House Telecom Subcommittee Vice Chmn. Stearns (R-Fla.) introduced bill late Wed. that would compel FCC to return remaining deposits of bidders in NextWave re-auction. In March, Commission returned 85% of deposits from re-auction but concluded winning bidders such as Verizon Wireless should continue for now to be held to nearly $16 billion in potential auction obligations until pending Supreme Court review played out (CD March 28 p1). Stearns bill would: (1) Require FCC within 15 days of passage of legislation to return full amount of re-auction deposits “for licenses that the Commission has not by that date delivered to such winning bidders.” That would amount to $400 million for 13 winning bidders. (2) Let each bidder wipe out its license rights under NextWave re-auction so it would be free of all remaining payment obligations. Bill’s co-sponsors include Reps. Boucher (D-Va.), Terry (R-Neb.), Pickering (R-Miss.), Towns (D-N.Y.), Rush (D-Ill.). “This is a matter of fairness,” Stearns said. “The successful bidders on Auction No. 35 have not received the spectrum they bid on and they have not received their total deposits back.” Verizon Wireless sued U.S. in April to obtain remaining deposit and sought ruling from U.S. Court of Federal Claims that auction “contract” for disputed licenses was void (CD April 9 p1). Lawsuit, also filed in U.S. Appeals Court, D.C., centered on $8.4 billion in auction prices for which Verizon bid in Jan. 2001 and for which it technically still would be liable should FCC prevail in Supreme Court case and be able to return licenses from NextWave to re-auction winners. Supreme Court earlier this year granted FCC request that it hear challenge to D.C. Circuit ruling that overturned agency decision to cancel NextWave’s licenses for missed payment. Verizon has argued that it has been harmed by its continuing debt obligation to FCC and that overhang from bid prices has affected its credit rating and ability to borrow. Carriers have contended that even if high court reverses D.C. Circuit, there’s likely to be further litigation on remand there. “The result is that there is not likely to be a final resolution of the status of the NextWave licenses, and the FCC therefore will not be in a position to deliver licenses to the winners of Auction No. 35, until 3 or more years from the time the auction was concluded,” bill said. It said FCC position was that winning bidders remained obligated to pay full amount of their bids on 10 days’ notice if Commission established its right in court to deliver those licenses. PCS licenses were returned to NextWave following D.C. Circuit decision last year. Several re-auction winners, including representatives of Salmon PCS, VoiceStream, NextWave and Verizon Wireless, recently met with staff of Sen. Stevens (R- Alaska) on possibilities of settlement in case. Settlement agreement last year reached by U.S., re-auction winners and NextWave expired Dec. 31 after Congress failed to pass legislation backing it up.
Wireless Spectrum Auctions
The FCC manages and licenses the electromagnetic spectrum used by wireless, broadcast, satellite and other telecommunications services for government and commercial users. This activity includes organizing specific telecommunications modes to only use specific frequencies and maintaining the licensing systems for each frequency such that communications services and devices using different bands receive as little interference as possible.
What are spectrum auctions?
The FCC will periodically hold auctions of unused or newly available spectrum frequencies, in which potential licensees can bid to acquire the rights to use a specific frequency for a specific purpose. As an example, over the last few years the U.S. government has conducted periodic auctions of different GHz bands to support the growth of 5G services.
Industrial Telecom Assn. (ITA) asked FCC for additional 90 days to file reply comments on notice of proposed rulemaking (NPRM) soliciting feedback on ways to ameliorate public safety interference at 800 MHz. “The significant impact on the public safety, private wireless and communications industries as a result of this proceeding, as well as the volume of comments, is such that an extension of time is warranted,” ITA told FCC. It also cited substantial volume of initial comments (nearly 200) that NPRM had generated so far. Among options on which Commission has solicited comments is plan submitted by Nextel last fall that would reconfigure systems at 700, 800 and 900 MHz and 2.1 GHz, including additional spectrum for public safety. American Mobile Telecom Assn. (AMTA) said that while FCC ultimately might decide rebanding was needed to address interference, existing record wasn’t conclusive on that point. AMTA Pres. Alan Shark said his group thought that “we aren’t doing our members a service by coming up with a proposal when there is so much uncertainty about the technical underpinnings.” While much attention in proceeding has focused on Nextel White Paper last fall, Shark told us: “It’s the wrong thing to drive this.” Shark, who counts Nextel among AMTA’s members, said he would like to see 7 issues drive discussion: (1) Extent to which that was immediate problem and potential fixes to address interference at 800 MHz should address not just long-term ramifications but must “recognize that this is happening now.” (2) Need for “voluntary mediation” when public safety or private wireless enterprises find they can’t work out solution with interfering party. Neutral, 3rd parties could be part of pool in such cases that could make recommendations on fixes, Shark said. (3) Some reshuffling at 800 MHz. “Under any rebanding proposal, we need to pull something out of 800 MHz to come up with greenspace to make it happen,” he said, and process would have to account for extent to which equipment moves in that band would need to be done in “orderly” manner. (4) Consideration of moving Nextel out of 800 MHz. Shark said that while commercial wireless operators had expressed concern about part of Nextel proposal that would give carrier spectrum at 2.1 GHz without auction, he didn’t have problem with it. “It would leave some greenspace and take out some incredible congestion.” (5) Examination of filtering aspects of new equipment to address radiofrequency interference “on the front end.” (6) Longer term strategy that could include moving all of public safety at 700 MHz, although several conditions would be needed. Key would be to have date certain by which analog broadcasters would vacate spectrum as part of DTV transition, he said. Another condition would be postponement of current date for 700 MHz auction, which AMTA supports, Shark said. Another caveat would be that relocated operators would be given assurances equipment would be available for them in new band. (7) Guarantees of reimbursement for relocating incumbents. Shark said there was need for congressionally mandated national emergency telecom that could address that issue.
Consensus is building that Bush Administration needs to articulate national broadband strategy, but White House is getting varied signals on just what that policy should look like. Those contrasts were on display Tues. at forum sponsored by Computer & Communications Industry Assn. (CCIA). Twelve representatives of IT, content and telecom industries joined with FCC official at George Washington U. (GWU) Va. campus in Ashburn to debate broadband deployment and copyright protection, with many echoing IBM E-Commerce Program Dir. Greg Waddell: “By the end of ‘02, the Administration should have a clear 10-year vision for wired and wireless infrastructures [for broadband] and adopt them as part of an economic development strategy.” Progressive Policy Institute Vp Robert Atkinson agreed, although he told us after session that Bush Administration “doesn’t have the ideological ability” to craft broadband strategy that didn’t rely solely on free-market solutions. Several panelists said wireless would play critical role in broadband deployment, and with its management of spectrum, federal govt. would be key player in that rollout.
OPASTCO said bill (S-2075) by Sen. Baucus (D-Mont.) could improve ability of small wireless carriers to participate in competitive auctions if “significantly amended.” Bill would require FCC to award at least one license to rural service area “or similarly sized geographic area” when more than one license in single block of spectrum was available. OPASTCO Pres. John Rose said Mon. in letter to Baucus that while bill promotes small company access to spectrum, it contains loophole that could allow large carriers to own “more than 25% of an auction participant who is a small business, rural telephone company, or a minority or woman-owned business.” OPASTCO recommends Baucus insert requirement in bill that would force FCC to adopt methods preventing such ownership by large companies. Association also would like changes in bill to create 2-phase licensing process similar to what FCC uses for cellular unserved markets. Rose said process would require FCC to determine whether wireless service has been deployed in rural areas during phase I before allowing carrier to deploy in larger market area during phase II.
Citing new data from Telcordia Technologies, Cingular Wireless and Sprint PCS told FCC Mon. that ancillary terrestrial usage of mobile satellite service (MSS) spectrum would eat up capacity of satellite uplink. Carriers said 90- page technical paper they commissioned from Telcordia researcher indicated even “modest” ancillary terrestrial networks “would pose a substantial risk of rendering the satellite incapable of providing any MSS services, including in remote and rural areas.” Sprint and Cingular said only “reasonable conclusion” to be drawn from proposal of MSS licensees is that they don’t plan to share spectrum between ancillary terrestrial component (ATC) and MSS use, but plan to separate MSS band into one segment for ATC and another for MSS operations. Wireless carriers filed late comments to FCC on possibility of using MSS spectrum for terrestrial wireless operations, either by MSS licensees or others. FCC last Aug. adopted notice of proposed rulemaking in response to request by New ICO to develop terrestrial spectrum using bands allocated to MSS (CD April 4/2000 p1). Data from wireless carriers comes as MSS licensees such as Globalstar are urging FCC to allow ATC usage in spectrum as means of keeping their operations financially viable.
TV stations belonging to Spectrum Clearing Alliance have carefully avoided any appearance of “collusion” in violation of antitrust laws, said official of group that’s fighting effort by CTIA to gain 6th delay from FCC in upper 700 MHz auction. In fact, he said, Alliance first approached Dept. of Justice (DoJ) last Dec. to inform agency of its spectrum- clearing efforts and was “working closely with DoJ to ensure that the activities of the Alliance are in full compliance with any relevant antitrust laws,” it said in recent FCC filing. As part of those contacts, Alliance submitted business review letter to Justice on Alliance’s structure. Auction is scheduled June 19, but House last week voted to order FCC to postpone it indefinitely (CD May 8 p1). CTIA told FCC in filing last month that Spectrum Clearing Alliance could raise antitrust concerns. CTIA said “concerted action by a combination of licensees who clearly exercise market power over the disposition of the upper 700 MHz band spectrum” raised antitrust issues and created more uncertainty in band. Spectrum Exchange countered in subsequent filing that CTIA’s effort to keep 700 MHz band “off the market” could be viewed as similar concerted action in wireless industry that would trip antitrust concerns.
Council Tree Communications urged FCC to craft compromise on 700 MHz auctions putting all or part of lower band licenses in Auction 44 up for bidding in time to meet statutory deadline of Sept. 30. “If the Commission believes that some delay of Auction 31 [upper band] is warranted, it should not also forestall opportunities for smaller bidders in Auction 44,” Council Tree told FCC last week in ex parte filing. At our deadline, Commission hadn’t issued decision on CTIA request to delay both upper and lower band auctions now set for June 19. CTIA filed application for review of Wireless Bureau decision to keep auction dates intact. House last week passed, under suspension of rules, legislation sponsored by Commerce Committee Chmn. Tauzin (R-La.) that would delay 700 MHz auction indefinitely. Sens. Ensign (R- Nev.) and Kerry (D-Mass.) are sponsoring similar legislation in Senate, where Sen. Stevens (R-Alaska) last week introduced contravening bill that would compel FCC to hold auctions as scheduled. “The Commission should not let Auction 44 follow the path of Auction 31,” Council Tree told FCC last week. “The Commission must make clear that Auction 44 will proceed without material delay.” Council Tree, which was among backers of NextWave re-auction bidder Alaska Native Wireless, told FCC that many smaller bidders might be interested in lower 700 MHz band -- 12 MHz blocks for service in metropolitan statistical areas and rural service areas. “There are 734 such licenses to be offered in Auction 44, representing only 12 MHz of the total 78 MHz allocated for commercial use in the 700 MHz band,” company said. But carrier still backed 30-day delay for lower band auction, including short-form filing, upfront payments, auction date. Additional time would “permit prospective bidders to regroup in the wake of the recent material scheduling uncertainty,” Council Tree said. It argued that because lower band of 700 MHz was more fragmented, that spectrum was not as useful for 3G services that larger national carriers were planning. Rural Telecommunications Group (RTG) told FCC Chmn. Powell last week in letter that competing bills in Senate had that chamber “deadlocked.” RTG said: “Compromise is unlikely in the time that the statutory deadline must be met by the Commission. If the Commission were to take its action on the basis of conflicting bills, the intent of Congress reflected in enacted legislation could easily and repeatedly be contravened, and the work of the agency and this Administration would become meaningless,” RTG said.
VoiceStream filed motion with U.S. Appeals Court, D.C., last week asking to intervene in lawsuit filed by Verizon Wireless against FCC on bid obligations and refunds from NextWave re-auction. In March, Verizon Wireless challenged in D.C. Circuit FCC order that returned 85% of NextWave re- auction deposit and covered agency’s refusal to release carrier from its obligation to pay “on 10 days’ notice” $8.4 billion for licenses won in NextWave re-auction if Commission prevailed in litigation now pending before U.S. Supreme Court. Last year, D.C. Circuit reversed FCC decision to cancel NextWave’s licenses for missed payment, leading to return of that spectrum to bankrupt C-block bidder. Ruling had result of overturning re-auction of NextWave licenses, which generated nearly $16 billion from bidders such as Verizon Wireless, Cingular Wireless, Salmon PCS. VoiceStream said in filing that Commission had rejected Verizon argument that it should be allowed to avoid its obligation to pay full amount of its winning bids for licenses of NextWave and Urban-Comm, “regardless of the outcome of the pending litigation.” VoiceStream said it was high bidder for spectrum formerly licensed to NextWave and Urban-Comm and had joined Verizon Wireless and other re-auction winners at FCC in requesting refund of their down payments. “As such, VoiceStream will be adversely affected if the court does not modify or set aside the FCC’s order,” carrier said. In pending Supreme Court case, VoiceStream filed intervening brief on side of FCC along with Arctic Slope Regional Corp. and Council Tree Communications. Those carriers argued in brief last week that D.C. Circuit “erroneously” had allowed U.S. Bankruptcy Code to trump FCC’s “regulatory mission” in NextWave case.
Alaska Sen. Stevens, ranking GOP member of Senate Appropriations Committee, introduced bill that would compel FCC to hold 700 MHz auctions as planned June 19. Bill, filed late Wed., complicates legislative picture on auctions and comes as FCC is in midst of deciding whether to grant CTIA request to delay bidding date. Stevens’s bill counters one sponsored by House Commerce Committee Chmn. Tauzin (R-La.) that passed House under suspension of rules late Tues. (CD May 8 p1) and would delay auctions indefinitely. Besides requiring FCC to keep auction date, Stevens bill would spell out that Commission alone -- not Congress -- should determine future auction deadlines. Industry attention now turns to how FCC will interpret conflicting signals from Capitol Hill and whether legislative compromise could be reached on 700 MHz deadline.
American U. in Washington plans to retire about half of its landline phones in fall and shut down campus Ethernet connections as it shifts to wireless LAN to carry voice calls, data and Internet services. While not new technology, wireless LANs -- also known by their specification number 802.11(b) or slang Wi-Fi -- have potential to be replacement technology for conventional voice and data connections and, unlike those traditional landline counterparts, it operates almost entirely without regulation. Industry itself isn’t subject to regulatory scrutiny other than requirement that antennas and routers meet standard noninterference requirements of any electronic communications device. Even airwaves services use are unlicensed, meaning entrepreneur can set up handful of football-sized $75 antenna arrays and service multiple dwelling unit (MDU) or office building with broadband tapped from single T-1 line.