“Unintended outcome” of high prices paid in recent wireless spectrum auctions has been to force carriers to curtail infrastructure investment, Gartner Dataquest said in new report. “Because the telecommunications sector is so large, the investment slowdown has actually slowed the U.S. economy,” said Ron Cowles, Gartner analyst for telecom and networking. “The government should consider using a portion of the auction revenue to apply financial incentives for infrastructure development to build advanced networks,” Cowles said. Other steps that govt. could take to stimulate telecom sector investment include investment tax credits, streamlining of rules that inhibit infrastructure deployment and modifying rules that stymie competition, report said. It also said govt. must redefine universal access to include broadband equal access “allowing bandwidth connectivity for advanced services to all areas, business and residential alike.”

Public broadcasters and major cable operators are starting to discuss digital TV carriage agreements that could short-circuit push by broadcasting industry for DTV must-carry rules. Cable and PTV officials said AT&T Broadband and Cox Communications were holding talks with special APTS/PBS MSO Advisory Committee, while Comcast, Charter Communications and other large cable operators have expressed strong interest in deals. APTS said it planned to approach Adelphia and Cablevision Systems, too, following landmark DTV carriage pact that APTS and PBS signed with Time Warner Cable last Sept. “I would expect to see more conversations between public stations and MSOs in the coming months,” NCTA Pres. Robert Sachs said.

Several large wireless interests marshaled new research from economists to bolster arguments to FCC for relaxing spectrum cap, proposal that raised concern of some small carriers and largest wireless reseller WorldCom. In proposed rulemaking earlier this year (CD Jan 23 p1), FCC reopened examination of whether spectrum cap and cellular cross-interest rule for commercial mobile radio service (CMRS) providers still were needed. Spectrum aggregation limits are 45 MHz in most markets, except rural areas, where cap is 55 MHz. In comments to date, CTIA, Sprint PCS and Verizon Wireless presented economic data to show how wireless competition had grown, although Sprint’s numbers indicated largest markets “remain concentrated.” As for cross-ownership rules, Verizon wrote: “Duopoly market structure -- the entire premise for this rule -- of course is gone.”

ArrayComm and 11 other technology developers created TDD Coalition that’s urging FCC to make spectrum allocations for wireless broadband data systems using time division duplex (TDD). Companies requested regulators to make unpaired spectrum available for TDD-based services instead of paired frequencies typically allocated for mobile wireless services. ArrayComm Senior Vp Bradley Holmes said TDD-based systems that offer wireless broadband services are expected to complement 3rd generation wireless services that use frequency division duplex technology that requires paired bands of spectrum. Other coalition members are Aperto Networks, BeamReach Networks, Caly Networks, Clearwire, Harris Corp., IPWireless, LinkAir, Malibu Networks, Radiant Networks, Raze Technologies, Wavion. Coalition said it wanted U.S. spectrum decisions to align with those of Europe and Japan, which already have made unpaired frequencies available for technologies such as TDD. Holmes said one concern of companies such as ArrayComm was that because other countries were beginning to make allocations dedicated to both TDD and FDD for advanced wireless services, if U.S. didn’t move in same direction, systems developed in U.S. would be deployed elsewhere first. ArrayComm’s technologies include i-Burst, portable broadband system that offers data rates of 1 Mbps, although company said technology could provide up to 40 Mbps per cell site. Holmes, treasurer of new coalition, told us that ArrayComm was conducting FCC-approved market trial in San Diego. Under experimental license granted by agency, ArrayCom can deploy i-Burst technology there until end of next year using 5 MHz of spectrum. As part of FCC proceeding that’s examining bands for potentially providing more spectrum for 3G, ArrayComm asked FCC to make allocations for not just FDD but for TDD as well. ArrayComm contended that technology could offer high-speed data in less spectrum than FDD-based technologies. “We're saying give us one block of 10 MHz,” Holmes said. Without channel plan that allowed single block optimized for TDD, technology developers said their concern was they would have to vie for 2 paired blocks in auctions against larger wireless carriers using FDD-based systems, even though TDD needed only one block. Holmes said ArrayComm could deploy technology in as little as 5 MHz, but ideally would prefer 10 MHz.

Bush Administration’s fiscal year 2002 budget proposal would increase funds for FCC, but White House’s long term strategy is to level off agency’s spending over the next 4 years. According to govt. budget details released Mon., Bush would increase FCC’s FY 2002 budget to $248.5 million from current $230 million. Total proposed outlays, or “amount the [FCC] actually spends in a given fiscal year,” would increase to $320 million from $301 million. Spending in FY 2003 and 2004 would drop to $302 million, then increase by $1 million in FY 2005 and FY 2006, respectively, under plan.

Panelists at Congressional Internet Caucus lunch Thurs. didn’t rule out need for congressional intervention of some type on pending Internet-capable 3rd generation wireless allocation decisions involving Dept. of Defense, NTIA and FCC. At lunch on Capitol Hill sponsored by advisory committee to caucus, several panelists suggested Congress could have role to play, specifically on mandatory auction date for certain bands now under consideration for 3G allocation. FCC is overseeing decisions on 2.5 GHz spectrum now occupied by Multipoint Distribution Service (MDS) and Instructional TV Fixed Service licensees and NTIA has purview over 1.7 GHz band occupied by govt. users, mostly military systems. Under Executive Memorandum signed by President Clinton last Oct., FCC would have to make spectrum allocation decision in July to meet congressional deadline of Sept. 30, 2002, for depositing proceeds in U.S. Treasury from auction of certain bands. “I hope that Congress recognizes that we may have to slow down just a little to speed up and get the right solution,” said Steven Berry, CTIA senior vp-govt. affairs. Issue of making sure there’s enough time for decisions is particularly important given bifurcation of 3G decision-making authority between NTIA and FCC in that area. “That’s where Congress has a role,” Berry said. FCC Wireless Bureau Chief Thomas Sugrue described potential for reaching solution on vacating incumbents from one of existing bands under consideration, although he said logistics for how some of that would happen were less clear-cut. “We would not resist and would in fact welcome some help from our friends in Congress to help make this happen,” Sugrue said. Panel was moderated by Washington attorney Gerry Waldron, with other speakers including NTIA’s Joseph Gattuso, Motorola Vp-Telecom Strategy & Regulation Richard Barth, Pegasus Communications Vp Cheryl Crate and consultant Leslie Harris for WEBNow, coalition representing ITFS licensees. Several panelists cited extent to which reimbursement, which is required for moving federal licensees from incumbent spectrum, is likely to make relocation decisions somewhat more tenable. “This is an area where the spectrum is potentially so valuable to 3G services, there should be enough money I think to make some of this work out,” Sugrue said. “The money makes things not a zero-sum game anymore. Otherwise, we're taking from DoD and giving it here, or we're taking from MMDS and giving it there and they move and someone else wins and that’s a hard way to get anybody to agree.” NTIA’s Gattuso said the NTIA report released Fri. on possibilities for 3G spectrum sharing and segmentation in 1.7 GHz left open options. “We have seen a lot of interest by the Secretary of Commerce and the Administration in general to look at this issue at the highest levels of government and to work with industry to look at our options,” he said. Harris stressed that ITFS licensees were in thick of deployment plans for rolling out wireless broadband services, including those covering “congressional” priorities of distance learning and service to typically underserved inner city and rural areas. “There is more at stake here than can you move incumbents,” Harris said. “There’s a real opportunity here -- DoD needs advanced, digital highly encrypted telecommunications capabilities for the 21st century,” Berry said, reiterating CTIA’s view that DoD spectrum would be best for 3G. “Right now they're in analog systems,” he said of Defense communications. He cited ITFS estimates for relocating incumbents of up to $30 billion, with DoD estimates closer to $4 billion. “Quite frankly I was surprised by the dollar number that DoD gave to NTIA."

Commerce Secy. Donald Evans met with wireless industry Thurs. on 3rd generation wireless issues, sending signal that all spectrum bands still were on table, sources said. Evans held hastily-called 30-min. meeting with wireless carriers and equipment manufacturers in advance of final reports that are set for release today (Fri.) from FCC and NTIA on options for additional spectrum for advanced wireless services. “The report that is coming out tomorrow is a first step in the process,” Evans spokesman said. Several sources indicated meeting appeared to be proactive step by Administration to allay industry concerns over serious questions raised by Dept. of Defense on challenge of sharing spectrum with commercial wireless systems in short term.

FCC seeks comments by May 14 on notice of proposed rulemaking (NPRM) that starts process of tapping Ch. 52-59 in 700 MHz band for auction to wireless operators and other providers of advanced services. Reply comments are due June 4 for NPRM that Commission approved this month (CD March 19 p1). Item addresses lower channels in 700 MHz, which must be auctioned by Sept. 30, 2002, and are occupied now by broadcasters who face digital TV deadlines for leaving band. Broadcasters must vacate spectrum by 2006 unless certain service penetration criteria are met. Among issues on which proposal seeks comment are whether agency should consider ways to facilitate DTV transition ahead of deadlines to make spectrum available to successful bidders sooner. NPRM said possible applications for spectrum included mobile wireless, wireless local loop, video and multimedia. Proposal also would allow companies to obtain licenses in that spectrum to provide broadcast services, such as mobile TV. Comment is sought on “whether this broad allocation is appropriate.” FCC requested feedback on whether restrictions on allocation were needed to protect adjacent channel broadcast operations. As example, NPRM asked whether there was need for guard band or separate allocation at lower end of band limited to low-power service because TV channels would remain adjacent to band on Ch. 51. “Alternatively, would the 698-746 MHz band be more useful for fixed services than mobile services in light of the high number of incumbent broadcasters that operate on the spectrum?” On that point, proposal sought comment on whether “fixed services may be more successful than mobile services in structuring their systems to avoid interference with incumbent broadcasters.” Agency asked for comment on appropriate amount of spectrum for each license in 698- 746 MHz band, specifically whether it should be licensed as single 48 MHz block or in smaller increments.

PEBBLE BEACH, Cal. -- Because so few consumers get their TV over air, broadcasters may soon have difficulty justifying their continuing control of big block of spectrum unless they refocus on public service, analyst Thomas Wolzien said in speech opening NAB Futures Summit here Sun. Although he said figure probably was inflated by various factors, Wolzien said recent auctions indicated broadcast spectrum could be worth as much as $367 billion, even though total market value of all TV stations is only about $100 billion.

Verizon Wireless urged FCC to defer granting licenses won at C- and F-block PCS auction in Jan. until U.S. Appeals Court, D.C., rules on NextWave’s appeal. Verizon Wireless won $8.8 billion in licenses of $17 billion raised by auction, in which most formerly belonged to NextWave but were cancelled for missed payment. Earlier this month, NextWave asked agency to delay spectrum awards until D.C. Circuit issued opinion (CD March 13 p4). Verizon Wireless told FCC in its comments that nothing in NextWave request “requires the Commission to issue a stay.” But awaiting D.C. Circuit’s ruling on NextWave “before granting the applications, and allowing winning bidders up to 30 days after the public notice announcing license grants to submit their final payments, would serve the interests of interested parties and would not undermine the Commission’s goals for the re-auction,” Verizon said. It argued that agency had leeway to allow auction winners more than 10 days to pay balance of winning bids. “The presumptive period of 10 days is an unrealistically short window for bidders to amass and arrange for the transmission of billions of dollars to the Commission,” company wrote. Thirty days would provide more “reasonable time to plan,” company said. Verizon asked FCC to deny NextWave petition, which seeks deferral of auction or conditional approval. In other comments, Alaska Native Wireless (ANW), designated entity with financial backing of AT&T Wireless, challenged standing of TPS Utilicom. TPS had petitioned to deny ANW license applications, saying carrier had failed to comply with FCC rules on entrepreneur status and very small bidder status and that its application lacked “requisite candor.” ANW told FCC that TPS wasn’t party in interest on its applications because it was “eligible to bid on none of the 44 licenses for which Alaska Native Wireless has applied.” TPS didn’t present “specific allegations” needed to raise question of fact that would warrant delaying grant of applications, ANW said. It also disputed TPS contentions that AT&T Wireless had de jure and de facto control of designated entity.