[Text only of letters sent from the Commerce Committee Democrats]
June O'Neill
Director
Congressional Budget Office
H2-410, The Capitol
Washington, D.C. 20515
Dear Director O'Neill:
Included in H.R. 2015, passed by the House on June 25, was a Manager's amendment that replaced Title III, Subtitle D, dealing with spectrum auctions. Because the amendment was never subject to hearings or open consideration by the committee, I have a number of questions that must be answered as we approach conference. It has been announced that the conference will begin at the conclusion of the District Work Period, so please provide your answer to the following questions no later than July 7, 1997. Thank you in advance for your assistance.
1. Section 3301(a) requires the Federal Communications Commission to establish methods by which a minimum bid in an amount that is more than nominal in relation to the value of the spectrum resource being made available will be required.
(a) How does CBO interpret this provision? What is nominal? Could auctions still occur under this provision that result in revenues that are one percent, ten percent, or 50 percent of anticipated revenues?
(b) How does this provision compare with the reported version of the bill which permitted the establishment of minimum bids?
2. Section 3301(b) requires the Federal Communications Commission to complete all actions necessary to permit the assignment, by September 30, 2002, by competitive bidding of licenses that use particular frequencies.
(a) What is your Office's estimate of the revenues to be gained by this subsection?
(b) The subsection identifies three specific spectrum bands: 1,710-1,755 MHz; 2,110-2,150 MHz, and 15 MHz from 1,990-2,110. For each of these three bands, please describe:
(i) the current use of the frequencies;
(ii) the use for which CBO assumed bidders would make for such frequencies;
(iii) the estimated cost to incumbent licensees of relocating current uses.
(c) Section 3301(b)(2) requires that the bidding for the spectrum from 1,710-1,755 take place after January 1, 2001 and before September 30, 2002. Does CBO believe that directing the auction to occur during this limited time period will enhance or reduce the value of the auction to the taxpayers? It would appear that one purpose of this provision would be to push CBO scoring of the auction into fiscal year 2002, to create the appearance of a balanced budget in that particular year. To what extent do CBO scoring procedures allow or encourage such time-shifting techniques, which may in the long run be detrimental to assuring maximum beneficial use of the spectrum?
3. Section 3301(d) requires the FCC to auction an additional 20 MHz to be identified by NTIA.
(a) What scoring did CBO attribute to this provision?
(b) What frequencies does CBO assume can be found pursuant to this provision, and what are the current uses of such frequencies?
(c) For what use does CBO assume the frequencies will be used?
(d) What are the estimated relocation costs for the incumbent users?
4. Section 3302 requires the auction of recaptured broadcast television spectrum by September 30, 2002. Does CBO believe that the potential revenues to the government would be enhanced if the auction were permitted to occur after such a date, and closer to the date upon which the spectrum is actually expected to revert to the government? If so, please estimate how much revenues could potentially be lost as a result of the requirement to complete the auction by September 30, 2002.
5. Section 3303 requires the auction of certain frequencies from 746-806 MHz during the period from January 1, 2001 to September 30, 2002.
(a) Does CBO believe that from the perspective of the taxpayer and the Treasury, it is prudent to place such a limited time restriction for the auction?
(b) The Commerce Committee version of the bill would have permitted auctions to occur earlier. Is there any reason to believe that requiring the FCC to commence bidding only after January 1, 2001 will enhance revenues?
(c) It would appear that the primary purpose for prohibiting the auction of these frequencies prior to January 1, 2001 is to place the scoring of these revenues in fiscal year 2002 to give the appearance of a balanced budget in that particular year. Assuming that is the case, what procedures does CBO have to discourage such time-shifting techniques that may be detrimental to the long-term interests of the taxpayer and the budget?
6. The Manager's amendment contains a provision on the payment schedule for the Universal Service Fund, section 3305, that was never considered in committee, nor discussed in the budget resolution. The provision appears to push spending into fiscal year 2001, and limit spending in fiscal year 2002. Once again, the only purpose for such a provision would appear to be to reduce outlays in fiscal year 2002 to give the appearance of a balanced budget in that year. To what extent do CBO scoring procedures encourage such time-shifting provisions, which do nothing to reduce outlays or increase revenues, but are used to give the appearance of a balanced budget in a particular year?
7. During much of the debate on spectrum auctions, a key issue was the potential market for various frequencies. Our committee has received no convincing testimony that such demand will occur in the next five years, yet CBO appears to believe that auctions will raise significant revenues. As you are aware, a recent auction which CBO estimated to be worth $1.8 billion, actually raised just $13 million, or less than one percent of your estimate. Please cite all evidence that CBO used in making its estimates of the value of spectrum.
8. In previous questions I have alluded to various time-shifting provisions in the Manager's amendment that appear to serve no public policy purpose, but could be used to reduce spending and increase revenues in fiscal year 2002, the year in which the budget is to balanced. Not too many years ago, techniques such as shifting the date of payment to a day after a fiscal year ended were used to create the illusion of lower spending. To what extent have such techniques been used in the communications provisions of this bill, and what is the position of CBO with respect to such techniques?
Sincerely,
JOHN D. DINGELL
RANKING MEMBER
cc: Tom Bliley, Chairman
Committee on Commerce
W.J. "Billy" Tauzin, Chairman
Subcommittee on Telecommunications, Trade, and Consumer Protection
Edward J. Markey, Ranking Member
Subcommittee on Telecommunications, Trade, and Consumer Protection
Back to the Public Record
Home Page