Show Me Your Budget, I'll tell You What You Value

On April 10, President Barack Obama sent Congress a budget proposal for fiscal year 2014. The President’s $3.77 trillion budget, with a mix of deficit reduction through spending cuts and tax increases and new spending to spur the economy, projects a $744 billion deficit for the 2014 fiscal year, which begins Oct. 1. That is down from the $973 billion shortfall projected for this fiscal year, after four years of post-recession deficits exceeding $1 trillion. Although much of the coverage of the proposal focuses on cuts to Medicare and Social Security, we take a quick look at the budget proposals for the Federal Communications Commission and the National Telecommunications and Information Administration, the two key agencies for federal telecommunications policymaking.

Federal Communications Commission
The Federal Communications Commission is requesting a budget of $359,299,000 to carry out the FCC’s functions and meet the expectations of Congress. (1) To put this in some perspective, when the Administration sent Congress a budget proposal in February 2011 for the 2012 fiscal year, the request was for $354.2 million – up from $335.8 million in 2010. The FCC is requesting additional funding for:

Public Safety Answering Points (PSAP) Do Not Call Registry: The Middle Class Tax Relief and Job Creation Act of 2012 requires the FCC to create a Do-Not-Call registry for telephone numbers used by Public Safety Answering Points (PSAPs), and to prohibit the use of automatic dialing equipment to contact those numbers. (2) The FCC requests $500,000 for FY 2014 in order to provide operation and maintenance on an annual basis. The FCC has also requested $1,000,000 as a one-time initiative for PSAP in FY 2014.

Support for Reforms of the Universal Service Fund Support Programs: The FCC is requesting $10,877,000 to support the Commission’s work to modernize and reform the Universal Service Fund (USF) Support programs.(3) More resources are required to continue the Commission’s work to modernize USF, implement reforms, and increase its oversight of the newly-reformed programs. This request will support funding for additional staff including, attorneys, economists, IT specialists, program managers, and technologists.

The FCC budget also reflects $2 million in cost reductions. The FCC has taken steps to find efficiencies and savings when possible and has identified $2 million in efficiencies and savings in travel, telecommunications, contracts, and other expenses.

The FCC’s FY 2014 budget submission includes requests for funding to support the eight strategic goals (see below) and support for:

• Commissionwide information technology needs through extending the enterprise storage;
• reform of the Universal Service Fund Support Program;
• space consolidation and facilities improvement that will reduce lease arrangements that are not cost effective and improve efficiencies;
• creation of a Do-Not-Call registry for telephone numbers used by Public Safety Answering Points (PSAPs);
• providing resources for mission-critical systems to ensure that they are operational during a Continuity of Operations (COOP) event; and
• providing contract funding to support mandatory audits for the Office of the Inspector General.

The FCC’s strategic goals and commitments are:

Strategic Goal 1: Connect America: Maximize Americans’ access to -- and the adoption of -- affordable fixed and mobile broadband where they live, work, and travel.

Outcome-oriented Performance Goal 1.1: Maximize broadband adoption by promoting affordability and removing other barriers to adoption by all Americans, including those with low incomes and disabilities.

A) The FCC aims to support and facilitate the development, deployment, and adoption of broadband services across multiple platforms. The FCC commits to:

• Carry out rulemakings, spectrum reallocation, and license modifications as needed to ensure that the growing demand for wireless broadband services, including satellite-delivered broadband, is met.
• Expeditiously review and issue spectrum licenses to qualified auction winners, promoting the expanded deployment of broadband services.
• Take concrete steps to increase broadband availability and innovative uses of broadband in addressing critical national priorities.
• Complete the Broadband Adoption Lifeline Pilot Program and analyze project reports and data gathered during pilot program.
• Initiate rulemakings and other actions as necessary to implement the statutory mandates of the Public Safety Spectrum Act.

Outcome-oriented Performance Goal 1.2: Maximize availability of fixed and mobile broadband to all Americans and community anchor institutions, including in rural and insular areas and Tribal lands, while ensuring that universal service programs are efficient, effective, and impose no greater burden on consumers and businesses than necessary.

A) The FCC will work in partnership with state, local, and tribal governments, consumer groups and industry to promote broadband availability to all Americans, including consumers in rural and high cost areas and individuals with disabilities.

• In coordination with state, local, and tribal governments, consumer and industry groups, conduct outreach activities to educate the public concerning the Commission’s broadband initiatives, including those promoting universal service.
• Work collaboratively across FCC Offices and Bureaus to identify and address Tribal and Native Community communications issues, including barriers to entry that operate against Tribal broadband deployment and adoption.
• Coordinate with other Federal Government agencies on rules and policies designed to achieve access by people with disabilities to communications and information technologies.
• Convene the FCC Native Nations Broadband Task Force on at least a quarterly basis.

B) The FCC will continue reform of the universal service program to reflect technological developments and changes in the market by:

• Overseeing implementation of reforms resulting in disbursements from the Connect America Fund.
• Enhancing access to broadband connectivity for health care providers through reform of Rural Health Care universal service support mechanism.

C) The FCC promises to enforce its own rules governing the Universal Service Fund by:

• Promoting and advancing universal service by reviewing 100% of referrals from the Commission’s Office of Inspector General and taking enforcement action where appropriate in cases of noncompliance.
• Pursuing complaints or other reports of fraud, waste, or abuse in the universal service programs.
• Reporting at least annually on USF enforcement actions.

Outcome-oriented Performance Goal 1.3: Enable the private sector to accelerate the deployment and expansion of broadband networks by minimizing regulatory and other barriers to broadband build out.

A) The FCC wants to encourage investment in networks and services by existing providers, while encouraging participation in broadband markets by new and non-traditional participants.

• Initiate or complete rulemaking actions that provide opportunities for innovations in broadband services.
• Coordinate with industry and academia to identify research opportunities and impediments towards broadband deployment.
• Review and revise, as necessary, the Commission’s rules and policies to promote broadband investment and innovation.

B) The FCC aims to maintain efficient licensing and facilities siting processes to encourage and facilitate rapid deployment of broadband infrastructure.

• Process 90% of routine license applications for wireless broadband services within 90 days of receipt.
• Resolve in a timely fashion all communications tower and antenna siting issues that impede the deployment of broadband infrastructure and services.
• Work with stakeholders to expand the reach and reduce the cost of broadband deployment by improving government policies for access to rights of way and wireless facilities siting.

C) The FCC promises to “vigorously” enforce policies and regulations that promote the deployment and adoption of all broadband technologies, and defend those policies and regulations against legal challenges.

• Promote the availability of broadband to all Americans by taking action, in all appropriate cases, consistent with applicable statutes of limitation and other deadlines, on consumer inquiries and complaints received regarding broadband availability.
• Take enforcement action in appropriate cases to deter anti-competitive practices that could affect the deployment of broadband technologies

Outcome-oriented Performance Goal 1.4: Measure and monitor the country’s progress on broadband.

• Monitor and, as appropriate, revise metrics for determining the extent to which broadband is being deployed in a reasonable and timely fashion.
• Educate consumers about delivered speeds and performance of broadband networks and make data publicly available to facilitate informed competitive service choices.

Strategic Goal 2: Maximize Benefits of Spectrum: Maximize the overall benefits of spectrum for the United States. The FCC says it will:

• Develop and implement flexible, market-oriented spectrum allocation and assignment policies that promote innovation, investment, jobs and consumer benefits, including ensuring meaningful availability of unlicensed spectrum.
• Develop and implement policies that support highly efficient use of spectrum.
• Serve as a resource domestically and internationally on issues involving use and management of our spectrum resources.

Strategic Goal 3: Protect and Empower Consumers: Empower consumers by ensuring that they have the tools and information they need to make informed choices; protect consumers from harm in the communications market. The FCC will:

• Promote transparency and disclosure.
• Act swiftly and consistently in the use of enforcement authority to protect consumers.
• Develop and maintain policies that encourage variety in media programming sources and services for consumers.

Strategic Goal 4: Promote Innovation, Investment, and America’s Global Competitiveness: Promote innovation in a manner that improves the nation’s ability to compete in the global economy, creating a virtuous circle that results in more investment and in turn enables additional innovation. The FCC will:

• Foster international engagement and cooperation on communications policy issues, including the broadband innovation initiative and free flow of data across borders.
• Advocate U.S. spectrum interests in the international arena.
• Preserve the free and open Internet as a platform for economic growth, innovation, job-creation, and global competitiveness.

Strategic Goal 5: Promote Competition: Ensure a competitive market for communications and media services to foster innovation, investment, and job creation and to ensure consumers have meaningful choice in affordable services. The FCC commits to:

• Ensure effective policies are in place to promote and protect competition for the benefit of consumers, including appropriate interconnection policies for communications networks.
• Promote competitive choices for wireless, satellite, and wireline voice and data service providers, for domestic and international services and for multichannel video programming.
• Evaluate and report on the competitive environment for communications services.
• Adopt, enforce and defend policies and rules that enhance access to communications services for persons with disabilities.
• Promote pro-competitive and universal access policies worldwide.
• Ensure expeditious and thorough review of proposed transactions to ensure they serve the public interest.

Strategic Goal 6: Public Safety and Homeland Security: Promote the availability of reliable, interoperable, redundant, rapidly restorable critical communications infrastructures that are supportive of all required services. The FCC will:

• Promote access to effective communications services, including next generation services, in emergency situations across a range of platforms by public safety, health, defense, and other emergency personnel, as well as all consumers in need.
• Evaluate and strengthen measures for protecting the nation’s critical communications infrastructure and facilitate rapid restoration of the U.S. communications infrastructure and facilities after disruption by any cause, including cyberattacks.
• Implement, maintain and conduct exercises for the FCC’s Continuity of Operations Plans (COOP) and Emergency Preparedness Plans and act swiftly in matters affecting public safety, homeland security, and disaster management.

Strategic Goal 7: Advance Key National Purposes: Through international and national interagency efforts, advance the use of broadband for key national purposes. The FCC will:

• Promote and facilitate the use of broadband to address key national challenges, including health care, education, energy, and e-government.
• Ensure that small businesses have the access to broadband and other communications tools needed to drive innovation and economic growth.

Strategic Goal 8: Operational Excellence: Make the FCC a model for excellence in government by effectively managing the Commission’s human, information, and financial resources; by making decisions based on sound data and analyses; and by maintaining a commitment to transparent and responsive processes that encourage public involvement and best serve the public interest. The FCC aims to:

• Effectively manage the FCC’s information technology resources by maintaining secure systems that meet the needs of both the FCC and the system users.
• Effectively manage the human resources of the FCC in order to ensure sufficient resources and knowledge to handle the FCC’s workload.
• Effectively manage the FCC’s financial resources to best achieve the FCC’s mission and to maintain internal controls that ensure sound budgeting, financial, and fund management and accounting principles and practices.
• Effectively manage the FCC’s administrative and management program resources to provide for the appropriate support for all of the FCC’s activities and to maintain internal controls that allow for sound facility, equipment, and security expenditures.
• Effectively manage the FCC’s processes for monitoring and disposing of applications, petitions, and complaints before the FCC in order to achieve timely action on pending items.
• Continuously review and examine our regulatory processes and significant regulations to achieve statutory objectives while reducing burdens on industry and promoting innovation and job growth.

New Proposals for Congress
The Administration is proposing legislative changes in the President’s FY 2014 Budget that pertain to the FCC and that are designed to improve spectrum management and represent sound economic policy.

Spectrum License User Fee
To promote efficient use of the electromagnetic spectrum, the Administration proposes to provide the FCC with express authority to use other economic mechanisms, such as fees, as a spectrum management tool. The FCC would be authorized to set user fees on unauctioned spectrum licenses, which could be useful in certain instances. Fees would be phased in over time to determine the appropriate application and level for fees. Fee collections are estimated to begin in 2013, and total $4.8 billion through 2023.

"Consistent with our position on previous proposed White House budgets, NAB will strongly oppose spectrum fees that imperil the financial underpinnings of local television and the tens of millions of viewers that we serve," the National Association of Broadcasters said. A similar fee has been proposed for the past several years, but Congress has disposed of it before passing the budget. “Everybody who has gotten their spectrum outside of an auction is going to oppose it,” said David Kaut, an analyst for Stifel.

Repurpose 1675 -1680 Megahertz using Auction or Fee Authority
The Administration proposes to direct that the FCC use either auction or fee authority to repurpose spectrum frequencies between 1675-1680 megahertz for wireless broadband use by 2017, subject to sharing arrangements with Federal weather satellites. Currently, the spectrum is being used for radiosondes (weather balloons). A new weather satellite that is scheduled for launch in 2015 will operate in adjacent frequencies. If this proposal is enacted, the National Oceanic and Atmospheric Administration would move the radiosondes to another frequency, allowing the spectrum to be repurposed for commercial use with limited protection zones for the remaining weather satellite downlinks. Without this proposal, these frequencies are unlikely to be repurposed to commercial use. The proposal is expected to raise $230 million over the next 10 years.

Auction Domestic Satellite Service Spectrum Licenses
The FCC would be allowed to assign licenses for certain satellite services that are predominantly domestic through competitive bidding, as had been done before a 2005 court decision called the practice into question on technical grounds. The proposal is expected to raise $50 million from 2013- 2023.

National Telecommunications and Information Administration

The National Telecommunications and Information Administration (NTIA), a part of the Department of Commerce, develops domestic and international telecommunications and information policy for the executive branch; ensures the efficient and effective management and use of the radio spectrum by Federal agencies; performs state-of-the-art telecommunications research, engineering, and planning; and administers broadband grant programs. The FY 2014 budget calls for $52 million for NTIA to improve telecommunications performance, optimize Federal agencies’ use of spectrum for radars and satellites, and increase broadband access to communities nationwide. The budget calls on NTIA to:

1. Develop, implement, and advocate policies to preserve an open, interconnected global Internet that supports continued innovation and economic growth, investment, and the trust of its users.
2. Support economic growth by continuing work to identify 500 MHz of spectrum that can be used commercially for mobile and fixed wireless broadband.
3. Perform telecommunications research.
4. Prevent waste, fraud, and abuse in the American Recovery and Reinvestment Act of 2009’s broadband stimulus program. The budget provides administration and oversight of nearly $4.2 billion of broadband grants as those broadband projects are completed. The proper close-out of the grants will result in recovery of unused grant funds.
5. Build, maintain, and operate a nationwide, interoperable public safety broadband network to support first responders. (4)
6. Award and administer grants to support state, regional, tribal, and local jurisdictions to identify, plan, and implement the most efficient and effective options for utilizing and integrating infrastructure associated with the nationwide public safety broadband network.

Why spend so much time looking at numbers that may not be part of a final budget – even if one is passed? Well, as Vice President Joe Biden says, "Don't tell me what you value. Show me your budget, and I'll tell you what you value." And, as Benton Foundation Chairman Charles Benton often reminds us here in the home office: “Money is policy.” Budgets – even budget proposals – remain instructive indicators of what policymakers see as important initiatives. It remains up to us to let them know if they are right – and to hold them accountable. ‘Til next week, we’ll see you in the Headlines.

Notes:
1) To fulfill its functions, the FCC engages in stakeholder outreach; data collection; engineering, technology and industry analysis; inter-governmental and international negotiations; rulemakings and enforcement, licensing and auctions.
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2) PSAPs are facilities that have been designated to receive emergency calls and route them to emergency service personnel. On May 22, 2012, the FCC released a Notice of Proposed Rulemaking initiating a proceeding to create such a registry. Under the statute, verified PSAP administrators or managers must be able to place onto the PSAP registry telephone numbers that are used for the provision of emergency services or for communications between public safety agencies.
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3) Since 2009, the Commission has taken major steps to modernize the four USF support programs with a particular emphasis on improving broadband connectivity nationwide. In 2010, the Commission undertook fundamental reform of the rural portion of the USF program to repurpose approximately $4.5 billion annually to provide broadband to all Americans, including the more than 19 million unserved homes. In 2011, the Commission reformed the Lifeline program, which provides basic phone service to low-income families, realizing cost savings of more than $200 million in the past year and repurposing a portion of those savings to initiate a pilot program to provide broadband to low-income families. Also in 2011, the Commission undertook reform of the under-utilized program that provides broadband connectivity to non-profit rural health care providers, allowing them to realize cost savings.
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4) The Middle Class Tax Relief and Job Creation Act of 2012 (“Act”) authorized the repurposing of spectrum through the use of voluntary incentive auctions. The Act directs that a portion of these proceeds, up to $7 billion, be used to support this work. The Act also provides $135 million for grants to state and localities to plan for the build-out of the network.
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