My Insanely Long Field Guide To The C-Band Spectrum Fight, And Why This Won’t End In December.

Like most everything else at the FCC these days, problems that have relatively simple and straightforward solutions turn into horrible complicated messes. Take the C-Band, a slice of spectrum that in the U.S. lies between 3.7 GHz and 4.2 GHz. When first authorized for commercial satellite use back in the day, these frequencies were considered far too high to have much value for terrestrial use. These days, of course, 3.7 GHz is considered prime “midband” spectrum perfect for mobile 5G deployment, and sits right on top of the CBRS spectrum the FCC intends to auction next June. So wireless carriers want the FCC to repurpose some or all of it for 5G. In addition, a bunch of folks (including my employer Public Knowledge) support opening up portions of the band in rural areas for point-to-point backhaul (on a secondary basis, which means the backhaul guys need to protect the incumbents from interference).

 

The logical and straightforward thing to do would be to treat this like we did the 700 MHz auction/DTV transition over ten years ago. Tell the C-Band guys “sorry guys, we’re shrinking your available spectrum from 500 MHz to 200 MHz and taking back the other 300 MHz for auction. We’re also going to allow point-to-point backhaul on a non-interfering basis because that will really help rural ISPs. Don’t worry, we’ll set aside some of the auction money for a transition fund.” Sure, the incumbent licensees would scream (they always do), but this is a fairly proven solution that worked well to get us spectrum for 4G (and raised $20 bn for the Treasury) so why not do it again?

 

Or, if you really want to bribe the incumbent licensees, we could do an incentive auction. I’m not a fan, especially when it’s folks who got their licenses for free. But fine. We crossed that bridge awhile ago with the broadcasters, the authority for incentive auctions is now part of 47 U.S.C. 309(j), let’s just use it.

 

But nooooooo . . . . . This FCC in particular seems to love delaying everything while it rethinks all the options so it can come up with its very own wrong decision. Just as the FCC delayed deployment of the CBRS spectrum by 2 years by reopening that proceeding to redo the rules at the behest of the big carriers, now the FCC apparently wants to try a “private auction” under which the current holders of the satellite licenses (as represented by a group of licensees called “C-Band Alliance” or “CBA”) will go off behind closed doors, “auction” the public spectrum themselves, and then promise to give a piece of the money back to the FCC.

 

After snoozing through this for over a year, members of Congress have suddenly woken up and made this all interesting. Why? Analysts estimate that an auction of 300 MHz of C-Band spectrum would yield $50-60 billion in revenue. If the government conducts the auction, then it gets to credit $60 bn as a “payfor” to the budget for things like rural broadband or Trump’s border wall (assuming the Congressional Budget Office, aka CBO, agrees with the estimate). Notably, Senator Kennedy (R-LA) of the appropriations Committee had a little hearing with Chairman Pai where he politely but firmly made it clear to Pai that he thinks a private sale is a dumb idea and he wants a public auction. When that apparently did not work to move the needle, Kennedy jumped over Pai’s head and took the matter to President Trump, although there is no indication that Trump has decided to do anything on the matter.

 

Meanwhile, in the House, Rep. Mike Doyle (D-PA), Chair of the House Telecom Subcommittee, dropped a bipartisan bill, the C-Band Act, that would require the FCC to do an auction. Doyle followed this up with a hearing where the majority of the Members in attendance made it clear they wanted the FCC to run an auction so they could use that money to pay for rural broadband.

 

To understand why the distinction between private sale and public auction matters so much to Congress, you need to understand one of the peculiarities of how Congressional budgeting works and and terms such as “CBO score,” “paygo” and “payfor.” To state the matter quickly, if the FCC holds an auction, CBO can score the projected revenue of the auction as part of its annual budgeting process and that projected revenue can be used to “pay for” other projects under Congress’ “pay as you go” (aka “paygo”) rules. But if the licensees have a private auction, there is no CBO score even if the licensees make a voluntary donation to the FCC. So from the perspective of Congress trying to find money to do stuff, the difference is not between $60 bn and something less than $60 bn. The difference is between $60 bn and zero. Granted, no one in Congress appears to worry about deficits these days, but as Senator Kennedy observed, that money could fund “several other government projects (including the wall),” and $60 bn is not a small amount of money whether you want to fund the wall (like Kennedy) or rural broadband (like the House E&C).

 

But what can Congress do, especially with Chairman Ajit Pai apparently determined to give C-Band Alliance what they want (especially now that AT&T and Verizon have supported C-Band)? Funny thing, we had a similar issue back in 2002 when the Powell FCC tried to move ahead with an unauthorized incentive auction, and Congress stopped that cold despite FCC authorization of the auction.

 

I explain below . . .

 

What Is C-Band and Why Are People Fighting About It?

 

“C-Band” is a band of spectrum in the U.S. between 3.7 GHz and 4.2 GHz. When it was allocated back in the 1970s for satellite use, these frequencies were considered super high-range and unusable for terrestrial purposes. If you are old enough to remember a period of time when rural folks got “cable” with giant satellite dishes, that was C-Band. More recently, television stations and cable programers use them to transmit programming to cable head ends.

 

These days, 3.7-4.2 GHz is considered prime “mid-band” spectrum for 5G. As a result, the wireless industry has pushed for the last few years for the FCC to reclaim a chunk of the C-Band (ranging from “all 500 MHz of it” to “at least 200 MHz” and settling these days on 300 MHz) to auction for 5G. This does not sit well with rural cable operators and broadcasters who actually use the spectrum and whose basic position is: “Hey, we are sitting here minding our own business following the rules and providing service like we’re supposed to do. Why pick on us?” If the FCC does reclaim the spectrum, they want to make sure they get compensated for the expense to migrate to new systems — either switching to fiber or shifting to remaining C-Band spectrum using more efficient compression technologies.

 

Meanwhile, WISPA and a coalition of others interested in rural broadband (including my employer Public Knowledge) have filed a Petition asking the FCC to open up the band for terrestrial sharing explicitly for point-to-point backhaul for rural broadband. The idea here is that even in rural areas where you have folks willing to provide service, like small wireless ISPs, you still need a way to move the traffic from the local network to the “cloud.” In places where it is expensive to run fiber, wireless backhaul makes it possible to get decent speeds for local networks.

 

As if this weren’t complicated enough, the satellite companies that hold the licenses organized themselves into something called the “C-Band Alliance” (CBA). They proposed what they called a “private auction.” Essentially, the FCC would bless these licensees getting together and selling off capacity in a process they totally promise would be completely fair and where they also promise they would make a “voluntary contribution” to the FCC out of the proceeds. The satellite companies argue that letting them sell off capacity privately will go much faster than going through the process of the FCC reclaiming the spectrum (which both the satellite licensees and the current user base will fight tooth and nail). Except that the current user base and those who want a standard FCC auction have also threatened to sue and fight tooth and nail if the FCC allows the satellite licensees to sell off spectrum capacity for terrestrial 5G on their own. The satellite companies have also promised to give some undisclosed amount to be figured out later to compensate the public for the money they would have made by holding the auction, except that actually holding the auction would generate a heck of a lot more money.

 

Meanwhile, the existing users were upset about any changes and complaining that the FCC and everyone else were waaaay underestimating the total number of users of the existing system (which turned out to be true), and demanding that the FCC keep things the way they are or, in the alternative, make sure that all the existing legacy users get made whole — since it’s not like they did anything wrong.

 

The FCC, being sensible for a change, decided in July 2018 to put all these proposals out for comment and to gather information on actual use of the band. Since then, it appears that the FCC majority has been gradually moving toward the private sale/private auction, with promise of a decision before the end of the year.  But then . . .

 

Let Me Guess. Dramatic Plot Twists, Right?

 

As always in the exciting wold of 5G, plot twists and surprise betrayals abound! Eutelsat, one of the satellite licensees, left the C-Band Alliance. This already created problems, since without Eutelsat it’s not clear how C-Band alliance can make good on its promise to clear 300 MHz of spectrum. But then Congress, which has mostly snoozed through this, got interested. Specifically, Senator John Kennedy (R-LA), Chair of the Senate Appropriations Subcommittee on Financial Services and government, had a hearing where he summoned Chairman Pai to express his disapproval of a private sale of public airwaves and question why Pai and the other Republicans keep insisting that it would take 5 years for the FCC to get C-Band spectrum to auction (given that it is taking less than 2 years to get CBRS spectrum to auction). Then Chairman Mike Doyle (D-PA) introduced a bipartisan bill requiring the FCC to auction 300 MHz of C-Band spectrum, and followed this up with a hearing stacked with witnesses hostile to the CBA private sale proposal (including my Public Knowledge colleague Phil Berenbroick, who did an excellent job).

 

This is not to say that Pai is totally without Congressional support. Senate Commerce Committee Chair Roger Wicker (R-MS) and Telecom Subcommittee Chair John Thune (R-SD) sent a letter of support to Pai back in May to take whatever action he thinks will move out spectrum quickly, i.e., go with private sale if that makes you happy. So far, Wicker and Thune have continued to support Pai, making it likely he will go with a private sale — unless President Trump gets involved.

 

So Where Does the Ever Important TotSF Stand?

 

Unsurprisingly, I think we ought to do an FCC auction (and we ought to grant the WISPA petition for wireless backhaul in rural). After all, my employer Public Knowledge is signed on to supporting both, so no surprise here.

 

Besides, this is a pretty straight up no brainer. Allowing rural folks to use the spectrum on a secondary basis for point-to-point backhaul in areas where no one is going to want to set up 5G networks (and where point-to-point makes it easy to avoid interfering with the incumbents) should be a no brainer. Secondary use on a non-interfering basis is older than unlicensed underlays for Heaven’s sake.

 

As for reclaiming C-Band spectrum for auction, it beats giving a gigantic multi-billion dollar windfall to companies at the public expense. I’m not a huge booster of the whole “race to 5G” thing, it’s clearly the flavor du jour and its clear we need more greenfield mid-band spectrum to make this work. I’m also not a huge fan of spectrum auctions. But to paraphrase a quote attributed to Winston Churchill and a bunch of others: spectrum auctions are the worst way to distribute exclusive licenses, except for every other way ever tried. And while the current incumbent users haven’t done anything wrong or violated any rules, this isn’t supposed to be a punishment. The fact is that the national interest requires us to repurpose the spectrum for 5G, and distributing the licenses by auction (with some secondary use point-to-point to help out with rural broadband) will create a huge pot of money to reimburse the existing incumbents for migration costs.

 

But Does The FCC Have Authority to Just Reclaim the Spectrum?

 

As I keep reminding everyone, the Communications Act says quite explicitly in Section 301 and Section 309(h) that you don’t own the spectrum. Section 304 requires every licensee to sign a waiver that says “hey, I totally don’t own this and I waive any claim against the regulatory power of the United States based on my prior use of the spectrum.” Section 309(j) says “absolutely nothing about distributing licenses by auction changes Section 301, Section 304, or 309(h). Really. You DO NOT OWN YOUR SPECTRUM LICENSE!!! No matter how much you say you own it or think you own it, you really don’t.” And, just in case you didn’t pay attention to all of the above, Section 316 says the Commission can make any modifications to any license its wants, provided it gives the licensee(s) 30 days notice in writing, which it did by issuing the Notice of Proposed Rulemaking in 2018.

 

This is exactly what we did back in the 700 MHz auction in 2007. In 2005, Congress told the broadcasters: Guess what? We’re taking back a whole bunch of “broadcast spectrum” — Channels 52-69 — and relocating all of you downstream. Oh yeah, all the secondary services using this spectrum, the FCC will sort you all out. Then, when we had to deal with the Band Plan From Hell in ’07 to rationalize the band after a bad auction in ’03 (more on that later), there was a licensee that stubbornly refused to move. They were holdouts and wanted a payoff. Unfortunately for them, the FCC Chairman at the time was a fellow named Kevin Martin, who had a very low tolerance for this kind of bullshit and a perfect willingness to use the powers delegated to the FCC by Congress to resolve precisely this sort of situation. So the FCC exercised its authority under Section 316 and simply migrated the annoying licensee elsewhere. Problem solved.

 

The FCC has done this on other occasions as well, even without explicit Congressional authorization, to the approval of the D.C. Circuit. Specifically, to resolve the spectrum gordian knot known as the “800 MHz re-banding order.” I shall spare you the details. If you are really interested you can read the D.C. Circuit’s opinion upholding the FCC stomping on individual public safety licensees and swapping stuff around to finally resolve this mess in Mobile Relay Assoc v. FCC, 457 F.3d 1 (D.C. Cir. 2006). Basically, as the D.C. Circuit and the Supreme Court have recognized, Congress explicitly delegated to the FCC the power to shuffle around spectrum and modify licenses in the public interest to address precisely this kind of situation. Technology changes, we have conflicting valid claims to the use of the spectrum, and someone has to make the decision.

 

So yes, the FCC has the authority should it chose to exercise it (as does Congress). The FCC also has about 25 years experience running auctions and putting together band plans at this point. As a benchmark, the FCC aborted the original plan for 3 year licenses with no expectation of renewal in CBRS and opted to go to standard licenses (on a county basis) back in October 2018. It plans to hold the auction in June 2020. That’s less than 2 years from decision to auction.

 

Meanwhile, the CBA private sale proponents want to do something that has never been done before, on authority that has never been used for this purpose or tested in court. Further, as supporters of the CBA proposal concede, the FCC is still going to have to be heavily involved in overseeing any private sale/auction, setting band plan rules, clearing the band, and doing all the work it would do anyway. It would just make a lot less money. Oh yes, and somehow Eutelsat needs to get brought back into the fold, which may require using Section 316 anyway.

 

You would think that the FCC would go with the tried and true clear and auction rather than the whacky never-been-tried-before “private auction” that takes just about the same amount of FCC work but makes substantially less money for the government, right? Hah! Based on public statements from Commissioner O’Reilly, and general rumors about where Chairman Pai stands based on his statements at the Kennedy hearing, the FCC appears to be leaning toward “private sale.”

 

This is particularly irritating because the whole justification the FCC gave for getting rid of the innovative CBRS “priority access license” system and replacing it with a standard auction to favor the big carriers was that the race to 5G was so important that we could not risk jeopardizing or delaying with an experimental auction process. So, of course, we can now totally risk delaying getting C-Band spectrum out for 5G by adopting a whacky, untested “private auction” guaranteed to get litigated because “the private sector can do auctions so much faster and better than us dumb old government FCC, the people who freaking invented spectrum auctions in the first place and have more experience with this stuff than anyone else in the world.”

 

On top of that, this so called “private auction” is a recipe for collusion and anti-competitive conduct. FCC auctions have been play tested for all manner of cheating and collusion for over 25 years. They are used as a model for spectrum auctions around the world. The FCC auction attracts the best specialists in the business interested in working on some of the most challenging problems and trying to outsmart companies investing massive resources in experts and huge “war rooms” for the purpose of gaming the system. But most importantly, the FCC has no incentive to jack up the prices. Even if it did want to throw the auction to a particular set of carriers, a host of transparency rules and oversight of federal agency action make that virtually impossible.

 

By contrast, absent creating some new regulatory structure, a “private auction” means inviting the satellite companies to go into a back room and act as a spectrum supply cartel to negotiate with the wireless industry. How could that possibly end badly? Especially when Supreme Court decisions such as Trinko make application of antitrust to an FCC blessed auction questionable?

 

But let us assume that the FCC is smart enough to pay attention to AT&T’s warning that without significant FCC oversight, this goes badly and ties up the spectrum in endless litigation. Doesn’t that just make things more complicated as the FCC tries to figure out how to apply the existing safeguards (or some reasonable substitute) to a “private auction?” Are we going to apply the usual “quiet rules” that apply during an auction to prevent the carriers from colluding? How do we prevent the CBA from colluding to jack up prices or cut side deals that benefit their primary business rather than distribute the spectrum fairly?

 

The idea that this is somehow a “private sector solution” rather than “command and control” is particularly laughable and insulting to anyone familiar with spectrum auctions and history. Spectrum auctions and flexible use were the “cure” for the old system of allocating specific bands for specific uses (command and control). Having private companies award licenses to carriers of their choice specifically for 5G is precisely the old command and control system — as modified for crony capitalism to make sure it maximizes the privatization of the public benefit. I expect Ronald Coase — the economist who thought up spectrum auctions in the first place — is rolling over in his grave.

 

This assumes, of course, that this proposal can survive the legal problems. I confess I’m skeptical of the legal theory (which you can see in this Verizon filing here), but even if I’m wrong and Verizon is right, we are talking years of litigation challenge on a novel question of law.

 

But set all that aside. Let’s talk about the budget issues and how this impacts incentives in Congress.

 

Why Does Senator Kennedy, A Republican On The Appropriations Committee, Care?

 

Senator Kennedy is something of a maverick on telecom. He was one of 3 Republicans to vote in favor of the Congressional Resolution of Disapproval on net neutrality, for example. But what this really comes down to is the peculiar way Congress does it’s budget. By law, Congress now uses a system called “PAYGO” (“Pay As You Go”). At a very high level, it means that spending or reductions in revenue are supposed to be “deficit neutral.” New expenses (or loses of revenue, like tax cuts) are supposed to be offset by new revenues (or cuts from other spending). The arbiter of all this is the Congressional Budget Office (CBO), which has many elaborate and arcane rituals for its various prognostications. I will summarize very briefly at a very high level the relevant issues here. Those wishing more details on this particular subset of financial divination can find more information in the CBO Dungeon Master’s Guide here and here, where you will find yourself dropped into a twisty maze of links all alike.

 

When the relevant committee considers a piece of legislation for a vote (which means it has to clear a bunch of hurdles first), it gets sent to CBO for a “score,” meaning a question of how much it costs and whether or not it will add to the deficit. Even if technically immune from PAYGO, costing a lot of money can become a talking for those opposing the bill. As you may have noticed from the recent Medicare for All discussion, this potentially generates a huge “how are you going to pay for it” fight. This is particularly true for budget bills that run through the Appropriations Committee, i.e., the Committee Kennedy sits on and is Chair of the Subcommittee on Financial Services and General Government.

 

As a Republican, Kennedy would like to go home and brag about his fiscal conservatism and how as Chair he brought needed economic discipline to wasteful Washington. This is rather difficult to do with the deficit running at close to $1 Trillion and the President demanding tens of billions of dollars for his “security wall” (to tide us over until Mexico pays, of course). This means getting a “pay for,” something that will generate revenue (or cut expenses) to offset the increased spending. You can then send the proposed “pay for” to CBO for an estimate of revenue generation. As I’ve discussed at length before spectrum auctions are a very popular “pay for.”

 

We have estimates for a C-Band Auction of 300 MHz (the current goal everyone agrees to) of between $50-$60 billion. CBO is traditionally rather conservative, but even if CBO knocks this down some to include the cost associated with clearing the band (which are usually paid out of auction revenues) and takes a somewhat pessimistic view of the likely bidding, we are still probably in the $40-$50 billion range. Interest rates are low again so capital is cheap. And while the mmWave band auctions have generally yielded very low revenues, that’s because the business models and technology around mmWave band is still untested and in flux. By contrast, mid-band spectrum like C-Band is pretty straightforward as the best spectrum for deploying what most people are now thinking about as 5G — 3GPP Release 15. (If this was technobabble to you, go read my basic backgrounder on 5G here.)

 

As I understand it, and I admit I am no CBO budgeting expert, CBO will also include the projected auction score in its budget assessment if the FCC schedules an auction on its own authority. The scoring rules here are somewhat more complicated, because the FCC auction process got some general credit for auctions in the 2012 budget going through 2022 (when Congress renewed the FCC’s auction authority for 10 years). But because C-Band was already assigned in 2012 to licensees, it wasn’t anticipated that there would be a C-Band auction. Again, I’m not exactly sure how this works, but after talking to some folks my basic understanding is that if a federal agency schedules a definite revenue producing event under its delegated authority, then it an be scored.

 

But CBA Has Promised To Give Treasury A Chunk of the Change. Why Isn’t That Good Enough?

 

Two things. First, if the FCC holds the auction, the FCC gets all the money. If CBA members do the private sale thing, the FCC (and therefore the federal government) gets a lot less of the money. (Eutelsat, for example, wants a cap at 50%.) After all, the whole point of this from the satellite licensee p.o.v. is to get gobs and gobs and gobs of money by selling something they don’t own (and still keeping enough of it do go on doing exactly the same business they are doing now). Furthermore, in a public auction, the FCC actually collects all the money and does all the book keeping. If the CBA does a private sale, there are lots of opportunities for funny book keeping games to keep the money from passing to Treasury — especially with an FCC uninterested in enforcement against big wireless companies and their friends.

 

So if you are a member of Congress looking for a payfor, then you definitely want the FCC to do the auction and get the whole $50 billion rather than settle for whatever ultimately makes it back to the FCC as a “voluntary contribution” to the government.

 

But the other complication is that, and again this is my understanding from talking to folks and I’m not a huge expert, CBO won’t score an indefinite voluntary contribution sometime in the indefinite future. Under CBO’s weirdo divination rules, there has to be enough certainty about the revenue to actually score it. If there are too many unknowns, then they won’t include it in the score. With no way to estimate how CBA would conduct its private sale, and therefore no way to estimate revenue, or the share going to the government, there is simply no way to include it in a projected budget score.

 

This isn’t to say the money wouldn’t show up at all (assuming it were paid). It would show up as deficit reduction the same way that unexpectedly strong tax revenues show up in the budget. But while that’s fine if you care about reducing the deficit for its own sake, it doesn’t give you any money to pay for new things under PAYGO.

 

In other words, if you are a member of the Appropriations Committee looking for a payfor for your multi-billion dollar security wall, or your multi-billion dollar rural broadband grant, then a private sale of C-Band spectrum doesn’t even get you the projected percentage of the auction promised. It gets you a big fat goose egg for your budget. Zero. Nada. Zip.

 

Which is why Kennedy cares. Because being able to go home and say that he stopped corrupt deep state bureaucrats from giving away $60 billion to foofy European satellite companies with outrageous accents and used that money to help Trump build his wall and/or bring broadband to the bayou is a hell of a nice prize.  This goes double for the House. Whereas Kennedy has at least some incentive to be nice to a fellow Republican (especially where Commerce Committee Chair Senator Thune and Telecom Subchair Whicker have Pai’s back), House Democrats don’t particularly have any reason to avoid embarrassing Pai by overriding him by statute.

 

Won’t This Delay Getting 5G Spectrum Deployment, China Will Eat Our Lunch, etc.

 

The biggest argument for the “private sale” is that it would get spectrum out for deployment faster than an FCC auction. Let’s assume for the moment that the race to deploy 5G is an actual thing and that therefore we care about maximizing deployment of 5G. Is this real? No. Bluntly, the only reason anyone could believe that a mysterious, undefined, never been tried before, subject-to-legal challenge private sale is going to be faster than a plug-n-play FCC auction is a combination of utter ignorance of the last 25 years of spectrum auction law and policy combined with an ideological belief that anything government does must invariably be worse than what the private sector does, or a cynical willingness to exploit this combination in others.

 

It’s worth noting that courts have generally refused to stay an FCC auction, although they have reversed an auction after the fact if they subsequently find against the FCC (that’s what happened when Nextwave Communications won their lawsuit in the Supreme Court in 2003. FCC had to undo a $17 billion auction).  So if the FCC goes ahead with reclaiming the licenses (or, even better, Congress passes the C-Band Act) they can proceed promptly to auction.

 

This does not, however, make private sale the safer course. To the contrary, the proposed private sale has a number of steps, from the FCC’s upcoming Order setting things in motion to the individual license transfers and modifications they would need to do post auction, each one of which will no doubt get it’s own round of litigation and may or may not get stayed (no track record here to judge, other than that stays are hard to get). But at any rate, the litigation fight over the “private auction” is likely to be far more complicated and uncertain than the fight over the public auction — especially if Congress just passes a law to resolve the issue.

 

But Pai Wants to Make a Decision at the December Meeting? Can Congress Get Something Through Before That?

 

Here is another fun fact most folks overlook. Congress does not have to get something over the goal post before the FCC votes and issues an Order. Congress can reverse the FCC right up until the day the auction is scheduled.

 

Say what?

 

Once again, it pays to know the history of the DTV transition and the 700 MHz auction. As part of the Telecom Act of 1996, Congress allocated broadcasters rights to free DTV licenses, which gave them huge new capacity. In exchange, Congress took back channels 52-69 to auction (and reallocate some to public safety — but that is another lengthy tale). But Congress initially made the transition contingent on 85% of US households receiving DTV. Since this meant buying an expensive new TV set to get the same programming, only about 1% of people had gotten DTVs by 2001 when Michael Powell took over as FCC Chair.

 

So Chairman Powell decided to adopt a “market-based approach” pushed by the broadcasters, particularly by a major owner of UHF stations named Bud Paxson. Under the plan adopted by the FCC in 2001,.the FCC would auction allow broadcasters to voluntarily put their spectrum up for auction with a major portion of the proceeds going to a “relocation fund” designed to pay off the broadcasters based on the population in their viewing area. At the time, folks were estimating that this would be a windfall of billions of dollars to broadcasters participating and to Paxson in particular — who had a lot of stations that would need relocating.

 

A bunch of folks in Congress were not happy with this plan and introduced the Auction Reform Act of 2002.  That prohibited the FCC from conducting its planned auction, required the FCC to return the upfront payments already made and prohibited the FCC from creating its own “relocation fund” or any other “incentives” that would result in an “unjust enrichment” of the broadcast licensees. President Bush signed the bill into law on June 19, 2002, the morning of the day the auction was scheduled to begin.

 

That’s right. Not only had the FCC issued its Order more than a year earlier. Not only had the FCC gone through the public notice process, set everything up, received and approved applications and cashed the upfront check deposits. The auction got cancelled at the absolute literal last minute. The kind of thing that one sees in a bad movie, with folks walking quickly to find the President in his bathrobe so he can sign the bill into law before the FCC hits the “start” button. That’s how much time Congress has to reverse the FCC’s decision if it doesn’t like it.

 

So This Isn’t Over In December Even If the FCC Votes on an Order?

 

Nope. So while I kind of doubt that Congress can get its act together to pass the C-Band bill while the impeachment thing is going on (although you never know, it might show up in a Continuing Resolution to keep the government funded; it is a payfor after all), Congress will still have plenty of time to pass it while the FCC and CBA and everyone else try to figure out how to do this whole “private auction” thing and how to deal with the inevitable litigation.

 

Stay tuned . . . .