Wireless Spectrum Auctions

LAS VEGAS -- Wireless industry pitches for more spectrum were almost as prevalent at NTIA convention here as wireless calls themselves. Customer demand for wireless spectrum will exceed supply by 2004 or 2005, Verizon Wireless Vp-Legal Mark Tuller said, and industry will need twice as much spectrum by 2010. He said increasing spectrum efficiency and technology couldn’t meet demand, and key sources were likely to be military spectrum (1755- 1850 MHz) and 2 GHz bands used by MMDS and ITFS wireless communications and educational TV services.

Australia Communications Authority (ACA) raised $576.8 million from 3rd-generation wireless auction that closed Thurs., with Telstra making highest overall bids of $149 million. Australian govt. said Telstra won 15 MHz of paired spectrum in all capital cities, 10 MHz paired spectrum in regional areas and 5 MHz of unpaired spectrum in all capital cities. Other successful bidders included 3G Investments, Hutchison Telecommunications Australia, Optus Mobile, Vodafone Pacific, CKW Wireless. Australian officials said licenses allow successful bidders to determine technology that will be used and that winners have committed to using Wideband CDMA and cdma2000. ACA Chmn. Tony Shaw said winning bidders include new market entrant CKW.

LAS VEGAS - Govt. should consider rebates or other restructuring of spectrum auction fees in order to create available capital to continue buildout of wireless networks, Motorola CEO Chris Galvin said in keynote session at CTIA convention here Wed. Galvin said rebates could be as large as 50% of auction fees paid by wireless carriers, and govt. also should restructure way future spectrum was allocated: “As any new technology is created, the rules and regulations need to be modified.”

LAS VEGAS -- Key to wireless Internet success is “total package” of consumer value, not whether system is wide area protocol (WAP) based or i-mode or any other technology, said Takeshi Natsuno, exec. dir.-gateway business for NTT DoCoMo. NTT already has 21 million wireless Internet users in Japan, generating average of $20 revenue (plus voice fees) per month, with more than 800 companies providing more than 40,000 Web sites of Internet content adapted for wireless devices, he told CTIA convention here. Despite talk of delivery modes, other speakers agreed content was key for new service.

LAS VEGAS -- Several Latin American regulators, speaking on prelude to CTIA Wireless 2001 show here, urged greater regional harmonization of wireless rules and frequency selections as policymakers wrestled with issues such as how to bolster universal service and roll out 3G. “We have not achieved total integration in Latin America to facilitate communications,” Argentina’s Communications Secy. Henoch Aguiar said, noting that in some cases it’s more expensive to connect between 2 countries in region than with callers elsewhere.

In long-awaited move to free up more spectrum for advanced wireless services, FCC approved notice of proposed rulemaking (NPRM) Fri. that begins process of tapping Ch. 52-59 in 700 MHz band for auction. Lower channels in that band must be auctioned before Sept. 30, 2002, one year after Sept. 12 auction for Ch. 60- 69. Commission approved item, with Comr. Tristani dissenting in part on voluntary band-clearing proposals to help relocate incumbent broadcasters ahead of 2006 digital TV deadline. FCC didn’t address budget blueprint by President Bush that would delay several wireless auctions, including proposed move of Ch. 52-59 auction until 2006.

U.S. Appeals Court, D.C., struggled Thurs. with how to balance bankruptcy law against FCC’s regulatory role to cancel PCS licenses of NextWave for missed payment. Before crammed courtroom, NextWave attorney Theodore Olson repeatedly cited section of bankruptcy code that bars any agencies from revoking licenses solely because licensee is bankrupt or hasn’t paid debt that is dischargeable. In one hour and 15 min. of oral argument, which ran beyond allotted time of 30 min., judges wrestled with how to reconcile Commission’s regulatory obligations to license spectrum against its role as creditor in bankruptcy proceedings. Judges David Tatel and David Sentelle pressed FCC attorney Daniel Armstrong on whether agency was asking court to read regulatory exception into Bankruptcy Code provision that bars license cancellation under some bankruptcy scenarios. “How would we do that? Congress didn’t write one,” Tatel said.

FCC rulemaking on Multichannel Video Distribution & Data Services (MVDDS)continues to stir debate in comments to Commission (CD March 14 p3). Startup Skybridge said it believed MVDDS systems such as one proposed by Northpoint were “grossly discriminatory against NGSO FSS systems that it plans to use. It said rulemaking “accepts practically every unsupported and contradictory assertion proffered” by MVDDS supporters while “ignoring the clearly documented and critical needs” of NGSO-FSS operators. EchoStar said conclusion by FCC on spectrum sharing was wrong and agency should examine its own history to make determination that “ubiquitous satellite service and ubiquitous terrestrial” cannot share same frequencies. Northpoint motives are opportunistic and form of unjust enrichment, EchoStar said: “There is no valid reason other than enrichment hopes” why Northpoint needs to operate service in DBS band (12.2-12.7 GHz). EchoStar said Northpoint could best service public interest by purchasing LMDS or wireless cable license, either at auction or in secondary market. DirecTV said rulemaking jeopardizes DBS in way that’s unfathomable. Idea that Northpoint will operate in DBS downlink band as good citizen without causing interference is untenable, it said. DirecTV said Northpoint’s proposed MVDDS was nothing more than fixed wireless service offering video and broadband capabilities and would be better off in another frequency band such as 2.5 GHz (MMDS), 24 GHz (DEMS), 28 GHz (LMDS) or 39 GHz. Meanwhile, Minority Media & Telecom Council (MMTC) backed Northpoint. MMTC said Northpoint’s service would aid minorities and rural residents while “increasing the diversity of voices available to all citizens.” Satellite Bcstg. & Communications Assn. (SBCA) and Boeing said they will challenge rulemaking launched during term of Chmn. William Kennard with petitions for reconsideration. Both plan to file next week.

U.S. carriers outlined litany of concerns to FCC International Bureau Wed. on challenges they face when entering foreign telecom markets, with several companies stressing lack of enforcement in countries that have deregulation measures. Bureau held forum to solicit information it will use to supplement its 2000 edition of International Markets Report. Western Wireless International Pres. Brad Horwitz told forum that company had focused on foreign markets where cost of entry to obtain licenses was low, through processes such as comparative hearings rather than auctions. Having entered markets, process of obtaining interconnection is one of largest challenges, Horwitz said. On regulatory side, company faces challenge of lack of enforcement powers by agencies in countries where incumbent telco may be “the largest hard currency earner,” he said. “You make progress but it’s in small steps -- circuit by circuit.” Joanna McIntosh, AT&T vp-international affairs, told International Bureau that it would be helpful to have U.S. regulators link telecom issues discussed with foreign counterparts to market access issues. “There is no sense talking about joint statements on e-commerce if there is no infrastructure to take you there,” she said. Dan Gonzalez of XO Communications outlined gamut of market entry requirements, with U.K., Germany and Netherlands tending toward more flexible regulations. Countries such as Belgium and France are on more restrictive end of spectrum. Lawrence Spiwak, pres.-Phoenix Center for Advanced Legal & Economic Policy Studies, said “fundamental problem” was that foreign regulators frequently looked to example of U.S. telecom policy for guidance. “The U.S. is not setting a good example,” he said.

Four carriers filed petitions to deny or delay awards of certain FCC C-block licenses won in $17 billion auction of 422 licenses in Jan. Despite some expectation that petitions to deny would focus on financial backing of designated entities by larger carriers, only one challenge centers on these arrangements. Three others urge FCC to first allow courts or agency itself to make final decisions on licenses previously cancelled for non-payment. NextWave filed petition asking agency to delay spectrum awards until U.S. Court of Appeals, D.C., issues opinion on its licenses cancelled for non-payment and subject of lengthy court proceedings. Notable absence among petitioners was Allegheny Communications, which has been vocal critic of arrangements such as Cingular’s 85% stake in designated entity Salmon PCS. Allegheny, which was widely expected to file petition to deny, instead struck $15 million deal with AT&T Wireless Fri. for PCS licenses in Tex., making challenge unnecessary because company will receive spectrum it sought, attorney said. Besides NextWave, carriers that filed petitions were 21st Century Telesis, TPS Utilicom and Southern Communications Systems.