In move seen as freeing up advanced wireless spectrum, CTIA Pres. Tom Wheeler Tues. touted Bush Administration budget proposal that would create trust fund to reimburse federal agencies that have to relocate from bands auctioned to commercial users. Budget blueprint released Mon. said Administration planned to propose legislation to streamline current process for reimbursing govt. agencies that were relocated from spectrum auctioned to commercial users. Proposal would create relocation trust fund from receipts of spectrum auction that would directly reimburse agencies for relocation costs. Wheeler said that would cover 1710-1755 MHz already reallocated to nongovt. from govt. users. Wheeler said trust fund also could cover relocation expenses linked to 1755-1770 MHz now occupied by DoD and under consideration for advanced wireless services. Budget said proposed policy change also would affect reimbursement procedures for 1710-1755 MHz, for which White House has proposed moving auction deadline to 2004 from 2002. “This is something that we have been championing for some time,” Wheeler said at Tues. media lunch. Absence of trust fund of that nature has been “stumbling block” in spectrum policy on how necessary relocations would be compensated, Wheeler said. “It’s the first time that an Administration has stood up and said ‘here’s how we do this,'” he said. Balanced Budget Act of 1997 had stipulated 1710-1755 MHz should be reallocated from govt. to nongovt. users. CTIA officials said Tues. that 1755-1770 MHz now occupied by military also could be covered by trust fund under language in budget. That 15 MHz of spectrum is under study at DoD for possible options for military users relocating for commercial wireless operations and Pentagon recommendation is expected to be sent to NTIA shortly. Administration took off table last fall most of 1755-1850 MHz band occupied by DoD that had been under consideration for 3G and other advanced wireless operations. Govt. revised assessment of 3G to focus on potential use of 1710-1770 MHz and 2110-2170 MHz. Wheeler outlined ways in which commercial wireless operators could operate at 1755- 1770 MHz without disrupting military capabilities. DoD uses 1761 to 1842 MHz for satellite systems that provide uplinks for tracking, telemetry and control. Wheeler said from 1761- 1770 MHz, commercial operators could redesign wireless networks to share spectrum in plan that would prohibit base stations and allow only low-power handsets that operate at power levels too low to cause interference. Fixed microwave systems also operate in band that CTIA said are similar to commercial point-to-point systems that commercial wireless industry successfully relocated for PCS. Solutions for these operations include frequency sharing and coordination that would be paid for by Administration’s spectrum relocation fund. For tactical radio relay systems that operate in 1755- 1770 MHz, these systems operate in pieces throughout 1710- 1850 MHz and are tunable, CTIA said. Solutions here could reflect those that military uses in international deployments, including geographical separation in remote areas, tuning to above 1770 MHz if needed and relocation and upgrade that trust fund also could pay for. CTIA Senior Vp- Govt. Relations Steve Berry said reimbursement is structured to be broad enough to include upgraded equipment and other costs such as retraining because DoD can identify all costs connected to moving out of spectrum. Current reimbursement process is very strict and doesn’t allow for enhancement of capabilities, he said.
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.
In new effort to get FCC to return billions in NextWave re-auction deposits, Verizon Wireless asked U.S. Appeals Court, D.C., Tues. to “compel full compliance” with ruling that overturned FCC decision to cancel NextWave’s licenses. “Because the cancellation of NextWave’s licenses was unlawful, the re-auction itself was without lawful basis,” Verizon said in petition. “For the same reason, any continuing obligations on the part of the NextWave re-auction winners were also necessarily extinguished by this court’s ruling.” In Jan., re-auction winners petitioned FCC to refund $3.1 billion in down payments they said agency had been holding without interest since Feb. 2001. Verizon Wireless and 12 other carriers said that because settlement agreement on NextWave’s licenses expired Dec. 31 without Congress’s approval of settlement, agency should return money. Verizon’s latest request to D.C. Circuit came in wake of carriers’ expectations that Commission wasn’t planning to return deposits until after Supreme Court decided whether it would hear oral argument in NextWave case (CD Jan 30 p1). Verizon Wireless told court FCC’s refusal so far to “implement this court’s mandate” and return deposits meant carrier had lost more than $80 million in unpaid interest on its $1.7 billion down payment.
Homeland security was dominant theme in President Bush’s FY 2003 budget proposal released Mon., with new money for securing telecom facilities among leading priorities. Some $3.5 billion would be allocated to assist first responders to emergencies in wake of Sept. 11, including support for landline and wireless telecom networks, twelvefold increase over FY 2002. Administration also outlined proposals for auctioning broadcast spectrum for 3G wireless and again proposed fines for broadcasters continuing to use analog spectrum after 2006.
Verizon Wireless is withdrawing petition to U.S. Supreme Court seeking review of U.S. Appeals Court, D.C., ruling that overturned FCC decision to cancel NextWave’s PCS licenses. Opposition briefs were due Fri. on FCC petition for high court review in NextWave case. While main petition for certiorari was from FCC, Verizon Wireless and other carriers had filed in support of Commission as intervenors. NextWave filed brief Fri. arguing Supreme Court shouldn’t agree to hear oral argument. Verizon Wireless had won largest block of licenses in Jan. 2001 re-auction of what at time had been PCS spectrum of NextWave. Verizon said it still disagreed with D.C. Circuit ruling that overturned FCC decision to cancel NextWave licenses. But Verizon told court it was withdrawing petition for review: “The public interest in putting the spectrum to use, rather than letting it lie fallow, is better served by quickly obtaining certainty in ownership of the NextWave licenses than by this court’s making the correct decision on the legal question presented.” Uncertainty over existing litigation has led to “a stalemate over the use of the spectrum that harms the public interest,” Verizon said. “The spectrum is totally unavailable to petitioner and the other Auction No. 35 bidders.” Re-auction winners, NextWave and govt. had reached settlement agreement last fall over NextWave’s licenses, but agreement expired when Congress failed to pass implementing legislation by Dec. 31. Verizon argued in Fri. filing that “NextWave itself cannot reasonably make the substantial investments needed to develop fully the spectrum without the certainty of title that would be provided by an end to this litigation.” Verizon also said that in congressional testimony last fall, FCC had testified that its main concern was immediate deployment of spectrum that had been tied up in 5 years of litigation. “The market could make faster and more reasonable adjustments if the case were ended now than if this court were to grant certiorari, hear oral argument in the autumn of 2002 and decide the case in petitioner’s favor in the spring of 2003,” Verizon said. “Even such a victory would not end this lawsuit: the case would be remanded to the D.C. Circuit for consideration of issues left open in its decision and then presumably remanded to the Commission.”
FCC isn’t moving to return NextWave re-auction deposits as quickly as expected in new development that could tie up $3.1 billion in down payments for several more months, industry sources said. Commission now is said to be likely to return portion of down payments closer to time that U.S. Supreme Court makes decision on whether to grant FCC’s petition for review of U.S. Appeals Court, D.C., ruling that had overturned agency’s decision to cancel NextWave’s licenses for missed payment. NextWave’s opposition brief to Commission’s petition for certiorari is due Fri. at Supreme Court, which is expected to decide by spring whether to hear appeal, possibly by late Feb. or early March. Item on returning part of down payments had reached 8th floor at FCC and decision on return of at least most of deposits for Jan. 2001 re-auction winners had been expected as early as last week (CD Jan 25 p6).
FCC set June 19 for start of auction for lower 700 MHz band now occupied by Ch. 52-59 TV broadcasters, meaning bidding on spectrum would take place at same time as Ch. 60- 69 auction. Lower 700 MHz band consists of 758 licenses for fixed, mobile and broadcasting services. Both lower and upper bands face congressional deadline of Sept. 30 for auction proceeds to be placed in U.S. Treasury. Spectrum in lower 700 MHz band will be offered for auction as two 12 MHz blocks consisting of pair of 6 MHz segments and two 6 MHz blocks of contiguous, unpaired spectrum in each of 6 economic area groupings (EAGs). Auction also will offer one 12 MHz block consisting of pair of 6 MHz segments in 734 metropolitan statistical areas (MSAs) and rural service areas (RSAs), which are smaller than EAGs. Wireless Bureau seeks comments on options for how 758 licenses in lower band should be grouped: (1) Grouping all licenses together in what would be simultaneous multiple round auction. (2) Or including only 734 MSA/RSA-based licenses in lower band auction and grouping 24 licenses based on economic areas with upper 700 MHz auction, where FCC has adopted similar approach of larger blocks of spectrum. Commission has said it chose combination of larger and smaller geographic areas for lower 700 MHz licenses to accommodate broad range of bidders. Public notice calls for upfront payments for each license and minimum opening bids. Bureau also seeks comments on proposal to award all licenses in lower 700 MHz band auction in single, simultaneous multiple-round auction. Comment is sought on proposed upfront payment for each license, activity rule, bidding procedures such as round structure, reserve price or minimum opening bid and minimum acceptable bids. Comments on those and other issues are due Feb. 6, replies Feb. 13.
Federal, state and local govts. need to make broadband rollout top priority, Silicon Valley advocacy group TechNet said Tues., and that means facilities-based telecom competition. “It’s all about how to encourage competition in the last mile,” said Microsoft COO Robert Herbold, member of TechNet’s broadband working group and also of President Bush’s Council of Advisers on Science & Technology (PCAST). TechNet Pres. Rick White, former Democrat on House Telecom Subcommittee, said TechNet “would encourage opening the local loop as much as possible.” However, in its White Paper A National Imperative: Universal Availability of Broadband by 2010, TechNet said FCC shouldn’t mandate open access for cable broadband networks. Group declined to take position on Bell-friendly bill sponsored by House Commerce Committee Chmn. Tauzin (R-La.) and ranking Democrat Dingell (Mich.), which many Tauzin-Dingell opponents hailed as victory in that TechNet didn’t actually endorse controversial legislation.
U.S. Supreme Court Mon. granted extension until Feb. 1 for responses to be filed on FCC’s request for review of U.S. Appeals Court, D.C., ruling that returned PCS licenses to NextWave. NextWave, Alaska Native Wireless (ANW) and VoiceStream had backed additional time in interest of possibly reaching settlement agreement over licenses. Verizon Wireless had balked at request for 30-day extension, telling court Fri. that there was “no current prospect of the parties’ reaching a new settlement” and that proposed 30-day extension would cause it “irreparable harm.” Verizon had told court, however, it didn’t oppose 14-day extension, which is what Supreme Court granted Mon. Verizon acknowledged last week that it wasn’t interested in another round of settlement negotiations until deposit on NextWave licenses it made after Jan. 2001 reauction was returned. But several industry observers said backing of VoiceStream and ANW, designated entity that has financial backing from AT&T Wireless, could point to new shape that settlement prospects are taking. “It kind of shows where the rift is,” industry observer said. FCC filed petition for review at Supreme Court Oct. 19 over U.S. Appeals Court, D.C., ruling that overturned agency’s cancellation of NextWave’s licenses for missed payment. Congress ultimately failed to pass settlement agreement reached by NextWave, re-auction winners and govt. over licenses by Dec. 31 deadline. As result, that earlier agreement terminated at year-end, NextWave told high court. “An additional 30-day extension is needed to permit exploration of possible alternative settlement arrangements for resolving the dispute between NextWave and the government over NextWave’s rights to the spectrum licenses,” NextWave told court. Acting Solicitor Gen. Paul Clement indicated he didn’t object to request for more time, NextWave said. ANW and VoiceStream told Supreme Court that request for more time wouldn’t affect effort by Jan. 2001 re-auction winners to get deposits on their licenses returned by FCC. Filing was made by Arctic Slope Regional Corp., Council Tree Communications and VoiceStream. Arctic Slope was original intervenor in NextWave court proceedings. Arctic Slope and Council Tree are among managing members of what came to be ANW when re- auction was held. Carriers that won NextWave licenses in re- auction year ago -- including ANW, Verizon Wireless and VoiceStream -- asked Commission to refund $3.1 billion in down payments that agency has been holding for nearly year. ANW and VoiceStream argued to high court that: (1) Extension of time wouldn’t have “any bearing” on separate matter of refund from FCC on NextWave licenses. “Indeed, because this case would not be heard until next term in any event, we do not believe the requested extension would prejudice any party,” they said. (2) More time would help in exploring settlement options over license disputes. Carriers said they disagreed with Verizon Wireless that “there are no prospects for settlement at this time.” While not balking at shorter extension, Verizon Wireless had said it would suffer “irreparable harm” if court granted full 30-day request. Carrier told court that from its perspective, there wasn’t any current prospect of reaching new settlement over licenses.
Companies that won NextWave’s licenses in re-auction year ago asked FCC Fri. to refund $3.1 billion in down payments that agency has been holding without interest since Feb. Re-auction winners said that with proposed settlement falling through and new solution not immediately apparent, “the time has come” for Commission to return money. They said they were losing at least $430,000 a day in interest, assuming “conservative” rate of 5%, and urged agency to act on their petition by Jan. 18.
Stakeholders in NextWave case talked Thurs. about possible options in response to unwillingness of Congress to codify proposed settlement by end of last year. Although FCC and Dept. of Justice supported $16 billion deal with bankrupt carrier that would have required return of auctioned C-block licenses, congressional action was needed to put $10 billion back into U.S. Treasury and allow NextWave to keep $6 billion after taxes. Sources said decision whether to revive proposal in some form was unlikely before end of day, but said negotiations would continue.