A New Administration Brings Renewed Hope for Renewed FCC Spectrum Auction Authority

It has been 686 days since Congress allowed the FCC's spectrum auction authority to expire on March 9, 2023. Absent additional auctions, not to mention the identification of specific spectrum bands to be auctioned for commercial use, mobile operators will struggle to satisfy consumers' insatiable demand for wireless data.

Moreover, the U.S. could risk ceding mobile broadband leadership to its global adversaries – in particular, China, the national security concerns regarding which I wrote about recently in two posts to the FSF Blog.

As Rhonda Johnson, AT&T EVP, Federal Regulatory Relations, wrote in a January 15, 2025, blog post, "AT&T stands ready to invest in the next set of 'anything-is-possible' predictions about what 'you will' be able to do in the years to come" – but "[t]he private sector cannot acquire the spectrum it needs in the U.S. until Congress reauthorizes the FCC to conduct auctions and the government allocates more full-power mid-band spectrum for licensed commercial use."

Fortunately, there is reason for optimism.

First, in his Statement on being designated FCC Chairman, Brendan Carr prioritized "unleashing new opportunities for jobs and growth through agency actions on spectrum."

Second, at today's House Committee on Energy and Commerce Subcommittee on Communications and Technology hearing titled "Strengthening American Leadership in Wireless Technology," regarding which Free State Foundation Director of Policy Studies and Senior Fellow Seth L. Cooper blogged yesterday, Subcommittee Chair Richard Hudson (R-NC) noted the following in his Opening Remarks:

Last Congress, the [FCC's] spectrum auction authority expired for the first time due to disagreements about how spectrum resources should be allocated. These auctions have historically brought in billions to our national economy, with the highest spectrum auctions raising over $80 billion from private companies. It is simple economics: there is limited supply, unlimited demand, and a willingness to pay. We need to reauthorize the FCC's spectrum auction authority immediately.

Third, Senate Commerce Committee Chairman Ted Cruz (R-TX) reportedly has described renewal of the FCC's spectrum auction authority as "his top tech policy priority for reconciliation, a process that will allow the GOP to push through budget-related legislation with its slim Senate majority."

In March 2024, Senator Cruz and Senator John Thune (R-SD), the new Senate Majority Leader, introduced the Spectrum Pipeline Act of 2024, legislation that would have renewed the FCC's spectrum auction authority and required it to auction for full-power commercial use at least 1,250 megahertz within 6 years.

Will AI Help or Hinder Federal Privacy Legislative Efforts?

Efforts to pass a federal data privacy law have dragged on for many years. During that time, unrelenting technological advancement simultaneously has produced new innovations that amplify calls for clear rules and complicated congressional conversations that might lead to such legislation. Artificial Intelligence (AI) is the latest such instigator/troublemaker.

Generative AI offerings – such as OpenAI's ChatGPT, Google's Gemini, and Meta AI – depend upon Large Language Models (LLMs) trained on massive amounts of data. The more data used to train the LLM, the better the results. Consequently, generative AI raises substantial questions relating to privacy. (By way of example, the image below was created with OpenAI's DALL-E using the prompt "create an image of generative AI and data privacy.")

In her Opening Statement regarding a recent Senate Commerce, Science and Transportation Committee hearing titled "The Need to Protect Americans' Privacy and the AI Accelerant," Chair Maria Cantwell (D-WA) wrote that "[w]e are being surveilled … tracked online in the real world, through connected devices. And now, when you add AI, it is like putting fuel on a campfire in the middle of a windstorm." AI, she argued, "increases the need for passing legislation soon."

This heightened concern, however, to date has not generated legislative progress on data privacy. The American Privacy Rights Act of 2024, about which I wrote in "Congressional Leaders Return Privacy to the Front Burner," an April 2024 Perspectives from FSF Scholars, has yet to advance beyond a discussion draft. It was scheduled for markup by the House Energy and Commerce Committee on June 27, 2024, but that markup was cancelled at the last minute, a development I described in a post to the Free State Foundation's blog.

Prompting an unsettling sense of déjà vu, already one state has taken stalled congressional matters into its own hands. On May 17, 2024, Colorado Governor Jared Polis signed into law Senate Bill 24-205, "Concerning Consumer Protections in Interactions with Artificial Intelligence Systems."

Broadly speaking, Senate Bill 24-205, which goes into effect on February 1, 2026, requires that developers of "high-risk" AI systems "use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination."

We shall see if other states follow Colorado's lead – and, if so, whether another unwanted privacy-related "patchwork" emerges.

Privacy Recap: Senate Commerce Committee Holds Hearing on Data Privacy; Op-Ed Authors Oppose FTC Privacy Rulemaking

On Wednesday, September 29, 2021, the Senate Committee on Commerce, Science, & Transportation held its first hearing of the year on data privacy, "Protecting Consumer Privacy."

Witnesses included:

• Georgetown Law Professor David Vladeck, a former Director of the FTC's Bureau of Consumer Protection (written testimony)
• President of The App Association Morgan Reed (written testimony)
• Maureen Ohlhausen, a partner at Baker Botts and a former Acting Chair of the FTC (written testimony)
• Independent Researcher and Technologist Ashkan Soltani, who once served as the FTC's Chief Technologist (written testimony)

As one might expect, there was widespread agreement on the need to both pass a federal data privacy law and provide the FTC with greater resources.

The disagreements centered on the usual suspects – that is, preemption of state laws and a private right of action – along with (1) the amount of additional dollars to be allocated to the FTC, and (2) whether it would be appropriate for the agency to initiate a privacy rulemaking in the absence of congressional progress, an issue I touched upon in a Wednesday post to the FSF Blog.

In her Majority Statement, Chair Maria Cantwell (D - WA) emphasized the need to better empower the FTC, noting with approval that the Budget Reconciliation Act in its current form would make $1 billion available over ten years to establish and fund a new Privacy Bureau.

In his Minority Statement, Ranking Member Roger Wicker (R - MS) wrote that "the need for strong data privacy rules has become more urgent" over the past year and reiterated that he is "open" to a narrow private right of action that does not "stifl[e] innovation and marketplace competition or lead[] to unjustified financial windfalls for plaintiff attorneys."

In addition, he urged President Biden "to appoint someone – a specific person – among his senior staff to be a liaison to Congress on this issue and to prioritize the enactment of a data privacy law this year."

Finally, he voiced his objection to the possibility of an FTC rulemaking, asserting that "[o]nly Congress can develop longstanding data protections for consumers that meaningfully safeguard their personal information." (See below for more on this topic from Senator Wicker.)

A video archive of the hearing can be found here.

This was the first in a series of three Senate Commerce Committee hearings on data privacy and security. The next, entitled "Enhancing Data Security," will take place at 10 am EDT on Wednesday, October 6, 2021.

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Also on Wednesday, the Washington Examiner published an op-ed by Senator Wicker, Representative Cathy McMorris Rodgers (R - WA), ranking member of the House Energy and Commerce Committee, and Republican FTC Commissioner Noah Phillips opposing a possible FTC rulemaking on privacy.

That same day, The Wall Street Journal (subscription required) reported that agency Chair Lina Khan is considering such a step.

The trio wrote that Congress has not granted the FTC "the authority to write comprehensive national privacy rules" and that "[a]ttempting to rewrite privacy law by executive fiat would be a blatant overreach that would almost certainly invite legal challenges."

They also argued that, as a matter of sound policy, "[a] national law must be the product of debate and compromise among the people's representatives."

The authors did, however, acknowledge that the FTC is the appropriate government entity to enforce a federal law once enacted, describing it as "the most effective privacy enforcer in the world."

Proposed Universal Service Contribution Factor for Q4 Is 29.1 Percent

In a September 10, 2021, Public Notice, the FCC's Office of Managing Director announced that the Universal Service Fund (USF) contribution factor for the fourth quarter of this year will be 29.1 percent, a slight drop from the third quarter's 31.8 percent but still untenably high.

Free State Foundation President Randolph May has described this fee, which is imposed upon consumers' steadily declining use of "telecommunications services" (think: landline phones) but not "information services" (that is, the Internet), as a regressive tax that "negatively impacts low income subscribers who can least afford to pay it more than higher income subscribers who can."

In a May 2021 Newsweek op-ed, FCC Commissioner Brendan Carr made a compelling case that "[w]e should start requiring Big Tech to pay its fair share." Shortly thereafter, in "Congress May Invest Billions in Broadband: It Should Reform the Universal Service Fund Too," Justin (Gus) Hurwitz, a member of the Free State Foundation's Board of Academic Advisors, agreed that "we should discuss, as Commissioner Carr rightly suggests, who should pay for" USF-related projects.

And as I noted in a July post to the FSF Blog, Republican Senators Roger Wicker (MS), Shelley Moore Capito (WV), and Todd Young (IN) have introduced the Funding Affordable Internet with Reliable (FAIR) Contributions Act, legislation that would direct the FCC to consider the viability of Commissioner Carr's proposal.

Bill Would Require FCC to Consider Big Tech Contributions to Universal Service Fund

On July 21, three Republican members of the Senate Commerce Committee announced the introduction of legislation that could revitalize the Universal Service Fund (USF) via contributions from so-called edge providers such as YouTube, Netflix, and Google.

With the Funding Affordable Internet with Reliable (FAIR) Contributions Act, Senator Roger Wicker (MS), ranking committee member, along with Senators Shelley Moore Capito (WV) and Todd Young (IN), would have the FCC consider the viability of an approach first articulated by Commissioner Brendan Carr in a May 2021 Newsweek op-ed.

As Mr. Carr explained, the USF's reliance upon steadily decreasing "telecommunications" revenues, through a monthly tax on bills for traditional voice offerings, is "now hopelessly outdated" and "on the verge of collapse."

The facts bear this out. Once below 6 percent, the USF contribution factor (that is, the rate at which consumers are taxed) surpassed 30 percent for the first time shortly before Mr. Carr wrote his op-ed. Not long thereafter, it rose even higher – 33.4 percent – for the second quarter of 2021. The proposed contribution factor for the third quarter of 2021 did dip slightly, but only back to the first-quarter level that gave Mr. Carr pause: 31.8 percent.

The reason the contribution factor continues to rise is no mystery. Consumers today use traditional telecommunications services far less – and Internet-based offerings far more. Rather than continuing to ratchet up the burden on the former, Mr. Carr instead proposed that "[w]e should start requiring Big Tech to pay its fair share."

Simply put, the anachronistic and unsustainable USF mechanism regressively taxes the dwindling user base of "telecommunications" services in large part to subsidize high-speed Internet service in high-cost areas. Edge providers utilize broadband infrastructure to generate billions and billions of dollars in revenues — without any obligation to help pay to close remaining digital divides.

In the words of Mr. Carr, "Big Tech has been enjoying a free ride on our internet infrastructure while skipping out on the billions of dollars in costs needed to maintain and build that network…. It is time to end this sweetheart deal. Big Tech should stop passing its costs onto the American people."

In a series of tweets at the time, FSF President Randolph May argued that Mr. Carr "makes a persuasive case" and that his "proposal deserves serious consideration."

More recently, Justin (Gus) Hurwitz, a member of the Free State Foundation's Board of Academic Advisors, asserted that, in the context of the ongoing congressional infrastructure funding debate, "[be]fore we decide how much to spend on [universal service] we should discuss, as Commissioner Carr rightly suggests, who should pay for [it]."

Senators Wicker, Capito, and Young clearly agree.

The FAIR Contributions Act, among other things, would require the FCC to:

• Seek input from the public "on the feasibility of collecting USF contributions from internet edge providers" and prepare, within 180 days, a report detailing its conclusions;
• Consider possible revenue sources;
• Evaluate the fairness of both the current system and one in which Big Tech contributes;
• Determine the feasibility of requiring such contributions;
• Estimate the impact on Tribal, low-income, and elderly populations; and
• Identify any statutory changes that may be required.

Senate Committee Passes Bill Requiring Mid-Band Spectrum for 5G

On November 18, the Senate Committee on Commerce, Science, and Transportation passed S. 4803 – the "Beat CHINA for 5G Act" – by a voice vote. If signed into law, the Act would require the FCC to begin a competitive bidding auction for commercially-licensed use of the 3.45-3.55 GHz band before the end of 2021. As Free State Foundation scholars have emphasized repeatedly, there is an urgent need for more mid-band spectrum for 5G. The 100 MHz of mid-band spectrum identified in S.4803 would help expand 5G network services in the U.S. The FCC has already commenced a proceeding on the 3.45-3.55 GHz band, and the Act would ensure that the auction takes place. A companion bill – H.R. 8548 – has been introduced in the House of Representatives.

Privacy Recap: Senate Commerce Committee Holds Hearing, Republican Members Introduce SAFE DATA Act

There have been two recent developments of note on the topic of privacy at the federal level, specifically before the Senate Committee on Commerce, Science, & Transportation.

First, on September 17, Committee Chair Roger Wicker (MS), along with three fellow Republican members (John Thune (SD), Deb Fisher (NE), and Marsha Blackburn (TN)), introduced the Setting an American Framework to Ensure Data Access, Transparency, and Accountability (SAFE DATA) Act.

The SAFE DATA Act is a revised and expanded version of a November 2019 staff discussion draft that I summarized in a Perspectives from FSF Scholars, "Federal Privacy Legislation: Bipartisan Discussions Devolve into Dueling Drafts."

The bill formerly known as the United States Consumer Data Privacy Act "has been updated to clarify definitions, expand the scope of data that is covered under the bill, and protect consumers from being manipulated by algorithms used by online platforms."

With respect to this last point, it incorporates language from the Filter Bubble Transparency Act introduced by Senator Thune and the Deceptive Experiences To Online Users Reduction (DETOUR) Act introduced by Senator Mark Warner (D VA).

It also appropriates $100 million to the FTC to carry out its provisions and authorizes the agency to obtain monetary relief on behalf of consumers for violations of the FTC Act.

Second, the Commerce Committee on September 23 held a hearing on the topic of privacy. Witnesses at "Revisiting the Need for Federal Data Privacy Legislation" included:

• Julie Brill, former FTC Commissioner and current Corporate Vice President, Chief Privacy Officer, and Deputy General Counsel for Global Privacy and Regulatory Affairs at Microsoft Corporation;
• William Kovacic, former FTC Chairman and Commissioner and current Director of the George Washington University Competition Law Center;
• Jon Leibowitz, former FTC Chairman and Commissioner, now an attorney at Davis Polk & Wardwell LLP and co-chair of the 21st Century Privacy Coalition;
• Maureen Ohlhausen, former FTC Commissioner and Acting Chairman, now a partner at Baker Botts L.L.P.; and
• Xavier Becerra, California Attorney General.

Among other things, the hearing focused on the heightened need for federal privacy legislation in light of the COVID-19 pandemic and the effectiveness of the California Consumer Privacy Act (CCPA) and its implementing rules.

Press reports indicate that, while a private right of action and preemption of state laws continue to serve as sticking points, lawmakers instead emphasized those areas upon which they agree. Nevertheless, it remains to be seen whether Congress will act this year.

In Senate Subcommittee Testimony, FTC Seeks Additional Privacy Authority

On July 21, the Federal Trade Commission (FTC) appeared before the Senate Commerce Committee's Subcommittee on Manufacturing, Trade, and Consumer Protection.

In written testimony, Andrew Smith, Director of the Bureau of Consumer Protection, focused primarily on the agency's recent and ongoing actions to protect consumers from scams, deceptive advertising, illegal robocalls, and other threats relating to the COVID-19 pandemic.

However, Mr. Smith also used this opportunity to advocate for additional FTC authority in the privacy and data security space. Specifically, he urged Congress to pass federal legislation that:

• Amends Section 5 of the FTC Act, which prohibits deceptive or unfair commercial practices, to allow the agency to impose fines for first-time violations;
• Expands the FTC's authority under Section 5 to include non-profits and common carriers; and
• Provides it with targeted rulemaking authority under the Administrative Procedure Act (APA).

The Senate Should Confirm Commissioner O'Rielly For Another Term

                                                             

The following statement may be attributed to Free State Foundation President Randolph May regarding the confirmation of Michael O’Rielly:

“I have watched dozens of FCC commissioners perform their duties over four decades, and many, from both parties, have served with distinction. But I’d say, without any hesitation, that Mike O’Rielly is in the very top ranks of the commissioner cohort. His combination of experience and expertise, commitment to free market-oriented principles, willingness to work with all his colleagues, and roll-up-his-sleeves work-hard mentality, all advance the cause of achieving sound communications policy in so many areas. And he is always on the lookout to reduce unnecessary regulatory burdens whose costs outweigh their benefits and impair consumer welfare.

I especially applaud the work Commissioner O’Rielly has pursued doggedly in the area of FCC institutional reform. This work, in which Commissioner O’Rielly has played a leading role, is not necessarily sexy or headline grabbing, but it is important to making FCC decision-making as efficient, effective, timely, and transparent as possible, all to the benefit of those subject to the Commission’s jurisdiction, but, most importantly, to consumers and the public at large.

I urge the Senate to speedily confirm Commissioner O’Rielly to another term, so he can continue to serve the public in the same exemplary fashion he has since he became a commissioner."   

Senate Commerce Committee Members Introduce COVID-19 Privacy Bill

Contact tracing, which involves identifying those who have tested positive for COVID-19 and the people with whom they have interacted, may prove effective in minimizing the spread of the virus and enabling the safe reopening of America. It typically is a labor-intensive effort, but digital tools, such as mobile apps, seek to automate at least part of the process. Such efforts have achieved qualified success in other parts of the world, such as Singapore and South Korea. But the monitoring of citizen movement inevitably implicates personal privacy. Businesses developing contact-tracing technology, and now lawmakers, seek to mitigate that impact.

A number of companies are active in this space, both domestically and internationally. The most high-profile effort involves Apple and Google, rivals that provide the operating system software (iOS and Android, respectively) running on virtually all smartphones. Working together to make available Application Programming Interfaces (APIs) that leverage Bluetooth technology, they have indicated that privacy is a “primary goal.” To that end they recently announced measures, such as prohibiting the collection of GPS location data and allowing only public health officials to deploy apps that utilize those APIs, in response to privacy concerns that have been raised.

In addition, on May 7, five Republican members of the Senate Committee on Commerce, Science, and Transportation – Chairman Roger Wicker (MS), John Thune (SD), Deb Fischer (NE), Jerry Moran (KS), and Marsha Blackburn (TN) – introduced legislation that, according to the Press Release, is designed to “provide all Americans with more transparency, choice, and control over the collection and use of their personal health, device, geolocation, and proximity data” and “hold businesses accountable to consumers if they use personal data to fight the COVID-19 pandemic.”

Specifically, the COVID-19 Consumer Data Protection Act of 2020 (CCDPA) would regulate “covered data” collected and used to:

• Track the spread, signs, or symptoms of COVID-19;
• Measure compliance with social distancing guidelines and other requirements; and
• Conduct contact tracing.

Covered data includes:

• Precise geolocation data;
• Proximity data;
• A persistent identifier; and
• Personal health information.

It does not include:

• Aggregated data;
• Business contact information;
• De-identified data;
• Employee screening data; and
• Publicly available information.

Should the CCDPA become law, “covered entities,” among other things, would be required to:

• Provide individuals with clear and transparent notice regarding how their data will be handled, to whom it will be transferred, and how long it will be retained;
• Obtain “opt-in” consent before collecting or using that data;
• Limit that collection to what reasonably is necessary;
• Ensure that that data is accurate (and allow individuals to correct inaccurate data);
• Implement appropriate data security policies and practices; and
• Provide a means for those who do “opt-in” to “opt-out” at a later date.

Covered entities include those that collect, process, or transfer covered data and are:

• Subject to the FTC's jurisdiction;
• Common carriers (which would be exempt from Communications Act provisions and FCC rules, other than those relating to 911, in connection with activities covered by the CCDPA); and
• Nonprofit organizations

Covered entities would be required to issue public transparency reports within 30 days of enactment and no less than every 60 days thereafter providing information on the number of individuals from whom data has been collected, the categories into which it falls, how it is used, and to whom it has been transferred.

The CCDPA would preempt state and local laws “related to the collection, processing, or transfer of covered data for a purpose described” therein and empower the FTC and state attorneys general to enforce its provisions.

The CCDPA would remain in effect only until the Secretary of Health and Human Services declares an end to this public health emergency. Covered entities would be required to delete or de-indentify all covered data at the end of the current crisis.