NTIA Dir. Nancy Victory told FCBA policy forum late Tues. that among themes that emerged at recent NTIA spectrum summit were need to address length and complexity of regulatory proceedings, which in some cases were seen as too “reactive.” In other areas, discussion turned to extent that innovative technology in receivers could maximize spectrum use by reducing size of guard bands and channel spacing, she said. “Not surprisingly, there’s a sliding scale between cost and efficiency,” she said. One issue that “surprised me most” at summit was interest in govt. and commercial users in exploring ways to use same system, Victory said. “Obviously this won’t work for all uses,” she said. “But if we can eliminate some redundant systems we can clearly increase efficiency and open up some spectrum for new services.” Among themes from summit that Victory said she expected would figure prominently in NTIA’s spectrum management agenda was “need for teamwork to replace turf wars. Spectrum needs are too important to be undermined by internecine squabbling between and among and within branches of government.” Victory said she planned to talk with FCC Chmn. Powell and David Gross, U.S. deputy asst. secy. of state for international communications, on developing action plan that would “facilitate the efficient functioning of the nation’s spectrum management team at home and abroad.” Victory also said: “We need to make a concerted effort to eliminate unnecessary government micromanaging of spectrum uses. This means a fresh look at legacy rules and restrictions to assess their ability to accommodate emerging technologies or spectrum needs.” In separate panel discussion moderated by Bryan Tramont, senior legal adviser to FCC Comr. Abernathy, Cingular Vp-Federal Relations Brian Fontes expressed dismay at recent Wireless Bureau decision to keep 700 MHz auction date intact. Bureau last week turned down CTIA request to delay June 19 start. Decision by bureau amounted to “no, we will do this auction come hell or high water,” Fontes said, noting that FCC had notice of proposed rulemaking on potentially reconfiguring 800 MHz band that could be affected by decisions in 700 MHz. Nextel Vp-Chief Regulatory Officer Robert Foosaner on separate panel said CTIA had set up committees on 800 MHz NPRM stemming in part from White Paper on band reconfiguration floated by Nextel last fall. Seven other associations have set up similar committees and 5 alternative plans are known to be in works other than Nextel’s original paper, he said: “Spectrum allocation… is about the most difficult decision that faces policymakers at the FCC.” Nextel proposal attempts to address “in a hard and concrete way with $500 million on the table” issue of interference in that band.
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.
Private wireless operators asked FCC Chmn. Powell Tues. to delay June 19 start of 700 MHz auction, citing proceeding at Commission to eliminate interference at 800 MHz. FCC Wireless Bureau turned down CTIA request last week to delay auction for upper and lower bands at 700 MHz (CD April 11 p1). Letter by 8 representatives of private land mobile radio services (PLMRS) cited comment period that Commission had opened for notice of proposed rulemaking that addressed interference experienced by public safety operators at 800 MHz. Private wireless community said several proposals “under preliminary discussion” involved retuning some incumbents 800 MHz licensees to 700 MHz band, including licenses covered by Ch. 60-69 auction. “While it is premature to assume that one of these proposals is the best course of action available, or the course of action the Commission ultimately will follow, it is equally premature to eliminate such proposals from consideration by going forward with the auctions on the scheduled date,” letter said. Groups said comment period for NPRM ends May 6, 2 days before short forms from auction participants are due at Commission. “It would be a disservice to thousands of 800 MHz incumbent licensees, and to the nation’s public safety needs, to allow the 700 MHz auction to proceed after interested PLMRS parties have expended extensive time and resources to devise a workable solution dependent on the availability of that spectrum,” letter said. Filing was signed by Aeronautical Radio Inc., American Assn. of Railroads, Forest Industries Telecommunications, Industrial Telecommunications Assn., frequency coordinator MRFAC, National Assn. of Mfrs., Small Business in Telecommunications, United Telecom Council. Groups said FCC appeared “eager to consider any and all reasonable solutions to 800 MHz public safety interference.” Saying that that was among themes raised at recent NTIA Spectrum Summit, letter said holding auction on current timeline could compromise “the Commission’s ability to meet that imperative.”
PGTV’s Total.TV, prospective bidder in 700 MHz auction that bills itself as potential new competitor to satellite and cable TV, is latest to ask FCC to delay June 19 auction. FCC Wireless Bureau last week turned down CTIA request for delay (CD April 11 p 1). Newly formed Total.TV told FCC Chmn. Powell in letter Mon. that it supported “brief delay” in auction date, saying it would increase competition in provision of video services and bolster DTV rollout. Total.TV said company was created by Phil Goldman, one of founders of WebTV. It said it would like to use all of 78 MHz available in upper and lower bands of 700 MHz auctions. Under plan that bears similarities to NorthPoint proposal, though at different frequency, company said it proposed to use spectrum to create multichannel video service that would compete with existing multichannel video programming distributors (MVPDs). “The availability of the 700 MHz spectrum offers a once-in-a-generation opportunity to promote new technologies, while providing needed competition between and among MVPDs, as well as fostering the digital television transition,” letter said. PGTV attorney Henry Goldberg said in letter that Total.TV planned to: (1) Deliver multichannel TV program networks using over-air digital terrestrial transmission on 700 MHz frequencies, “which are already receivable by digital TV sets.” (2) Require neither satellite dish nor cable installation. (3) Offer national programming with access to all free local broadcast channels plus local pay-per-view. (4) Price service aggressively compared with satellite and cable MVPD services. (5) Use less expensive set-top box, particularly for multiple receiver homes, and eventually eliminate need for device. Filing Mon. marked first time that Total.TV had publicly disclosed plans for service. It also is seeking changes in rules for 700 MHz spectrum that would encourage participation by businesses other than wireless voice and data service providers, it said. Rules for upper band of 700 MHz allow wide array of wireless services, including broadcast type, but Total.TV said that while such services would be allowed in theory, they must be consistent with technical rules that impose 1 kw power limit per transmitter. “It is impossible to deploy a competitively viable multichannel video programming service operating under such a power constraint,” company said. Service rules for lower band of 700 MHz, by comparison, have 50 kw limit. Such differences make it hard for potential MVPD competitor “to bid in both auctions in order to acquire sufficient blocks of spectrum for a competitive multichannel video service,” Total.TV said. “While it is imperative to protect the incumbent TV broadcasters and future public safety users from harmful interference, the 1 kw power limit is not necessary for either purpose.” To allow bidders to obtain blocks of spectrum large enough for MVPD services, Total.TV asked FCC to consider single auction for both bands with package bidding.
Wireless industry is mulling options now that FCC Wireless Bureau decision has turned down CTIA request to delay 700 MHz auction set for June 19 (CD April 11 p1). Several sources said that because decision was by bureau, rather than FCC, door was left open for review by full Commission. Efforts on Capitol Hill to delay bid start date -- already under way before bureau decision -- also are expected to accelerate this week. “CTIA believes that the FCC was a little quick on the draw in their response and may have not looked at all the benefits that could be derived from a moderate delay of the auction,” said CTIA Vp-Govt. Relations Steve Berry: “We hope that the full Commission will have a much broader scope in its review.” Berry said CTIA hadn’t made any decision on whether to seek full FCC review of its request to delay start date, but said group was evaluating alternatives. Even before bureau decision last week to keep date, efforts were under way to have letters sent to FCC from key Senate and House appropriators and Commerce Committee members. One industry source said hope was that House Commerce Committee Chmn. Tauzin (R-La.) would lead Republicans in urging FCC to delay auction and that Rep. Dingell (D-Mich.) also would back delay. As early as end of this week, legislation is expected to be drafted that would delay auction, source said. White House Office of Management & Budget apparently is monitoring plan to retain auction date in light of language in Administration’s budget proposal that would push back dates of 700 MHz bidding, source said. Budget blueprint indicated that if upper band auction were moved to 2004 from 2001 and Ch. 52-59 bidding to 2006 from 2002, budget offset of $2.6 billion for fiscal 2002 would be realized. Before bureau decision, some Senate offices were close to including report language on fiscal 2003 budget that would direct FCC to delay auction date. Some in wireless industry also hope that NTIA might weigh in on auction timing with letter that would underscore language in Administration’s budget proposal, source said. Cingular Wireless last week had submitted ex parte filing to back CTIA request for delay, saying FCC had started proceeding to examine ways to eliminate interference for public safety users at 800 MHz. Cingular said one possibility would be to relocate existing 800 MHz public safety operations to 700 MHz to resolve interference, move that could finance relocation through auctioning vacated 800 MHz spectrum. “Delay of the 700 MHz auction is warranted to allow these issues to be fully addressed in the pending public safety rulemaking,” Cingular said. One industry source said Wireless Bureau letter to CTIA last week denying request for delay might have “raised bar” for signals FCC would need to receive from Hill to push back date of upper band auction for 6th time. FCC Wireless Bureau Chief Thomas Sugrue said bureau had adopted reserve price of $2.6 billion for upper band, meaning that if bidding didn’t reach that level, licenses wouldn’t be awarded.
Northpoint has no clue on what FCC will rule Thurs. at agenda meeting on future of terrestrial broadband service that uses satellite spectrum, CEO Sophia Collier told us Fri. “The FCC has clammed up,” she said: “It’s very difficult to get information.” However, industry buzz continues to suggest FCC will make compromise decision that will include some kind of conditioned license with auction that Northpoint steadfastly has opposed. Collier said: “Regulators think they do well when both sides are unhappy, but they should look at win-win solutions rather than lose-lose.” She said Northpoint wasn’t sure what it would do “if the decision goes against us.” She said company would explore option of asking FCC for reconsideration, or appealing to U.S. Appeals Court, D.C.
Despite 3G bid prices in Germany that spiraled to $46.1 billion in 2000, Matthias Kurth, pres. of Germany’s Regulatory Authority for Telecom Posts, defended auctions Thurs. as tool for distributing spectrum. He addressed Transatlantic Telecom Trade Seminar in Washington on European marketplace, sponsored by Commerce Dept., CompTel, European Competitive Telecom Assn. (ECTA), TIA. “I still believe the auction system is good, even if people overbid,” Kurth said in luncheon speech shortly before meeting with FCC Chmn. Powell: “I can’t help that.” Of high bid prices for licenses, which were highest in European 3G auction, he said: “It was surprising even to us.” Auctions still are better alternative than traditional European “beauty contest” method in which licensees were judged on merit-based factors rather than bids. “It’s a question of timing,” Kurth said, noting that at time of 3G auction, telecom market was at peak of its cycle. If bidding were held in today’s depressed economic environment, “I'm pretty sure we wouldn’t get the same results,” he said. Kurth said that in aftermath of auction, Germany had allowed operators to explore alternative solutions such as network sharing to help defray costs and keep rollout of services on track. He said another issue German regulators were beginning to encounter in wireless industry was calls by competitors to step up regulation of sector. In some cases, competitors argue that individual wireless networks in themselves embody monopolies and should be regulated as such based on factors such as prices to terminate calls. But Kurth said he advocated light touch in such areas. “We always step back when we have a feeling that the market is competitive,” he said. But he added: “We have a lot of forces who want to push us in this [other] direction and it’s a very crucial debate.” As for broadband access, Kurth said that as in U.S., regulators in Europe were struggling with how to ensure that incumbents provided network access to competitors for starting services. He said Deutsche Telekom recently lowered DSL prices for residential customers in what was seen as step closer to creating “mass market” for DSL services. In separate speech Thurs., ECTA Pres. Phil Evins said factors such as diminished availability of venture capital were pointing to another wave of company consolidations in Europe. He cited $8 billion merger last month of Sweden’s Telia and Finland’s Sonera. Trend of former national monopolies’ pairing up across border will continue, Evins said. Europe is likely to end up with 5 or 6 former national monopolies after consolidations are completed, he said: “There is still a lot of consolidation. There is still a lot of fallout.”
FCC Wireless Bureau Wed. turned down CTIA request for delay of 700 MHz auction that’s scheduled for June 19. In denying petition, Wireless Bureau Chief Thomas Sugrue cited steps that agency already had taken to alleviate uncertainties involving that spectrum through policies such as voluntary clearing alternatives. “The current statutory scheme, which directs the Commission to conduct these auctions a number of years in advance of the end of the digital television transition period, ensures that uncertainties about the availability of certain portions of these bands may continue for some time,” Sugrue said. FCC faces statutory deadline of Sept. 30, 2002, for depositing proceeds from Chs. 52-59 auction in U.S. Treasury, and earlier statutory deadline for Chs. 60-69 already has been missed in postponements. “Although Congress is aware of this situation, it has not acted to address it by, for example, moving the auction deadlines back or moving the DTV transition forward,” Sugrue said. Congress also hasn’t acted on Administration budget proposal that would delay auctions, he said.
FCC Wireless Bureau is seeking comments on petition by Progeny LMS requesting Commission to provide flexibility to licensees in Location & Monitoring Service (LMS) band and to alter certain restrictions at 902-928 MHz. Progeny asked that FCC consider eliminating or doing away with: (1) LMS spectrum cap to let single licensee hold all LMS licenses in given economic area. (2) Restriction on real-time interconnection with public switched telephone network. (3) Restriction on types of communications or services that LMS operators can offer. (4) Safe harbor provision that contains presumption of noninterference for secondary users of band. Comments are due May 10, replies May 28. Progeny won LMS licenses in 1999 FCC auction and has asked agency to relax restrictions on type and content of messages and spectrum aggregation. It urged agency to apply to LMS band “its market-oriented policy of allowing licensees flexibility to offer whatever services the market can support and demand, so long as those operations do not hinder or interfere with the operations of primary users in the band.”
National Telecom Co-op Assn. (NTCA) members will be “fanning out across the Hill” today (Thurs.) seeking support for rural wireless bill introduced this week by Sen. Baucus (R-Mont.), NTCA CEO Michael Brunner said. Bill, which would require FCC to offer spectrum in blocks covering smaller geographic areas than currently covered, “isn’t perfect legislation, [but] it’s a piece of the puzzle,” Baucus’ Legislative Asst. Jay Driscoll said Wed. at NTCA policy conference press luncheon in Washington. He said Baucus was reaching out to other associations such as CTIA to get backing from members “both big and small,” emphasizing to CTIA-affiliated companies that bill wouldn’t pick winners or losers or show preference for particular technology platforms: “If the bill can be written better, we invite them to work with us.” NTCA Pres. John Metts said bill not only addressed difficulties of deploying wireless telephony service in rural areas, but also would assist in provision of broadband and data services. Since legislation would require FCC to auction smaller spectrum blocks, small-to-midsized providers could afford to buy spectrum that otherwise could be purchased only by industry behemoths, he said. Subsequent decrease in infrastructure and service start-up costs for competitive wireless carriers would encourage such companies to participate in auctions, he said. Recent NTCA member survey indicated many providers were dissuaded from participating in auctions since FCC offers spectrum blocks exceeding needs of rural carriers. Metts cited example of company wanting to buy spectrum covering rural area outside of El Paso that would have been required to bid for block that included entire El Paso metropolitan area: “Rational, smaller license areas that relate to our smaller geographic areas is what we need.”
Verizon Wireless is suing govt. to obtain remaining deposit from Jan. 2001 NextWave re-auction and is seeking ruling from U.S. Court of Federal Claims that auction “contract” for disputed licenses is void. Lawsuit came after FCC returned 85% of deposits from re-auction late last month but concluded winning bidders should continue for now to be held to nearly $16 billion in auction obligations (CD March 28 p1) until Supreme Court review plays out. Commission’s order described decision at that time as balancing act to preserve auction results pending Supreme Court review in NextWave case while returning most of deposits to bidders. In lawsuit filed Fri., Verizon Wireless also sought unspecified damages that it charged had been caused by “the FCC’s breach of the auction contract.” Litigation centers on $8.4 billion in auction prices for which Verizon Wireless successfully bid in Jan. 2001 re-auction and for which it technically still is liable. Verizon Wireless’s suit argued that it had suffered “substantial economic injury” as result of FCC’s contract “breach,” including effects on its credit rating and ability to borrow.