broadcasters.
  In 1997, Congress ventured down a path that we hoped would lead to a 
revolution for the American consumer--digital television. Congress took 
action to support the transition to digital television, specifically 
high definition digital television, because of its potential to give 
Americans sharp movie-quality pictures and CD-quality sound, and took 
the extraordinary step of giving the broadcast industry a huge amount 
of spectrum for free--a $70 billion gift.
  During consideration of the Balanced Budget Act of 1997, broadcasters 
touted DTV technology as a competitive necessity that would preserve 
free over-the-air television in the new digital millennium. They sought 
legislation intended to speed and facilitate a transition from analog 
to digital television broadcasting. Their requests for special 
treatment were fulfilled.
  At the time, the Wall Street Journal described Congress' action as a 
``planned multibillion dollar handout for wealthy TV-station owners.'' 
While other industries must purchase their spectrum in competitive 
auctions, in the case of digital TV, Congress decided to give away the 
spectrum. At the same time, Congress also decided that broadcasters 
could keep their old analog spectrum until 2006, or until 85 percent of 
TV homes in a market could receive digital signals.
  During the debate on the Balanced Budget Act, I expressed my serious 
reservations with the spectrum provision. At the time I stated:

     . . . when it comes to the bill's provisions on the analog 
     turnback date, I fear that we have inadvisedly undercut the 
     value this spectrum might otherwise bring at auction by 
     including a waiver standard in this bill that unnecessarily 
     signals to bidders in 2002 that the spectrum they're bidding 
     on may not become available on any definitive date.

  I was not alone in my concern. In October 2000, the New York Times 
wrote:

     By giving the new spectrum away instead of auctioning it off 
     to the highest bidders, Congress deprived the Treasury, and 
     thus taxpayers, of tens of billions of dollars. The giveaway 
     also kept the new spectrum out of the hands of bidders eager 
     to sell digital services. The new spectrum went instead to 
     incumbent broadcasters, who have dawdled.

  Moreover, if the broadcasters begin to use their digital spectrum 
primarily to broadcast multiple channels of standard definition, 
perhaps on a subscription basis, I believe that they will never 
relinquish the spectrum. This scenario was never mentioned by the 
broadcasters while they were lobbying Congress for the free spectrum 
they eventually received.
  In 1997, Congress mandated that future FCC spectrum licensing should 
be performed through auctions, ensuring that the spectrum is allocated 
to parties that value most highly the opportunity to provide wireless 
products and services, and that compensate the public for the use of 
its resources. Yet, at the same time, Congress gave away billions of 
dollars in public assets at the broadcasters' urging and on the promise 
that the public would get it back, and get superior, free over-the-air 
service in the bargain. As the President's budget acknowledges, 
however, this is not happening.
  The administration is also proposing that beginning in 2007, the 
broadcasters would be assessed a $500 million annual lease fee for 
their use of the analog spectrum. If they return their analog spectrum 
by the 2006 deadline, they will be exempt from the fee. While this 
proposal has merits and may be justified, I believe that in all 
likelihood, the broadcasters will never pay. Be assured that a few 
years from now, the NAB will be marching up to Capitol Hill asking 
Congress for more time to complete the DTV transition.
  We should not let this happen. I believe that Congress must address 
this issue legislatively to protect the American taxpayer and ensure 
that the DTV transition will become a reality. Congress devoted 
valuable public assets to the DTV transition and ultimately has the 
responsibility for finding responsible solutions. The proposal before 
the FCC that enables broadcasters to further capitalize on the spectrum 
give-away by allowing the broadcasters to negotiate to vacate the 
spectrum by 2006 for a price, is not, I note, a responsible solution.
  In closing, I would like to read a quote from an article that 
appeared in Business Week last year.

       Congress should also make broadcasters pay for their 
     valuable real estate by attaching a price tag to the spectrum 
     they now occupy. When they approached Congress hat-in-hand, 
     broadcasters promised something they have yet to deliver. Now 
     that this has become abundantly clear, they shouldn't get a 
     free ride on taxpayers' backs. What they should do is fork 
     over the going rate for whatever airspace they occupy. That's 
     what cellphone companies are doing.

  It has been almost 5 years since the spectrum giveaway and the 
transition to digital television has barely materialized. The American 
taxpayers first lost the auction value of the spectrum. Now, they have 
no real certainty of what they're likely to get in return, or when they 
are likely to get it. The situation is a mess, characterized by more 
finger pointing than progress. Regardless of who is to blame, this much 
is clear: By 2006, this country will not have the transmission 
facilities, the digital content, nor the reception equipment necessary 
to ensure that 85 percent of the population will be able to receive 
digital television.
  In fact, recent statistics show that consumers have yet to embrace 
digital television. The Consumer Electronics Association reports that 
1.4 million DTV sets were sold last year, of which 97,000 were 
integrated units containing digital tuners. However, we received 
testimony before the Senate Commerce Committee last year that over 33 
million analog sets had been sold in 2000 alone. While DTV sales have 
been increasing each year, an overwhelming majority of Americans are 
still purchasing analog sets.
  Given the uncertainty surrounding the return of the spectrum 
currently occupied by broadcasters, the administration has proposed 
shifting the auction for TV channels 60-69 from the elapsed 2000 
deadline to 2004. Additionally, the proposal would shift the auction of 
TV channels 52-59 from 2002 to 2006. According to OMB projections,

[[Page 3776]]

shifting the auctions to later dates would increase expected revenues 
by $6.7 billion. The administration has concluded that if legislative 
action is not taken to shift the auction dates, potential auction 
participants may hesitate to bid for this spectrum without certainty of 
when the broadcasters may actually vacate it.
  At the same time, however, even if we act to change the dates, I also 
believe that years from now Congress is likely to again find itself 
attempting to shift the auction dates because the broadcasters will 
still occupy the spectrum. I hold this view because last year, the 
Commerce Committee held hearings on the transition to digital 
television. During that hearing I asked the National Association of 
Broadcasters, NAB, whether or not they believed they were going to 
reach 85 percent of the homes in America by 2006. The NAB's response, 
``Originally, the expectations and the projections that [we] looked at, 
was for that transition to take as long as possibly 2015.''
  I believe that there's not a snowball's chance in Gila Bend, AZ, that 
the broadcasters will vacate this spectrum by 2006, or that, despite my 
best efforts, that broadcasters will be penalized for squatting, as the 
President has proposed, if they occupy this spectrum after 2006. Some 
broadcasters have suggested that they may use their digital spectrum to 
multicast standard definition signals and provide other ``ancillary'' 
services, competing against companies and technologies that had to pay 
for the spectrum they use. I worry that if broadcasters provide 
``ancillary'' services using the spectrum they received for free, they 
will have a distinct competitive advantage over wireless companies who 
pay the public for the use of its spectrum.
  I yield the floor.

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