CTIA wants President Obama to know they don’t look kindly on the inclusion of new spectrum fees in his final budget proposal.
Tucked away in the bowels of the newly released budget for fiscal year 2017, Obama has proposed a new “spectrum license user fee.” As with a similar proposal in the budget for fiscal year 2010, the fee appears as a line item in an appended table called Mandatory and Receipt Proposals.
Fiscal year 2017 for the United States begins in October.
“CTIA is opposed to new spectrum fees,” CTIA vice president of Government Affairs Jot Carpenter said. “Fees would be a tax that will depress auction revenues, harm investment and do nothing to free up additional bands of spectrum or advance consumers’ adoption of wireless broadband services.”
Combined with a proposal to allow the FCC to auction predominantly domestic satellite services, the Administration expects the fee will rake in about $225 million in 2017, $325 million in 2018 and $425 million in 2019 before leveling off at a steady $550 million annually from 2020 through 2026.
Over the next five years, the proposal would bring in more than $2 billion dollars with that total rising to more than $4.8 billion by 2026.
This year’s proposal appears to be nearly identical to the one made in the fiscal 2010 budget, which called for the collection of $50 million in the first year, $200 million the following year, and $550 million from 2013 to 2019. The total raised under that fee schedule would have been more than $4.7 billion through 2019.
The proposal comes just weeks ahead of the FCC’s long-awaited 700 MHz spectrum auction, which is scheduled to begin in March.
As suggested by CTIA, it’s possible that the whiff of new spectrum fees might prove to be the final straw for some wireless carriers and other buyers who have expressed lukewarm interest in big auction spending to date.
Verizon CFO Fran Shammo has already declared that the carrier will not be “held hostage” in the auction and will balk at sky-high prices for 600MHz spectrum. While AT&T CFO John Stephens openly admitted the carrier is seeking a 2×10 MHz chunk of spectrum in the auction, he has so far refused to disclose how much AT&T is willing to spend to achieve its goal.
Cable operator Comcast has also said it will take a paddle in the auction, but said it will look to evaluate what’s available and only buy “only if we think the price is right.”
Other major players, like Sprint, U.S. Cellular and Charter Communications, have either outright stated or hinted that they will not participate in the upcoming auction at all.
The application deadline for forward auction participants is today.
The lack of big players – and the big bids that come with them – could serve to depress overall auction revenues. Prior to the new fee proposal, Bloomberg reported that auction revenues were already projected to fall well short of the $45 billion expected by the FCC.
According to analysts surveyed for the piece, spending in the upcoming auction could total just $33 million.
Filed Under: Telecommunications (Spectrum)