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Feb. 27, 2009

President Barack Obama called for wireless spectrum license fees in a record $3.9 trillion budget, reviving a proposal that has so far failed to move in the past under the Bush administration.

However, with the new Democratic administration intending to halve the projected $1.7 trillion budget deficit by 2013, the latest campaign to levy a fee on mobile phone carriers and other spectrum license holders could get more traction this time around in the Democratic-led Congress.

Wireless service providers, which have paid billions of dollars to acquire licenses in government auctions since the mid-1990s, have strongly opposed spectrum licensing fees in the past and are expected to do the same now that lawmakers take up the Obama budget.

The president’s 140-page budget plan amounts to a very broad overview to say the very least. More information on the proposed spectrum fee — which would require legislation to enact — and other telecom-related provisions is expected when the administration releases a more detailed budget package in April.

As such, the four national wireless providers — Verizon Wireless, AT&T Mobility, Sprint Nextel and T-Mobile USA — said they were not in position to comment on the spectrum licensee fee proposal.

Though details on the new budget are few and far between, some information was made available yesterday.

The Obama administration estimates that wireless spectrum license fees would raise $4.8 billion over the next ten years. Also, the budget projects $1.4 billion in receipts from spectrum auctions over the same period, reflecting the reality of the dwindling supply of airwaves that are left to be sold.

“We are currently reviewing the details of the proposal and look forward to participating in the next stages of this issue,” stated cellular industry trade association CTIA.

The administration also wants Congress to give the FCC the green light to authorize the auction of domestic satellite spectrum, hoping to generate $200 million from such bidding by 2019.

As for universal broadband access, Obama’s budget blueprint had nothing new.

But general references were made to the $7.2 billion earmarked for broadband grants in the economic stimulus bill that Obama recently signed into law.

Obama’s spectrum fee plan will play out in political and economic circumstances that are strikingly similar to those of the early 1990s, when the FCC was first given authority to utilize auctions to award wireless licenses.

Democrats — which controlled Congress in the early 1990s when former President Clinton was attempting to erase a less oppressive budget deficit — authorized spectrum auctions for the first time. Democrats had consistently opposed spectrum auctions proposed by previous Republican administrations.

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Source: WCT.