The Congressional Budget Office (CBO) released its much anticipated report on the estimated cost of S911, the Public Safety Spectrum and Wireless Innovation Act of 2011, and the report concludes that the bill would reduce net direct spending by $6.5 billion over the 2012-2021 period. Proponents of the bill had predicted that the bill would reduce the deficit by $10 billion. This $3.5 billion shortfall could jeopardize the prospects for passage of the bill in its current form, because the bill is being considered as possibly part of the debt ceiling deal that is being developed by the President and Congress. Meanwhile, Republicans in the House Energy and Commerce Committee have circulated a discussion draft version of the bill, which is different from the S911 in several respects – including not reallocating the 700 MHz D-Block for Public Safety. House Republicans favor auctioning the 700 MHz D-block to help reduce the national debt.

Interestingly, the CBO estimated that the reallocation of the 700 MHz D-Block to Public Safety would add $2.75 billion to the cost of the bill. Also, CBO estimated that the cost for the Public Safety Broadband Corporation to build-out and operate the public safety broadband network would be $12.5 billion – including $11.5 billion in capital expenditures and $1 billion in operating cost overruns. But, the shortfall in the CBO estimate wasn’t solely from the estimated cost of the public safety broadband network, the CBO also concluded that the net proceeds from proposed incentive auctions of existing broadcast spectrum as well as auctions of Federal spectrum bands would less than expected as well. Specifically, the CBO estimated that spectrum auctions would likely raise $8.4 billion over the next five years and $16.1 billion after 2016, based on expected delays in the process at the FCC and the CBO’s estimate that spectrum would sell at roughly .70 per MHz/pop, which is less than the .80 per MHz/pop that was raised from past spectrum auctions.