WASHINGTON -- The House Energy and Commerce Committee approved a bill yesterday that would for the first time allow the government to auction radio frequencies. The frequencies will be used for advanced wireless telephones and other new technologies.
The bill, which has heavy support from the White House and is given strong chances of becoming law within the next few months, would bring about a significant change in how the government manages the airwaves.
Licenses to use the radio-frequency spectrum -- whether for traditional television and radio broadcasts or for more specialized uses like cellular phone networks -- are collectively worth billions of dollars.
Until now the government has awarded the licenses either through lotteries or a long process in which competing applications are evaluated in hearings.
The bill, which was approved by the committee on a vote of 36 to 8, would allow the Federal Communications Commission to award licenses to the highest bidders and turn the money over to the Treasury.
The bill would primarily affect licenses for "personal communication services," an emerging family of technologies that includes everything from Dick Tracy-style wristwatch telephones to palm-sized computers and electronic notebooks that communicate over the air.
The FCC is in the process of allocating a broad band of frequencies for these new services, and it hopes to begin assigning licenses by early next year. The bill approved yesterday would require the FCC to start issuing licenses within nine months of the bill's enactment.
It would also order the government to make available for new commercial technologies a big block of frequencies now used by federal agencies. The federal users would either be moved to other frequencies or would adopt nonradio technologies.
The Congressional Budget Office estimates that auctions of the radio spectrum could raise $7 billion over the next five years; the measure approved yesterday will be incorporated into the House's budget bill.
The Senate is working on a similar measure. While details of the Senate bill remain up for debate -- such as whether to give special treatment to rural telephone companies -- the broad outlines of an auction plan seem all but certain of passage.
Support for auctions has increased in the last few months, partly because of prodding from the Clinton administration and partly because of unhappiness over the lotteries. A wide range of critics have long contended that lotteries merely reward speculators, who apply for licenses and then resell them on the private market for a quick profit.
But the idea of moving to auctions has also been controversial, because many small companies and minority groups argue that they would be easily outbid by large, rich companies. Rural telephone companies, which are eager to offer wireless services, have been vocal opponents, as have some of the start-up companies that have proposed new services.
The bill would not affect broadcasting licenses, most of which were handed out many years ago and will continue to be issued through merit-based hearings.