Wireless Spectrum Auctions

First proposals on how to reorganize FCC under project led by Mary Beth Richards, who is special counsel to FCC Chmn. Powell, are due out this summer, she said Mon. Proposal is part of first phase of comprehensive FCC reform project spearheaded by Powell, and recommendations will focus on short-term changes suggested by Commission staff, industry, consumer groups and others, she told American Mobile Telecommunications Assn. (AMTA). Second phase of project is “much more comprehensive,” probably spanning 1-3 years and “completely changing the FCC along functional lines” rather than traditional divisions between buckets of technologies, Richards said. “So there is a possibility that at the end of it there will no longer be a Wireless Bureau, there will not be a Common Carrier, but there would be another bureau that deals with particular functions,” she said at AMTA annual leadership conference in Alexandria, Va. She cited spectrum management as one possibility and said it was too early to forecast any changes.

FCC is widely expected to issue Further Notice of Proposed Rulemaking to examine more closely spectrum beyond main MMDS and Instructional TV Fixed Service (ITFS) bands as part of 3rd generation wireless decision-making, several sources said. Among spectrum blocks likely to be rolled into further notice would be mobile satellite services (MSS) issues teed up at Commission in CTIA petition for rulemaking last month asking for reallocation to “more efficient uses” of “underutilized” MSS spectrum at 2 GHz (CD May 21 p5). One source said further notice could come as soon as next month. From outset of 3G decision-making process, FCC has said it would consider broader array of spectrum than just that at 2.5 GHz used by MMDS and ITFS operators, but controversy over incumbents that would be moved from those bands has received most attention in recent months. Meanwhile, Dept. of Defense continued to take hard line against reallocating military spectrum at 1.7 GHz to commercial uses.

With FCC target deadline fast approaching for making 3rd generation (3G) wireless spectrum allocation decision, Dept. of Defense continues to take hard public line on risks of sharing or vacating military-occupied bands for commercial users. Rear Adm. Robert Nutwell said on TechNet International 2001 panel Tues. that although relocating incumbent military users might be feasible -- given enough time and money -- strategy still would carry risks for Pentagon. Timing and finding comparable spectrum remain 2 large impediments, he said, calling 3G “number one” spectrum issue for DoD right now. He said DoD estimates of up to $4.3 billion in relocation costs were bit low. “I guess given enough time and money you could do almost anything,” Nutwell said of relocation option, saying main impediment was where comparable spectrum could be found. On timing, he didn’t budge from earlier DoD estimates it would take until 2010 to move nonspace systems from spectrum now occupied mostly by military, with satellite systems taking until at least 2017. “These are probably a little bit optimistic in terms of the actual time because typically satellites last longer than they were predicted to, so it could be even a little bit worse than this,” he told Washington conference.

ATLANTA -- Wireless industry could find itself in cross hairs of regulators that want to set framework on service levels, Verizon Wireless CEO Dennis Strigl warned at Supercomm 2001 here. “My greatest fear… is creeping regulation. We have to keep the service quality up so regulators are not tempted to intervene,” he said in keynote Mon. Part of wireless carrier’s problem is PR, he said. “Day after day, the headlines cover major disappointments. But how can they say we failed to keep our promises on new technologies when the rollout of 3G is still on schedule?” All of wireless industry is guilty of “overhyping and overpromising,” especially in timing of wireless data, Strigl said: “We have ignored the basics, something we can’t afford to ignore. The industry has overcomplicated the business for the customer and needs to simplify applications from their perspective.” Carriers want to leapfrog to wireless data but don’t want to deal with basics of business to deliver useful wireless applications, he said. Fundamentals have been neglected, he said, with inability to get service because network is congested, areas with no service at all, 20-min. waits for service, switches down, confusion over calling plans, confusion where it is legal or illegal to use cellphone while driving, bad roaming experiences due to inadequate SS-7 networks.

FCC Wireless Bureau denied petition for waiver of installment payment rules filed by Capital Two-Way Communications. Capital had won two 900 MHz specialized mobile radio licenses in 1996 auction. Licenses were cancelled automatically after Capital failed to make payment following 180-day grace period. “The Commission has repeatedly emphasized the importance of full and timely payment,” agency said. “Strict enforcement of payment rules enhances the integrity of the auction and licensing process by ensuring that applicants have the necessary financial capacity and that spectrum is awarded to those qualified bidders who value the spectrum most.” Bureau also said Capital’s petition didn’t present unique or unusual circumstances.

FCC Wireless Bureau granted extension to Dec. 31, 2002, from Aug. 12, 2001, of construction requirement for all major trading area (MTA) licenses in 900 MHz band. Order responded to requests for waivers filed by Nextel subsidiary and Neoworld. FCC rules require 900 MHz MTA licensees to provide coverage to at least 1/3 of licensed area within 3 years and at least 2/3 within 5 years. Licensees also can demonstrate after 5 years that they are providing substantial service. FCC granted most of specialized mobile radio licenses in that band after 1996 auction, meaning 5- year construction date for most licenses is Aug. 12. Top 3 bidders were Geotek, Nextel and Paging Network, although Geotek and PageNet subsequently filed for bankruptcy. Nextel and Neoworld then acquired MTA licenses from Geotek. PageNet later merged with Arch Wireless, which filed for FCC approval to assign former PageNet licenses to Nextel. Bureau granted approval of that transaction Fri., as well. Neoworld told FCC in waiver request it wanted to use licenses for national digital dispatch system but it couldn’t obtain equipment by Aug. 12 deadline. Bureau declined declaratory ruling for Neoworld on substantial service demonstration. Nextel, which holds 379 licenses in 900 MHz band, had told FCC it could build analog facilities to meet Aug. 12 construction deadline, but such nondigital systems would run counter to public interest. Extension was needed because of lack of 900 MHz digital voice network equipment, Nextel said. It said more time also would allow it to integrate 900 MHz spectrum into its existing national 800 MHz network and enable it to roll out pico cell technology to ease interference between 800 MHz commercial operations and nearby public safety systems. Bureau said it was in public interest to grant extension to all 900 MHz MTA licensees because carriers planned to introduce advanced digital systems but equipment wouldn’t be commercially available in enough volume to meet 5-year construction deadline.

CTIA told FCC, in comments filed last week on reallocation of Ch. 52-59 in 700 MHz band, that it wouldn’t be technically feasible for advanced wireless services to share spectrum with “full-power broadcast licensees.” Comments from wireless and broadcast interests on notice of proposed rulemaking (NPRM) came as recently passed budget resolution retained proposals by President Bush to push back auction dates for both upper and lower band channels of 700 MHz. Rulemaking would reallocate lower 700 MHz band from incumbent analog broadcasters to advanced wireless services. NPRM also proposed retaining broadcasting allocation, which could include what CTIA called full-power broadcast operations. CTIA said that in related auction proceedings for Ch. 60-69, agency had rejected possibility of sharing those frequencies by broadcast and advanced wireless services. “The same conclusion is applicable to the lower 700 MHz band with equal or even greater force, given the large number of broadcast licensees on this band,” CTIA said. “There are simply too many technical, operational and regulatory challenges associated with the sharing of spectrum by full-power broadcast and wireless licensees.” Group said there was “home” for terrestrial broadcast TV services on Ch. 2-51. CTIA also urged FCC to not apply spectrum cap to lower band, which would reflect Commission decision on how Ch. 60-69 would be auctioned to wireless carriers. In other comments, Leap Wireless recommended FCC license and auction spectrum in basic trading area or metropolitan statistical areas, rather than in larger regional areas or through national licenses, which are possibilities on which agency sought feedback. Reallocation of spectrum would be “meaningless” to smaller carriers that serve secondary markets if spectrum were to be auctioned in those larger blocks, Leap contended. Rural Telecommunications Group (RTG) offered essentially same message on importance licensing of “smallest possible geographic areas” to ensure that rural communities weren’t left behind. RTG also urged agency to “provide rural telephone companies with auction incentives,” particularly bidding credits. It said “Commission should establish strict build-out requirements to ensure delivery of service to rural areas and to prevent stockpiling or warehousing of spectrum.” Qwest Wireless said Commission shouldn’t license new broadcast-type services “given the ongoing presence of incumbents. Mobile and fixed wireless services continue to strive to reduce their operating power requirements.” Carrier told FCC that broadcast operations had viable alternatives “and authorizing such services on this spectrum risks burdening new mobile and fixed wireless services.” Qwest said that if FCC decided to allow services other than fixed and mobile wireless in that band, new broadcast-type services should be subject to same technical and service rules, “thus precluding high-power broadcast operations in the spectrum.”

New ICO wants “regulatory flexibility, not new spectrum” with plan CEO Craig McCaw has offered to FCC, Senior Vp-External Affairs Gerry Salemme told us Thurs. “This isn’t an attempt to change the rules. We want to take the rules as they are written to optimize our spectrum to bring service to rural and remote parts of the world.” McCaw wants Commission to approve plan that would allow him to develop terrestrial spectrum using radio spectrum allocated to MSS operators, including New ICO (CD April 4 p1). Motient and Cellsat have offered similar plans to FCC. There has been strong opposition to Motient plan from wireless industry, including AT&T, but Cellsat is concerned about latest McCaw proposal because it has been waiting 7 years for license and doesn’t want proceeding delayed.

With decisions still pending on 3rd generation wireless spectrum, ITU Secy.-Gen. Yoshio Utsumi warned in Washington Wed. that U.S. “is at this moment left aside from the world trend” of 3G licensing. “Unfortunately, the U.S. doesn’t have secure frequencies for this service,” he said at PCIA news conference. “The development of 3G in the U.S. market is very, very crucial for the success of these services.” In separate interview, Utsumi told us he believed World Telecom Standardization Assembly (WTSA) in Montreal last fall and March IP telephony forum in Geneva had helped narrow “conception gap” on certain Internet policy issues between U.S. and other countries. In arena of ITU reform, he said recommendation would be made to ITU Council next month to create Satellite Backlog Action Group, nicknamed SATBAG, to focus on solution to satellite filings challenge that has faced ITU for years.

CTIA asked President Bush to give Commerce Secy. Donald Evans “sufficient time” to complete 3rd-generation wireless spectrum assessment by delaying pending auctions. Govt. has been working toward July 31 deadline that FCC faces for spectrum allocation decision under timelines set out by President Clinton in executive memorandum last Oct. Request to Bush came as speculation has grown that Commerce Dept. wouldn’t necessarily be prepared to craft 3G decisions within tight schedule of executive memorandum anyway. Last week, House Telecom Subcommittee Chmn. Upton (R- Mich.) said panel’s hearings on issue were delayed because department wasn’t ready to unveil its “game plan” (CD May 14 p1). “Previous Administrations ignored this [3G] issue until it finally reached crisis proportions, leaving your Administration to inherit the crisis and make the tough decisions,” CTIA wrote Bush.