PRESTIDIGITATION

By John Greenwald

IMPORTANT LAWS ARE USUALLY FEStooned with special-interest baubles to ensure their passage. But sometimes the gift-giving frenzy embarrasses even lawmakers. Take, for example, the sweeping telecommunications legislation now before Congress. Tucked inside it is wording that could allow public airwaves worth as much as $70 billion to be handed over, free of charge, to existing U.S. television broadcasters at a free-market auction. Senate majority leader Bob Dole, hardly a sworn enemy of special interests, has blanched; last week he threatened to oppose the entire bill unless the giveaway is dropped.

The spectrum handout is a classic example of how government subsidies live on after their rationales have expired. The giveaway was originally conceived by the Reagan Administration as a way to bolster American firms in a race with Japan to develop a new technology called High-Definition Television. Then hdtv was eclipsed by so-called digital television, which promises extra-sharp pictures and CD-quality sound. The Japanese are barely in the digital race, but the fcc decided to ladle out the frequencies anyway.

The handout's chief sponsors are Republicans Jack Fields of Texas, who chairs the House telecommunications panel, and Senator Trent Lott of Mississippi. They argue that small TV broadcasters still need the subsidy, since they would be squeezed out of a spectrum auction by rich new competitors like AT&T, which can enter the TV business under the new law. Both large and small broadcasters are fighting back against Dole, noting that they will return the new channels after 15 years. Besides, they argue, without free airwaves they would have to charge viewers for digital programs. "No one can pay for the digital channel and provide a service that is free," says Lynn McReynolds, speaking for the National Association of Broadcasters.

Dole, for one, doesn't agree.

--By John Greenwald. Reported by John F. Dickerson/Washington

With reporting by John F. Dickerson/Washington