Casey Lide of Keller & Heckman wrote a recent blog that warns that federal grant funding might be considered as taxable income by the Internal Revenue Service (IRS). This would be a dreadful outcome for any taxable entity that receives the grant funding since it would create a huge tax liability that would have to somehow be covered outside of the grant funding. This would not affect just the big telecom and cable companies but also the many small telephone companies and cooperatives which are also taxable. This is very distressing news for a corporation that has already accepted grant funding from the CARES Act or from American Rescue Plan Act (ARPA) funds because they might be facing an unexpected tax liability. One of the problems we have currently in dealing with these kinds of issues is that the IRS is running several years behind and won’t have yet dealt with a tax return from a corporation receiving recent the latest infrastructure grants. As a further word of warning, this same issue would apply to anybody accepting state infrastructure grants. A state would have to take positive action to forgive the grant from state income taxes, but that would not shield state grant revenue from federal tax liability. Any taxable entity that has already received funding, or anybody thinking about taking funding, should reach out to legislators on the issue. It may turn out that Congress might be the only one who can fix this – they certainly didn’t intend for anybody building rural broadband to incur a huge tax penalty. If this doesn’t get resolved, many of the carriers who are planning on using grants to solve the rural broadband gap might have to drop out of the pursuit of grants.

[Doug Dawson in President of CCG Consulting.]

The Federal Communications Commission announced that July 29, 2022, will be the start of bidding in Auction 108 for 2.5 GHz licenses. This auction will be for “white-spaces” of the 2.5 GHz band where no one owns the spectrum. T-Mobile is particularly interested in Auction 108 because it already owns or leases much of the 2.5 GHz spectrum across the United States, and it wants to fill in the gaps in its coverage. The auction will offer about 8,000 new county-based overlay licenses. “T-Mobile is likely to be the major winner, as the auction will allow the company to fix the ‘Swiss Cheese’ problem its 2.5 GHz network grid is known to suffer from,” said New Street Research policy analyst Blair Levin. The FCC has decided to grant T-Mobile the things it wanted for this auction. First, the FCC is expediting the auction. Even though Verizon and AT&T have complained they can’t make informed bidding decisions unless they know some of the terms of T-Mobile’s existing 2.5 GHz leases with schools across the country, the FCC is moving forward quickly without making any public ruling on Verizon’s and AT&T’s request for lease information. Secondly, the FCC announced that Auction 108 will use an “ascending clock” auction format. This is the type of auction that T-Mobile wanted. Some potential bidders had wanted a single, sealed-bid auction because T-Mobile has so much more information about the spectrum. But the ascending clock auction will allow T-Mobile to more precisely target its bids.

The 5G for 12 GHz Coalition announced the addition of the Benton Institute for Broadband & Society—one of the most respected voices in shaping communications policy. With the support of the Benton Institute—a nonprofit organization founded with the objective to “bring open, affordable, high-performance broadband to all people in the US to ensure a thriving democracy”—the Coalition’s calls for the Federal Communications Commission (FCC) to open up the 12 GHz spectrum band for two-way terrestrial and 5G mobile services is gaining strength from a wide array of policy thought leaders, public interest groups, service providers large and small, and more. Executive Director of the Benton Institute, Adrianne B. Furniss, expressed her eagerness to work with the Coalition. “Benton enthusiastically joins the call for the FCC to allow airwaves currently reserved for satellites also to be deployed for simultaneous reuse on the ground,” Furniss said. The Coalition urges the FCC to rely on the substantial engineering, economic, and technical data submitted into the record to inform its decision to unleash an additional 500 MHz of available capacity in the 12 GHz band for terrestrial two-way 5G services. The Coalition calls on the FCC to act on its Notice of Proposed Rulemaking (Expanding Flexible Use of the 12.2-12.7 GHz Band, et al., WT Docket No. 20-443, et al) to allow the 12 GHz band to unlock the power of 5G for all Americans. For more information, visit 5Gfor12GHZ.com and learn why the 12 GHz band is the best option for opening more mid-band spectrum here.