FCC ESTABLISHES NEW RULES FOR MVDDS, DESPITE DBS OPPOSITION

SBCA is “exploring options” with engineers and lawyers following release, official told us. He said it wasn’t “favorable decision. We don’t know what to think about it.” Northpoint, Pegasus, Satellite Receivers and MDS America are among companies that have proposed service for new MVDDS band.

MVDDS operators must site and design transmitting system to avoid causing harmful interference to DBS subscribers, order said. MVDDS must provide DBS licensees with at least 90 days’ notice before starting service in area. Interference limits in new rules apply all existing DBS customers 30 days after MVDDS provider notifies DBS carriers that it intends to construct tower. If MVDDS signal degrades, obstructs or repeatedly interrupts DBS signal under clear sky conditions, MVDDS operations immediately must take corrective action or stop operation until problem is corrected.

Northpoint said its tests indicated there wouldn’t be interference, but SBCA official told us order placed “burden” on DBS industry to protect customers. He said “safety valve” clause that allowed FCC to readjust power limits when there was “anomalous situation and interference levels increase dramatically to point it has ‘detrimental impact’ on DBS service are extremely burdensome.” FCC also limited its research to 3 satellites and didn’t take into account 3 wing satellites or service outside top 32 markets, SBCA official said. Chmn. Powell and Comr. Abernathy in joint statement called that contention “inaccurate.”

Commission also established technical rules to protect status of incumbent Broadcast Satellite Service (BSS) providers and new nongeostationary satellite fixed satellite service (NGSO FSS) operators. Rules don’t specify equipment configuration that must be used within MVDDS service. Operations are designed to be technologically neutral, Commission said. MVDDS must limit Power Flux Density (PFD) and stations will be required to locate sufficient distance from preexisting NGSO FSS receivers. MVDDS licensees should have flexibility to determine services to offer in 12 GHz band as well as flexibility to modify service offerings as customer demand evolves, it said. Channel users in adjacent bands must develop their own sharing and protection agreements based upon design and architecture of their systems, FCC said.

Must-carry won’t apply to new MVDDS operators in local areas, Commission said. It said that since MVDDS didn’t have to carry video programming it wasn’t necessary to make must- carry mandatory. FCC said that in-region cable operators whose subscribers made up at least 35% of multichannel households weren’t eligible for licenses. DBS operators will be able to apply for MVDDS licenses, FCC said: “Open eligibility won’t lead to substantial competitive harm and exclusion isn’t warranted.” DBS providers may be able to use MVDDS as complementary terrestrial application to accommodate demand for local TV, but it can’t be used to avoid must-carry responsibilities, FCC said.

Network nonduplication, syndicated exclusivity, sports blackout and leased access rules weren’t imposed on MVDDS operators either. Commission said it was premature to impose standard on new service because it was unclear whether MVDDS would even be used to transmit superstations or other distant TV stations. Existing must-carry rules don’t apply to cable or satellite operators with fewer than 1,000 customers. FCC feels it will be in better position to examine issue after service starts. In meantime, private contractual agreements and necessity for retransmission consent within relevant protected zone will protect broadcasters.

Geographic licensing scheme is being used to support ubiquitous service, Commission said. Site-based licensing would be resource-intensive for applicants and Commission, it said. FCC decided to use Component Economic Areas (CEAs) instead of Designated Market Areas (DMAs) because Nielsen, which owns right to DMA listings, didn’t give Commission blanket license to use DMA listing for MVDDS. Fixed services generally are deployed on localized basis so smaller CEA service areas better track deployment, it said. CEAs also will encourage rapid service deployment to less populated and rural areas, FCC said. MVDDS won’t be prohibited from transferring licenses, it said, because benefits of allowing transfers outweigh risk of unjust enrichment.

Auctions are required in CEAs where mutually exclusive applications are filed, FCC said. Geographic licensing regime will allow companies to fit service to meet needs of area and coordinate spectrum usage based upon changing market conditions, it said. Bidding credits were established to help small businesses: Very small businesses (average gross revenue [AGR] of under $3 million for previous 3 years) will receive 35% credit, small business ($15 million AGR) 25%, entrepreneur ($40 million), 15%.

CEAs will help increase bidders and opportunities because smaller areas will require lower minimum investment, Commission said. For those that seek regional or national footprint such as Northpoint, CEAs may be aggregated to create larger network, it said. Initial license period is 10 years. Commission declined to adopt set-aside of MVDDS spectrum or special credits requested by DBS operators.

Powell-Abernathy statement said Northpoint issue “was extremely difficult” to resolve, but final policy “appropriately balances the competing interests while allowing an important new service to move forward.” Northpoint was praised for efforts, but in end law wouldn’t allow it to receive spectrum without auction, Powell and Abernathy said. Comr. Copps, who dissented in part, said Commission should have established “more universal meaning” of harmful interference. He disagreed with eligibility and auction requirement. “We should have limited auction participation to entities that would provide new competition in MVDDS market,” Copps said. He also said must-carry rules should have been imposed.

MVDDS is “placing too much of the burden on the backs” of DBS operators, Comr. Martin said. “The arbitrary nature” of technical requirements “are both disappointing and troubling.” New technical rules are contrary to law, he said, and order “sanctions the severe disruption of DBS service for an untold number of consumers when some additional reasonable limits could have been adopted.” Northpoint had no comment.