Wireless Spectrum Auctions

Budget pressures are among forces prompting a proposed Dec. 31, 2008, transition date in a House Commerce Committee draft bill (CD May 23 p1), as Congress eyes a potential windfall from spectrum auction, sources familiar with the process said. The Congressional Budget Office (CBO) has advised the committee to hold the 700 MHz auction in 2008 so as not to compete with a 3G auction in June 2006.

The FCC is expected at its June 9 meeting to act on petitions seeking reconsideration of the Commission’s Hearing Aid Compatibility (HAC) order, according to sources. It’s also expected to launch an NPRM seeking comment on how the FCC should change its competitive bidding rules to comply with the Commercial Spectrum Enhancement Act.

Incumbent providers operating in the 900 MHz band urged the FCC to ensure “sufficient” protection for their systems from harmful interference if the Commission moves forward with a proposal to facilitate the band’s more flexible use. They want the agency to ensure that licensees don’t face interference such as that which required the remedies adopted in the 800 MHz interference proceeding. The incumbents, which are site-specific licensees, generally opposed the geographic market area licensing the FCC proposed. They said it would cause commercial systems to proliferate at the expense of continued licensing of critical infrastructure, industrial and land transportation systems.

Two groups of prominent telecom, wireless and technology companies this week separately endorsed a hard deadline for DTV transition, igniting a debate with NAB. A new High Tech DTV Coalition unveiled Wed. and led by Janice Obuchowski, former NTIA dir. and ambassador to the World Radio Conference, backs House Commerce Committee Chmn. Barton’s (R-Tex.) goal of a firm deadline. Without specifying a date, Obuchowski said her group stands behind Barton. Barton, now pushing a Dec. 31, 2006, deadline, has said he could accept a “slight” compromise. “We want the deadline to be as soon as practicable,” said coalition member Peter Pitsch of Intel.

The wireless industry urged the FCC in comments to provide regulatory certainty as it creates a new regulatory framework for wireless broadband services. Commenters generally supported the FCC Wireless Broadband Access Task Force report recommendations released in Feb. (CD Feb 11 p8), calling them a step in the right direction. But some expressed concern that the report failed to make firm recommendations regarding issues such as jurisdiction. They said the Commission should take further steps before carrying out the recommendations.

The FCC’s Wireless Broadband Access Task Force Report overlooks or underestimates obstacles rural providers face in seeking to deploy wireless broadband, NTCA told the FCC in comments Fri. Without regulatory intervention, ubiquitous broadband wireless deployment will never become a reality in rural America, NTCA said. Hailing the Task Force for seeing how wireless broadband could help rural America, NTCA nonetheless said the body’s report lacks specific recommendations for getting more licensed spectrum into small rural carriers’ hands. It’s hard for small providers to get licensed spectrum at auctions, and secondary markets aren’t effective, the group said. But by lessening some regulatory constraints “the FCC could make secondary markets a viable alternative for rural carriers.” Lack of access to licensed spectrum forces some members to use unlicensed spectrum to serve customers, NTCA said, calling that tack “far from an ideal solution” despite its low cost. NTCA urged a “keep what you use” approach to spectrum licensing, under which regulations would force large spectrum licensees to part with spectrum left unused after they have had sufficient time to build out the licensed territory. “Unless the FCC takes further steps to facilitate rural carriers’ efforts to gain access to licensed spectrum,” the wireless broadband’s promise for rural America “will remain largely unkept,” NTCA said. Separately, Microsoft called the report “an excellent statement of broadband wireless’ potential and the Commission policies that will encourage private industry to realize that potential,” but said in “one critical respect” the report didn’t go far enough. Before implementing the report, the FCC should “bring the distinction between low- [below 1 GHz] and high-frequency spectrum to the foreground by emphasizing that access to low-frequency spectrum is essential to the continued growth of the broadband wireless industry,” Microsoft said. Granting access to that spectrum would “remove a significant obstacle, lowering the cost of building wireless broadband networks by 50% or more.” Mobile Satellite Ventures urged the FCC to support the report recommendations and “foster hybrid satellite/terrestrial service… in encouraging the development of the high- speed communications and broadband market.” The task force report was released at the Commission Feb. meeting (CD Feb 11 p8). More comments were expected to be filed at our deadline.

Opponents of a proposed Sprint-Nextel merger warned the FCC the companies tried to divert its attention from key issues in a reply to oppositions last week (CD April 13 p4). Sprint and Nextel said most objections didn’t relate to their merger review and should be addressed elsewhere, if at all. But opponents strongly disagreed, citing excessive market concentration, roaming agreements, spectrum aggregation and spin-off of the Sprint local wireline business as major concerns.

Auctioning spectrum licenses of limited duration and flexible use is the most rational approach to spectrum governance, according to Princeton U. Prof. William Baumol, whose study was debated by economists at an AEI- Brookings Joint Center event in Washington Tues. Baumol said the govt. should give spectrum holders flexibility to rent or sell unused frequencies to other entities. He said although the FCC had embraced auctioning licenses and other decentralized market mechanisms, administrative restrictions still covered much of the spectrum. Baumol also said spectrum licenses should be “limited in duration for a clearly specified period” of 10-15 years, and renewable only through an “unbiased” auction.

SES Americom and Crown Castle Mobile Media will deliver live TV to mobile handheld devices, officials from both companies said at the NAB conference in Las Vegas. Crown Castle said it has leased Ku-band capacity aboard SES’s AMC 9 satellite to reach satellite receivers across its planned DVB-H (digital video broadcast -- handheld) network. A Crown Castle spokeswoman said the company has begun testing the DVB-H network in 3 Pittsburgh markets. The collaboration is a first for SES’s satellite-based mobile platforms, which distribute data, TV and Internet to oil rigs, freight trucks, commercial jetliners and households -- but not to cell phones. An SES spokeswoman said the SES satellite backbone will distribute the TV signals to Crown Castle’s terrestrial infrastructure via Ku-band spectrum. Once received by Crown Castle’s wireless network, the signals will be transmitted over the 1670 MHz wireless frequency, a Crown Castle spokesman said. The spokesman said Crown Castle acquired a nationwide license for the spectrum, which wasn’t in commercial use, in a 2003 FCC auction. Mobile handsets that are capable of receiving the TV signals are in development by Nokia and others. Nokia officials said they anticipate DVB-H trials in 2005, with wide scale marketing during 2006.

Sprint and Nextel defended their proposed merger before the FCC, dismissing opponents’ arguments (CD April 1 p2). They said critics provided “no facts or arguments” to counter the conclusion that the combined company would deliver many public benefits without harming competition. Sprint and Nextel said most objections weren’t germane to FCC review of the merger; if they deserve consideration, it’s in other rulemakings, they said, noting that some parties tried to use the merger to win reconsideration of the FCC’s recent 800 MHz order. Others, they said, asked the agency to issue a “policy statement” on roaming, though the FCC is already conducting a rulemaking on future roaming regulation. “These and similar claims are plainly outside the scope of the Commission’s review of this transaction and should be rejected,” Sprint and Nextel said. The companies pooh-poohed comments on Sprint Nextel’s prospective 2.5 GHz spectrum holdings. “Since only one of the merging companies has a presence in 409 out of the 493 BTAs in the U.S., the merger has no effect on BRS spectrum ownership in those areas,” they said. Even in 84 basic trading areas where Sprint and Nextel have a presence today, the companies said the combination of their 2.5 GHz spectrum wouldn’t harm competition or the public interest, since: (1) “2.5 GHz spectrum is neither a separate product market nor a unique input.” Because it is impossible to predict which types of service will succeed commercially in that band, “it would be premature and contrary to precedent for the Commission to undertake an antitrust analysis of these services.” (2) “There is plenty of spectrum -- both assigned to licensees and available to be assigned in the future through auctions -- with which to provide both the existing and the new services that may compete with the services Sprint and Nextel plan to offer using the 2.5 GHz band.” The companies argued the combination of their BRS assets would promote the development and availability of new broadband services in competition against other wireless carriers. They urged the FCC to give the merger expedited approval.