TELECOMMUNICATIONS AGENCIES AND PROGRAMS
BUDGET HIGHLIGHTS
FY 2004 REQUEST

Federal Communications Commission (FCC)

The funding levels for the FCC are adequate to perform its basic duties and functions. With the continued increase in enforcement responsibilities and need for greater technical expertise, however, a further increase in funding will be needed. Commission Chairman Michael K. Powell has asked for legislation to increase fines that the FCC can impose upon licensees. Though his stated rationale is related to enforcement rather than budgetary needs, the practical effect of such authority could be to increase the FCC’s annual budget.

Analog Spectrum Lease Fee

Television broadcasters were given additional spectrum in the Telecommunications Act of 1996 to allow for the conversion from analog broadcasts to digital TV (DTV) broadcasts. The deadline for the broadcasters to return the analog spectrum was established as December 31, 2006, by the Balanced Budget Act of 1997. To protect consumers, there are exceptions in the law to allow the broadcasters to retain their analog spectrum for a period beyond 2006. The Administration is proposing to create an analog spectrum lease fee that would become effective in 2007 and raise $500 million annually until the analog spectrum is returned. The fee would be imposed upon commercial broadcasters who have not returned their analog spectrum by December 31, 2006. Any such lease fee on commercial broadcasters would impose additional financial burdens on broadcasters who are already facing significant costs during the digital transition. Moreover, encouraging broadcasters to cease broadcasting in analog prematurely could hurt those consumers who had not yet invested in a digital television or a digital converter box. Those consumers would no longer be able to receive over-the-air broadcasts for their news, entertainment, and emergency information.

Spectrum Auction Authority

Under current law, the FCC’s authority to auction commercial licenses expires in 2007. The Administration is proposing to make this authority permanent and forecasts $2.2 billion in revenue to the Treasury over the next 10 years. The use of auctions has proven to be an effective management system for the distribution of spectrum in a competitive market. Auctions have proven to be in the public interest when not compromised by efforts to establish arbitrary deadlines for budgetary needs.

Spectrum License User Fee

The Administration is proposing to give the FCC the authority to assess fees on holders of spectrum that obtained their licenses without an auction. This would not appear to be a user fee in a conventional sense. For a user fee to be collected there must be a demonstrable benefit received by the payer from the government. In the case of spectrum allocated to a license without an auction, there is no benefit afforded the license because there is no ongoing FCC involvement except upon renewal. If no benefit is received by the licensee, then this fee would be purely for the support of the government.

Corporation for Public Broadcasting (CPB)

CPB provides grants to qualified non-commercial television and radio stations for programming and general operations as well as programming production for national distribution. CPB is advance funded by two years to protect against political pressure being placed upon editorial decisions. President Bush has attempted to remove CPB advance funding status and place its funding in the current year in each of his budgets including the 2004 budget. Appropriations legislation have not adopted this approach. CPB is in the midst of making the transition from the traditional analog broadcasts system to a digital transmission system. This transition is mandated by Congress and is required to be completed by May 2003. Public broadcasters have been leading the charge in making high value content available in High Definition TV (HDTV) and through innovative and value-added uses of the Standard Definition TV (SDTV) multi-cast digital signal. The $380 million currently advance funded for CPB is intended to support production of national and local programing as well as the necessary funding that supplements the contributions of individuals and sponsors in the day-to-day operations of public TV and radio. In past years, $25 million has been appropriated to specifically assist with the expensive transition to digital. The budget proposes siphoning away money from the core funding that is used for production and maintenance and instead to use it for other purposes such as the digital transition. This action will reduce the ability of public broadcasters to continue to offer the content that they offer today and it will impair the ability of public TV and radio to make the transition to digital. Funding for the digital transition should not come out of funds needed for day-to-day operations and production.

Public Telecommunications Facilities, Planning, and Construction (PTFP)

This grant program is part of the Department of Commerce and is administered through the National Telecommunications and Information Administration (NTIA). This program has been in existence since 1962 and makes funding available to public TV and radio broadcasters for transmission equipment. Currently, the majority of these grants have been used to assist public broadcasters with purchasing digital equipment such as new towers and transmitters for the transition to digital broadcasts. All public TV stations are required by law to have completed the transition by May 2003. President Bush’s budget would suspend funding except for administration of current grants. Termination of this funding will severely impair the ability of the public broadcasters to meet the May 2003 deadline.

National Telecommunications and Information Administration (NTIA)

Funding stays essentially the same except for an expected increase in fee collections from new spectrum management responsibilities. The budget request proposes legislation that would create a federal spectrum relocation fund to be administered by NTIA. When federal spectrum is auctioned the receipts would be placed in the relocation fund to compensate the former federal users’ relocation costs. This proposal would shift the burden of relocation costs for federal users from the taxpayer to the commercial users that will receive the benefits of the spectrum. But the costs of relocation are unknown as is the level of receipts from the auctions. If there are excess auction receipts in the fund, Congress should make alternative uses available for the funds. The funds could be used for a fund for high-tech educational projects or for addressing the digital divide.

Technology Opportunities Program (TOP)

This program is administered through the Department of Commerce’s National Telecommunications and Information Administration (NTIA). The program provides matching grants to underserved communities in an effort to close the digital divide. This is achieved by providing grants to demonstrate the use of advanced telecommunications services in relation to healthcare, education, and public safety. The President’s budget request would terminate this program because it has been deemed to have served its purpose. The benefits of this program, however, far outweigh the costs. For example, $12 million from the TOP program helped the FBI fight terrorists in California where the grants helped build an information sharing network that was used to identify suspected terrorists after Sept. 11, 2001. In Louisiana, $500,000 equipped police and fire departments with computers that share information in the event of a chemical spill. A program in Massachusetts received $354,291 to create a website that helps low-income and elderly tenants obtain information about housing issues and to encourage landlords to make repairs as well as work with lawyers regarding tenant and landlord disputes. Stockton, California entrepreneurs will benefit from an online learning program that helps them create comprehensive business plans. In Grand Rapids, Michigan, a $720,000 grant is funding a program allow physicians to access interpreters through videoconferencing so that they will not lose patients because they can’t make a proper diagnosis.