**SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL**

*In the Matters of Auction of Licenses in the 747-762 and 777-792 MHz
Bands (Auction No. 31); Auction of Licenses in the 698-746 MHz Band
(Auction No. 44); Cellular Telecommunications & Internet Association
Application for Review (WT Docket No. 99-168, GN Docket No. 01-74).*

I do not support an open-ended, indefinite delay of our 700 MHz auctions
scheduled for June 19, 2002, as advocated in the application for review
filed by the Cellular Telecommunications & Internet Association (CTIA)
and others, but I do believe that there are compelling reasons to invoke
a short delay, until January 14, 2003, of the Upper 700 MHz band
auction. I do not find any compelling reasons to delay the Lower 700 MHz
band auction.

I am well aware that there has been a late-inning legislative drive by
the industry to change the law and remove the dates that have been
leading us to conduct these auctions at this time. If Congress passes
into law such changes, the Commission will immediately and faithfully
comply. While I respectfully take cognizance of these Congressional
efforts, I cannot in good conscience sway from what I believe to be the
right result based primarily on the *prospect* of legislative change \--
particularly where Congress has already spoken definitively as to our
responsibilities. By our actions today, we are *not* trying to out-race
Congressional efforts to change the law. The Commission has waited until
the last possible moment to issue this decision. It must announce the
applications that have been accepted *today*, and will begin accepting
funds next week, if no action by the Commission is taken. In other
words, non-action would keep both auctions moving forward and it would
be even more difficult to reverse or delay. We are making an affirmative
policy judgment on when to conduct these auctions under the current
circumstances, while striking a balance that is respectful of both past
and potential Congressional action.

# 

# Indefinite Delay

The application for review filed by the incumbent wireless industry
seeks an indefinite delay of two auctions that the Commission had
previously determined should take place at this time. In reaching those
timing decisions, we considered all the issues and concerns that are
presented now at this very late hour, just on the eve of the start of
the auctions. The salient point is that there is nothing new presented
in this appeal that was not fully considered by this Commission in
adopting the service rules and setting the dates for these auctions.
Therefore, I support denying the CTIA application for review's request
for an indefinite delay.

The application for review raises essentially two arguments for
indefinite delay. First, it asserts that broadcasters will not vacate
until the completion of the digital television transition, and thus, the
uncertainty of when that spectrum will be cleared frustrates its
effective use. As an initial matter, auctioning encumbered spectrum is
not at all unprecedented. For example, the Commission auctioned
broadband PCS while encumbered by fixed microwave users and even
adjusted the relocation rules after the first PCS auction. It has also
auctioned the "white-space" surrounding incumbent licensees in the MDS,
paging, and SMR services.[^1] Second, Congress, when it directed the
Commission to auction these bands by certain dates, was aware that the
spectrum was encumbered by broadcasters and would remain so for a
significant period of time after the auction. Third, the supposed
uselessness of these bands is belied by the number of applications the
Commission has received, indicating significant interest in bidding
despite the problems of incumbency. Thus, it is not clear to me why we
should delay indefinitely the auction of this spectrum because of
incumbency, as the parties urge. Additionally, it is hard legally to
credit claims that Congress' objectives will be frustrated by this
problem of incumbency, given that Congress set the dates with full
knowledge that the spectrum was encumbered (having itself set in motion
the DTV transition), and would remain so long after the dates it set for
licensing the spectrum and depositing the auction proceeds.

More importantly, however, the problem of broadcast incumbency is one
for which there is no short path to resolution. The transition to
digital television could take well over a decade. One might argue that a
modest delay is warranted, if there were a credible and imminent
possibility that the bands at issue would be unburdened, but the
proponents of delay do not offer one, and I see none. I am hesitant to
keep spectrum off the market indefinitely, awaiting some as-of-yet
unidentified solution that would greatly accelerate the transition.
Jawboning, voluntary agreements and hope can only get us so far.

The only present possibility for clearing these bands is by way of the
band-clearing mechanism established by the Commission in the Upper 700
MHz band that might induce broadcasters to leave the spectrum.
Ironically, substantial delay would actually frustrate the possibility
for band clearing in the upper band. Those broadcasters that occupy
these bands will necessarily have to invest further in building out
their digital stations and the possibility of relinquishing their extra
6 MHz licenses becomes much less attractive. Thus, substantial delay
could create more uncertainty as to when and how the band might be
cleared.

Additionally, some proponents of delay argue that even more spectrum in
the Upper 700 MHz band could be made available for public safety users.
Such suggestions, however, are quite speculative -- though the
Commission is deeply committed to improving spectrum availability and
access for public safety users. For one, the problem of incumbency
exists for any user of the bands. Public safety entities should be no
more enthused about being moved to this spectrum than are the commercial
providers that urge they be put there. In any event, there are no
specific proposals that are developed that have any prospect of being
realized any time soon.

I also hear some maintain that the problems associated with effective
use of these bands may lead to a busted auction in which few participate
and bids are low. It is important to emphasize (yet again) that good
spectrum policy should not be driven by trying to garner the most
dollars for the Treasury. It is such thinking, ironically, that led to
the statutory auction dates that are now the subject of criticism and
debate.

I would also note that requests for postponement are inconsistent with
the incumbent wireless industry's consistent demands for additional
spectrum. The parties seem to contend that these bands are not the
spectrum they are really interested in (at least for now), so we should
keep it on the government's shelf (or in the hands of analog
broadcasters) until they are ready to bid on it. Withholding spectrum
from auction indefinitely creates barriers to entry for new providers
and may artificially shelter incumbents from competition -- not a result
that is in the public's interest.

The fact that a significant number of companies have applied to bid for
these licenses should give pause in accepting too quickly the claims
that the spectrum should not come into the market. A number of major
carriers and manufacturers now would prefer that these licenses not find
their way into the market, but this should not overshadow other
potential users who are anxious and willing to acquire this
spectrum.[^2] This Commission very recently took conscious steps to make
a substantial amount of this band available for smaller and rural
entities by limiting the geographic regions to RSAs and MSAs in the
Lower 700 MHz band. We also made a combination of paired and unpaired
bands available for new and innovative technologies to prove themselves
in the market. This spectrum is allocated for flexible use and one
cannot discount innovative, and potentially competitive services that
might be built on the foundation that these licenses provide. We should
never side with one segment of an industry over another, and I fear that
accepting an indefinite delay would do just that.

Perhaps most importantly, appeals for the Commission to indefinitely put
off the auction are further blunted by the fact that Congress has passed
a statute -- and signed into law by the President -- that directs this
agency to auction this spectrum by specific dates and for specific
purposes. I recognize fully that the law affords some flexibility to
miss statutory deadlines (we have done so several times with the Upper
700 MHz band), but those instances are rightfully narrow, and not a
basis for indefinite disregard. A law passed by two houses of the U.S.
Congress and signed by the President expresses the will of the people.
Unelected members of an administrative agency, as Congress regularly
reminds us, are duty bound to follow the law, no matter what our
preferences might be otherwise. It should be above question that we
should be conservative when being urged to push the envelope of the law,
lest it contravene the will of Congress.

As I noted above, there have been aggressive attempts to change the law
and remove (or modify) the current dates. But it is hazardous for an
agency to take actions that contravene the law based only on the fact
that there are efforts afoot to change that law. It is difficult and
ill-advised to try and give odds on the chance of a given bill becoming
law and to implement its terms before it does so. There have been
several legislative proposals to alter the auction dates over the last
several years (the same reasons were urged then as well), yet those
efforts failed. Again, if Congress passes into law such changes, at any
time, the Commission will immediately and faithfully implement its
directives. In fact, I would encourage Congress to grant this agency the
flexibility and discretion it needs for scheduling *all* auctions, not
just these.

# Upper 700 MHz Auction Delay

With all that said about an indefinite delay, I have reluctantly
concluded that the best course is for the Commission to temporarily
delay the auction of the Upper 700 MHz band until January 14, 2003.
While we cannot be sure of the ultimate outcome, the potentially
imminent prospect that Congress may wish to change its policy gives me
pause. While this legislative activity alone would not be enough, a
number of technical questions and must carry issues remain outstanding
that could affect the prospects for clearing the Upper 700 MHz band for
new commercial and public safety users and they should be resolved.

It bears repeating that, with this temporary delay, we are *not*
imposing a deadline on Congress. Instead, we are making an affirmative
policy judgment to move the auction to a date of our choosing. The
Commission and its auctions staff have been planning for a long time to
conduct these auctions (pursuant to Congressional direction) in a fair
and efficient manner. Congress set out both the timing of such auctions
and the purposes to which the spectrum should be put. There is a
substantial effort underway in Congress to possibly change aspects of
that policy. However, the fact that legislation has passed the House and
that there are serious efforts to pass legislation quickly raises
concerns in my mind about the destabilizing effect on the auction.
Proceeding under this additional cloud of uncertainty could affect
financing decisions and bidding behavior, thereby compromising the
integrity of the auction. But I also note that just because the
Commission delayed this particular auction before, it cannot stand for
the proposition that it can delay whenever and for as long as it wishes.
That would make a mockery of the laws enacted by Congress and set a
troubling precedent for an administrative agency.

# Lower 700 MHz Auction on Schedule

With regard to the Lower 700 MHz band, I am pleased that two of my
colleagues have supported the effort to keep on schedule with that
auction. There is a clear Congressional directive that requires the
Commission to put money in the Treasury by the end of September for this
spectrum to be reclaimed from analog broadcasters. Time remains for the
Commission to comply with the current statutory date, and it should
endeavor to do so absent compelling circumstances or other serious
outstanding issues. Such circumstances or issues, to my mind, have not
been presented by the proponents of delay. Moreover, there are unique
public interest benefits to putting this spectrum in the market that tip
in favor of proceeding. For example, the Commission has created
licensing rules that will provide unique opportunities for rural and
small interests to obtain licenses \-- one of the public interest
objectives of Section 309(j) of the Communications Act. Additionally,
the application filings show substantial interest in this particular
auction.

Of course, many of the arguments for temporarily delaying the Upper 700
MHz band auction could be said of the lower band as well. However, I
believe important distinctions do exist. In addition to the unique
positive public interest benefits identified above, one significant
distinction is the fact that the specific legislative dates for the
Upper 700 MHz band have long passed. That auction was previously delayed
past the dates established in the year 2000 Consolidated Appropriations
Act, based on the belief that conflicts in separate and distinct
legislative goals necessitated additional time. We could have easily
chosen to schedule the auction a few months from now instead of the
dates we did select. In my view, we have come close to resolving those
original concerns, but I believe we have greater latitude to set that
auction date, within a very short realm of reasonableness. Additionally,
in the Upper 700 MHz band, we have established a mechanism that affords
an opportunity to clear the band of incumbent broadcasters to make way
for new public safety and commercial services, but some technical issues
are outstanding. We declined, however, to establish a similar band
clearing mechanism for TV Channels 52-58 in the lower band and thus no
such basis exists for further delay.

[^1]: *See, e.g.,* Lower and Upper Paging Bands Auction Scheduled for
    June 26, 2001, DA 01-850, *Public Notice,* 16 FCC Rcd 7675 (2001) at
    6-7 (citing interference protections post-auction new licensees will
    owe incumbent licensees); Auction of Licenses for Fixed
    Point-to-Point Microwave Services in the 38.6 to 40.0 GHz (39 GHz)
    Band, DA 00-112, *Public Notice*, 15 FCC Rcd 850 (2000) at 9 (same);
    Auction of 800 MHz Specialized Mobile Radio Service Licenses, DA
    97-1672, *Public Notice*, 13 FCC Rcd 1875 (1997) at 3-4 (same);
    *see, also,* Amendment of Parts 21 and 74 of the Commission's Rules
    with regard to Filing Procedures in the Multipoint Distribution
    Service and in the Instructional Television Fixed Service, MM Docket
    No. 94-131, *Report and Order*, FCC 95-230, 10 FCC Rcd 9589 at ¶¶
    56-58 (rule making adopting interference protections for existing
    licensees with respect to new MDS licenses to be auctioned).

[^2]: I note with interest that on July 20, 2000, a number of large
    industry players asked the Commission to delay the Upper 700 MHz
    auction (then scheduled for September 6, 2000) until June 2001.
    *See* Letter to William E. Kennard, Chairman, from the Cellular
    Telecommunications Industry Association, AT&T Wireless Services,
    Inc., BellSouth Corp., Ericsson, Inc., Motorola, Inc., Nextel
    Communications, Inc., Qwest Wireless, LLC, SBC Communications, Inc.,
    Verizon Wireless, and VoiceStream Wireless. These players noted that
    "\[b\]ecause of its location in the electromagnetic spectrum and its
    excellent propagation characteristics, the 30 MHz of spectrum to be
    auctioned in the 700 MHz band is ideally suited for the next
    generation mobile and high-speed broadband services. These services
    will intensify competition for all communications services and yield
    tremendous benefit to the public." *Id.* at 1. In light of pending
    rulemaking proceedings involving the band clearing process, they
    urged the Commission to "work with Congress as necessary to permit a
    postponement of the \[Upper\] 700 MHz auction until June 2001."
    *Id*. at 3-4.