US FCC gets new auction authority in payroll pact

WASHINGTON Wed Feb 15, 2012 7:57pm EST

WASHINGTON Feb 15 (Reuters) - U.S. communications regulators could auction off some television airwaves and compensate broadcasters from a portion of the proceeds under a provision tucked into a payroll tax compromise reached by lawmakers on Wednesday.

The Federal Communications Commission has called for repurposing TV airwaves for mobile broadband use since 2010.

Until now the agency lacked the congressional authority to divert funds away from the Treasury to give broadcasters a financial incentive to return unused spectrum licenses.

Congressional aides and industry sources confirmed the inclusion of the auction authority in the payroll bill.

Wireless carriers like AT&T Inc, Sprint Nextel Corp and Verizon Wireless, a joint venture of Verizon Communications Inc and Vodafone Group Plc, have clamored for more airwaves to stave off a looming spectrum crunch that would mean more dropped calls and slower connection speeds for wireless customers.

The growing use of wireless devices like Apple Inc's iPad tablet and Google's suite of Android-powered smartphones has added to the urgency to find more airwaves.

The first auction of television spectrum is still likely years away, industry sources said, because of the time it will take for the FCC to develop rules for the new auctions and to seek public comment.

The U.S. House of Representatives and Senate are expected to approve the year-long extension to payroll tax cuts by Friday, before lawmakers leave for a week-long recess.

Auction proceeds would help legislators meet about half of the roughly $30 billion in savings needed under the compromise to extend President Barack Obama's tax cut for 160 million workers through Dec. 31.

Recent wrangling over the provision had centered on whether the FCC would be able to retain its authority to set auction rules that help smaller or minority-owned firms to compete with larger companies for spectrum.

The top executives at Sprint Nextel, Deutsche Telekom AG's T-Mobile USA and other smaller carriers had pushed for this flexibility, but AT&T accused them of wanting the FCC to stack the deck in their favor.

Under the compromise reached, industry sources said the FCC would not be barred from adopting auction rules that promote competition.

One source added that the FCC would have to open for public comment any decision to restrict a company from buying spectrum in a given market.