Statement of Administration Policy: S. 2904 - Emerging Telecommunications Technologies Act of 1990

(Senate)
(Inouye (D) Hawaii and Burns (R) Montana)

The Administration opposes S. 2904 in the form in which it is expected to be amended by Senator Inouye. The bill would require the transfer of substantial amounts of radio frequency spectrum from use by the Federal Government to the private sector in an inefficient and costly way. It would require this transfer without authorizing the Federal Government to obtain potentially billions of dollars for the Treasury through competitive bidding.

If S. 2904 were presented to the President in its current form, the Secretaries of State, Transportation, and the Interior, the Department of Justice, the Chairman of the Federal Communications Commission, and the Administrator of General Services would recommend a veto.

The Administration opposes S. 2904 because it does not authorize the use of competitive bidding in the assignment of these Government frequencies. In a time of increasing Federal budget constraints, it would be a serious mistake to transfer extremely valuable spectrum from public uses to private commercial purposes without compensating the American taxpayer for use of that spectrum. Under current regulatory procedures, once this Government spectrum was assigned to a private user it could generally be transferred to a third party, probably by sale or lease, at a substantial profit, creating a windfall for the original licensee.

By contrast, competitive bidding would lead to an efficient use of the Nation's valuable spectrum resources and would return a portion of the spectrum's economic value to the American taxpayer. Competitive bidding is particularly appropriate for spectrum to be newly released or shared by the Federal Government since there is no embedded investment by the private sector in such spectrum that could be jeopardized.

The Administration opposes the provisions of S. 2904 that would require the President to reallocate 200 megahertz of spectrum. These provisions improperly limit the discretion of the President or his designee to determine the amount of spectrum needed to meet essential Federal requirements. The bill contains no justification for a mandatory reallocation of 200 megahertz.

The Administration also opposes the bill because it does not provide for reimbursing the Federal Government for costs incurred by Federal agencies in reallocating frequencies for private use, including the costs of reestablishing spectrum-dependent systems. Such reimbursement is essential to avoid disruption of Federal operations, and could be provided by revenues from competitive bidding.

The Administration has consistently supported policies that would make additional spectrum available for commercial use in ways that promote spectrum efficiency, greater availability of services, and the development and use of new telecommunications technologies. S. 2904 does not meet these goals.