FCC TO TAKE UP MDS AND ITFS RULE CHANGES THURS.

Several industry sources said the FCC item up for action Thurs. wasn’t expected to include tentative conclusions on policy areas such as whether ITFS operators should be able to sell their licenses. It also is expected to ask a much wider range of open questions about the future regulation of that spectrum, including how well past regulatory regimes had worked. The item is expected to raise many questions that could lead down different regulatory paths depending on the feedback received, a source said. Among the possibilities getting attention is whether ITFS operators should be able sell their licenses. If adopted, that would mark a big shift for those licensees, which now can undertake leasing arrangements of up to 15 years with companies such as Sprint and WorldCom. In the early 1980s, the FCC adopted rule changes for MDS and ITFS, including allowing ITFS licensees to lease excess capacity to commercial operators while keeping some spectrum for educational programming. In 1998, the Commission cleared the way for MDS and ITFS operators to offer digital, 2-way services and it recently allowed mobile operations. ITFS licensees operating digital systems had to keep at least 5% of their licensed spectrum for educational usage. The original ITFS allocation was to nonprofit groups and educators for one-way analog broadcasting of educational TV programming.

An industry source said the question whether ITFS operators should be able to sell would be controversial, particularly because an acquisition of such a license by a commercial operator would take that piece of spectrum permanently outside the realm of nonprofits and educators. Even within the ITFS community, some operators are expected to declare they would like to generate extra cash by selling the licenses, while a larger group viewed the spectrum as akin to national parkland set aside for educational purposes, several sources said. “If you let people sell it over time, it goes away,” a source said.

Several sources said the FCC had a stepped-up interest in maximizing the use of ITFS bands in line with the spectrum ideas raised in last fall’s Spectrum Policy Task Force report, which made recommendations to the FCC on more flexible spectrum use. Last year, as part of the Commission’s reorganization, primary responsibility for MDS and ITFS licensing was moved to the Wireless Breau from the former Mass Media Bureau. The spectrum held by ITFS licensees -- twenty 6 MHz licenses -- makes it attractive for more flexible options, the source said. If the FCC allowed ITFS operators to sell, “there will be pressure on people to sell their birthright and then regret it,” the source said. “If someone can lease 95% of the capacity for 15 years, that already permits a substantial secondary market to develop.”

The FCC plans to address a White Paper submitted last fall by the Wireless Communications Assn., National ITFS Assn. and Catholic TV Network that said that with more flexible rules, MDS and ITFS systems could provide the same type of high-speed wireless broadband service as Wi-Fi but on a ubiquitous, rather than hot-spot, basis. The groups said 2nd-generation technology that didn’t rely on a line-of-sight pathway for 2-way data operations was hampered by a “broadcast-like” interference analysis, application and licensing process that placed a substantial burden on licensees. They sought a new band plan for 2.5 GHz that would protect the one-way, high-power operations that some ITFS licensees would continue to use while allowing 2-way advanced services to operate without causing interference. The proposal also would do away with a 40-year-old interleaving channelization plan. It said the FCC’s 2-way licensing decision 4 years ago allowed the routing licensing of MDS and ItFS stations for 2-way broadband video, voice and data services. But it said the Commission still required an applicant to undertake a highly restrictive interference analysis.

WCA, the National ITFS Assn. and the Catholic TV Network recently met with FCC staff to stress what they called the “important public interest benefits” that would come from adoption of the proposed rule changes “and the strong industry consensus that has developed in support of the filing.” They cited the “benefits” of a market-by-market approach for shifting from the current band plan to the one they were proposing and the extent to which all licensees retained “the amount of spectrum to which they are currently entitled.” The Catholic TV Network told the FCC in a filing this week that ITFS was one of the “few self-supporting services” in the Brooklyn diocese. Msgr. Michael Dempsey of the network said all lease income in that diocese went exclusively to the ITFS service, as was the case with the rest of the network.