The Honorable Richard B. Cheney
President of the Senate
Washington, D.C. 20510-0010

Dear Mr. President:

Enclosed is a draft bill to amend section 3007 of the Balanced Budget Act of 1997 to shift auction deadlines for spectrum bands that are candidates for use in connection with third generation (3G) advanced mobile wireless services. The efforts of the Federal Government to identify additional spectrum for these 3G systems will have significant, long-term implications for some of America's most vital economic and national security interests.

	Related Link • Proposed Bill Text and Section-by-Section Analysis

Chairman Powell of the Federal Communications Commission and I both believe that it is imperative that the final allocation decision be the best possible one and that additional time and continued hard work are needed to reach that decision. While the Federal Government is committed to identifying spectrum for 3G services as expeditiously as possible, the current statutory auction deadline affecting certain of the bands under consideration does not provide sufficient time to conclude the identification process and conduct an auction before September 30, 2002. Accordingly, this legislative proposal shifts the statutory deadlines originally established in the Balanced Budget Act of 1997 for completion of the auctions of and collection of receipts for spectrum licenses in the 1710-1755 MHz and 2110-2150 MHz bands from September 30, 2002, to September 30, 2004.

The Office of Management and Budget (OMB) advises that any law that would reduce receipts is subject to the pay-as-you-go (PAYGO) requirements of the Balanced Budget and Emergency Deficit Control Act (BEA). Accordingly, the proposed legislation to shift the deadlines for the completion of and deposit of receipts for spectrum auctions will be subject to the PAYGO requirement. OMB's preliminary scoring indicates that this proposal will reduce the surplus by $1 billion in FY 2002 and increase the surplus by $1 billion in FY 2004. Final scoring of enacted legislation may deviate from these estimates. Based on revised assumptions for the current spectrum auction schedule, the Mid-Session Review of the Budget baseline already reflects the shift in auction receipts from 2002 to 2004. However, the BEA requires that official PAYGO scoring continue to use the FY 2002 Budget baseline and thus score the cost to FY 2002. The Administration will work with Congress to ensure that any unintended sequester of spending does not occur under current law or through enactment of any proposals that are part of the President's program.

We also have been advised by the Office of Management and Budget that enactment of this legislative proposal would be in accord with the program of the President. If you have any questions, please call me or Brenda Becker, Assistant Secretary for Legislative and Intergovernmental Affairs, at (202)482-3663.