Markey, Dodd will back trust fund for digital content

By Dan Odenwald

A bill introduced in the House May 2 brings the DOIT proposal for a trust fund supporting digital educational content one step closer to “done it.” The legislation introduced by Rep. Ed Markey (D-Mass.) proposes to invest proceeds from spectrum auctions in a permanent trust fund for that purpose. Sen. Christopher Dodd (D-Conn.) is preparing a similar bill in the Senate, earmarking 50 percent of all future auction proceeds for such a fund.

Markey’s Wireless Technology Investment and Digital Dividends Act (H.R. 4641) also provides for up to $300 million in funding for public broadcasting’s digital conversion.

The bill looks very much like the trust fund proposed last April by the Digital Promise Project led by former PBS President Lawrence Grossman and ex-FCC Chairman Newton Minow. Their proposal for the Digital Opportunity Investment Trust (DOIT) would set aside $18 billion in revenue from future spectrum auctions to pay for digital educational content. They called on Congress to just “DOIT.”

Despite the proposed legislation, the trust fund concept still has a long way to go. Much of the auction proceeds are slated to help balance the budget, while other funds will go to paying down the debt and cutting taxes.

But Markey believes some of the proceeds must go to public interest media. His bill would set up a permanent trust fund like DOIT to distribute grants for educational technology, teacher training, worker re-training and digitizing of educational materials. Grants would also go to bringing broadband Internet access to low-income housing areas and underserved rural populations.

The Markey trust would derive its funds from the interest generated off of auction proceeds. For example, if $10 billion is raised from the auctions, and earns 5 percent in interest a year, then roughly $500 million would be available for grants each fiscal year, a Markey aide says.

Public TV lobbyists applauded the Markey bill for providing “much needed federal support” for pubcasting’s digital transition–as well as money for new digital content.

The bill also calls on the FCC to design a more civic-minded national spectrum policy by guaranteeing that auction revenues be reinvested in public service media, not dumped into the treasury to satisfy balanced-budget hawks.

The public should reap the benefits of the spectrum auctions, Markey says, beyond having access to a new generation of mobile phones and wireless Internet devices.

Budgeteers on Capitol Hill have designed the auctions to raise money without a thought to what makes sound spectrum policy, says Markey, the senior Democrat on the House subcommittee for telecommunications and the Internet.

At least some auction proceeds should be used to enhance democracy, bridge the digital divide, and promote public interest projects, he says.

To that end, his bill prohibits the FCC from scheduling any more auctions until a new spectrum policy is established. It’s time, Markey says, to put the “policy horse” back in front of the “auction cart.”

Clearly others disagree. Adam Thierer, director of telecommunications policy at the libertarian Cato Institute, believes the government shouldn’t use taxpayer dollars to fund digital public interest services. The digital age doesn’t need ministers of culture who select which educational and cultural projects get public funding, Thierer adds. That job is best left to companies and consumers. Let consumers “vote with their wallets and attention spans,” he says.

“A national imperative”

But the DOIT proposal stems partly out of the concern that the public interest won’t be met by commercial endeavors. Indeed, Grossman says, for much of the early digital revolution no one was focusing on the public-service possibilities of new digital media.

Concerned by that fact, a group of foundations–including the Carnegie Corporation, Century Foundation, Knight Foundation, MacArthur Foundation and Open Society Institute–commissioned a report that urged the government to set up an educational trust fund financed by spectrum auctions.

The report recommends using $18 billion in proceeds from future spectrum auctions to endow the fund. If wisely invested, the endowment would generate roughly $1 billion a year in revenue, which would be distributed as grants to libraries, museums, pubcasters and other nonprofits for the creation of digital media.

“The needs are enormous,” Grossman says. “This is a national imperative.” Public education must be transformed, and workers retrained, he says. The digital revolution provides enormous opportunities to do this, he adds.

DOIT could do for education what the National Science Foundation does for science, what the National Institutes of Health do for health and what the Defense Advanced Research Projects Agency (DARPA) does for defense, Grossman adds. Congress spends nearly $2 billion a year connecting classrooms to the Internet and virtually nothing on content. DOIT could change that.

The trust fund would follow on America’s three previous big investments in public education: the Northwest Ordinance of 1787, which used proceeds from the sale of federal lands to establish schools; the Morrill Act of 1862, which endowed 105 land-grant colleges; and the GI Bill of 1944, which opened colleges to millions of World War II vets.

Since proposing the trust fund more than a year ago, Grossman and Minow have been campaigning quietly to win support on and off Capitol Hill. The Markey bill is in part a culmination of their efforts.

Along the way, the DOIT proposal has attracted support from both the commercial and nonprofit worlds. Hollywood producer George Lucas, 3Com’s Eric Benhamou, and eBay’s Meg Whitman have endorsed the project, as well as the American Museum Association, American Association of Libraries and the American Federation of Teachers.

In the Senate, Dodd is drafting the Digital Opportunity Investment Trust Act. Citing the precedent of the Land Grant Colleges Act, the bill calls on the NSF to establish a trust fund to support education, information, the arts and culture, according to Anne Murphy, project director for the Digital Promise project.

It earmarks 50 percent of revenues from future auctions (likely to be between $25 billion to $100 billion) to go to the fund, and for the NSF to appoint a task force to study the matter and make recommendations to Congress regarding the trust’s structure.

Like Markey’s bill, Dodd’s reportedly will include a section for public broadcasting, citing its “state of the art digital transmission system in carrying out the Trust’s education and information mission.”

Public TV stations need digital content, Murphy says. The trust fund can help pay for that content to be delivered via public TV signals or through libraries, schools and museums. While the fund won’t replace pubcasting’s annual appropriation, it will be a major source for content funding in the digital age, Grossman adds.

This spring, Dodd and the House Science Committee formally asked the NSF to conduct a feasibility study of the trust fund idea, which is currently under way. The NSF intends to submit its report this summer in advance of legislative hearings on the concept.

Digital Promise reps are also drawing interest from the White House, Murphy says. In early February, she met with the White House Office of Science and Technology, which found the idea “intriguing.” She also met with the President’s Information Technology Advisory Committee (PITAC), which was also enthusiastic about the idea.

Roadblocks ahead

Despite the momentum DOIT has picked up in some Washington offices over the past 13 months, victory isn’t guaranteed, says Michael Calabrese, a scholar with the New America Foundation, a Washington, D.C., think tank.

Whenever the federal treasury sees a giant windfall of cash–as spectrum auctions will deliver–members of Congress want those dollars for their own causes. Much of the spectrum freed up by TV broadcasters converting from analog to digital will go to balancing the budget and paying down the debt. Many legislators will want to see the auction proceeds pay for tax cuts. Some members will want to use the funding to fight the war on terror.

Markey will have to get in line behind a number of legislators who already want that money, says Adam Thierer of Cato.

DOIT has a good chance of success if it’s taken up in the context of larger legislation to reform spectrum policy, Calabrese says, including speeding up the digital TV transition and moving the military to different frequencies.

But if the trust fund bill is introduced as a stand-alone bill, it will be much easier to kill by opponents who want the money for something else.

Sen. Fritz Hollings (D-S.C.), chairman of the Senate Commerce Committee, which has jurisdiction over spectrum policy, plans to discuss DOIT in the context of spectrum reform hearings.

During those hearings, Hollings will examine the scheduling of auctions and how best to move present users off spectrum the feds want to sell. The timing is crucial, and Congress wants to wait until spectrum prices are high before they hold auctions.

Auction timing questions are causing a showdown between Congress and the FCC. On the same day Markey introduced his trust fund bill, the House Commerce Committee voted to delay the auctions of UHF channels 52-59 and 60-69. The full House voted May 7 to delay. The FCC was scheduled to auction them off June 19. It’s the sixth delay of the auctions.

The FCC protests that federal law requires it to hold the auction next month, but House Commerce Committee Chairman Billy Tauzin (R-La.) says it’s too early. Wireless companies, who covet spectrum, won’t pay top dollar for property that won’t be available for years to come. “These auctions aren’t ready for primetime,” Tauzin says.

The Commerce’s Committee senior Democrat, Rep. John Dingell (D-Mich.), says scheduling the auctions this early would be “asinine,” calling it part of the “train wreck” of the 1997 Balanced Budget Act.

The day after the House Commerce Committee approved its auction delay bill, Sens. John Ensign (R-Nev.) and John Kerry (D-Mass.) introduced similar legislation in the Senate.

The White House is also pushing for delays. According to President Bush, delaying the auctions from 2002 until 2005 will guarantee an additional $20 billion in proceeds.

Such delays pose yet another problem for the trust fund proposals. If no one is sure when the auctions will occur–and no one in Washington wants to schedule them–the fund would have to wait years for its critical start-up money. If the auctions are held at all, Thierer says, the trust fund wouldn’t see its share of the proceeds until at least the next decade.

To Current’s home page
Earlier news: Grossman and Minow propose the trust fund, April 2001.
Texts of Markey bill, H.R. 4641 and Dodd-Jeffords bill, S. 2603.
Outside link: Digital Promise Project website.
Later news
Dodd and Jeffords propose using auction proceeds for digital trust fund Originally published in Current, June 24, 2002

Sens. Christopher Dodd (D-Conn.) and Jim Jeffords (I-Vt.) introduced a bill June 10 [2002] that would use 50 percent of the proceeds from future spectrum auctions to fund a digital content trust fund for education and culture. Portions of the proceeds would also help public TV convert to digital broadcasting.

The Digital Opportunity Investment Trust, S. 2603 [text], is modeled on a trust fund with the same name proposed by former PBS President Lawrence Grossman and ex-FCC Chairman Newton Minow.

In the House, Rep. Ed Markey (D-Mass.) introduced a trust fund bill May 2. His Wireless Technology Investment and Digital Dividends Act (H.R. 4641) also provides for up to $300 million in funding for public broadcasting’s digital conversion.

The Dodd and Jeffords bill was inspired by the Land-Grant Colleges Act of 1862, authored by Vermont Sen. Justin Smith Morrill, which used the proceeds from sale of public lands in the West to create 105 land-grant colleges and universities.

The digital trust fund would enhance distance learning, improve math and science education and enable schools, libraries and museums to reach wider audiences.

According to government estimates, spectrum auctions could yield more than $20 billion. Dodd and Jeffords propose investing half of that in the trust fund and returning the other half to the U.S. Treasury to meet other obligations.

The trust would be administered by a director and deputy director appointed by the chairman of the National Science Board and overseen by an eight-member, bipartisan advisory board appointed by Congress and the White House.

Web page revised June 26, 2002
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