Politics & Policy

Stealing Spectrum

A Sununu amendment to a Commerce bill sticks it to taxpayers.

Earlier this summer, the U.S. Senate Committee on Commerce, Science, and Transportation approved passage of the Commercial Spectrum Enhancement Act. The bill, originally authored in the House of Representatives by Fred Upton (R., Mich.), would use the proceeds from auctions of government-owned airwaves to create a special fund that would help federal agencies smoothly relocate from spectrum as it is sold to commercial entities. While the importance of this legislation may not be readily apparent, one has only to look at the tremendous bipartisan support of 408 votes it received in the House of Representatives to see the true magnitude of the issue. Senate Commerce Committee Chairman John McCain introduced the Senate version of this legislation. With McCain’s reputation as a pork-fighter, one would expect that the legislation before his committee would be free of any such pork provisions. And it was, until it was amended.

Unfortunately, there is now a huge pork prize included in the bill just to benefit a single company. Thanks to a successful amendment by Sen. John Sununu (R., N.H.), the U.S. would simply give Northpoint Technology the rights to spectrum with an estimated worth of $100 million. This “no cost gift” (at the expense of taxpayers) occurs because of intensive lobbying by the politically connected Northpoint. If the Sununu Northpoint amendment remains in the bill, taxpayers will be fleeced once again.

The sale of spectrum is an important business for the communications sector of our economy, and our taxpayer dollars are clearly at stake. Spectrum auctions to date have produced $1.2 billion for the U.S. Treasury. Now that tough economic times are forcing the federal budget into record deficits, the last action Congress should contemplate is giving millions of taxpayer dollars to Northpoint, courtesy of the Sununu amendment.

This blatant taxpayer rip-off follows the Federal Communications Commission (FCC) action to set aside part of the Direct Broadcast Satellite (DBS) spectrum used by satellite television companies for a “terrestrial” (ground-based) wireless cable system, like the one Northpoint plans to build. While many thoughtful policymakers questioned the decision on the grounds that sharing of the DBS spectrum by terrestrial wireless systems could interfere with satellite TV transmissions, the FCC set-aside was granted.

The commission made it clear, however, that terrestrial wireless cable providers should bid for the spectrum in open auctions like everyone else. Undiscouraged, Northpoint went directly from the FCC to Congress and asked its friends to hand over the spectrum as a gift. To the chagrin of taxpayers, this boondoggle (to date) is succeeding.

Northpoint has a long history of political involvement, as does its national network of politically connected franchisees. It has been reported that some of the franchisees are even related to members of Congress. Those connections have, so far, greased the way for the Northpoint giveaway gambit. But getting a massive handout attached to a bill in committee is one thing, while getting it passed is quite another. When the bill reaches the Senate floor, it’s clear that a number of senators will be working to strike the Sununu gift language. National Taxpayers Union, and many other concerned groups, will be supporting that effort.

If the Senate effort fails to pull the Northpoint pork off the bill, it seems certain that the Commercial Spectrum Enhancement Act will be dead. This death will occur despite the importance of the bill. Ken Johnson, a House Commerce Committee spokesman, has already called the Sununu Northpoint amendment “a deal breaker.” Members of the Senate should act now to save this important legislation, before a single company trying to add to its profits at taxpayers’ expense torpedoes it.

Al Cors, Jr. is vice president of government affairs for the National Taxpayers Union. NTU has actively championed fair spectrum auctions for more than a decade. For further information, visit www.ntu.org, or write to 108 N. Alfred St., Alexandria, Va. 22314.

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