Top Senate Democrats, including Majority Leader Daschle (D- N.D.) urged President Bush Mon. not to allow “unnecessary delays” in opening “at least some” of 1755-1850 MHz band for commercial users eager for 3rd generation wireless spectrum. “In recent years, Congress has mandated safeguards to ensure that DoD does not surrender frequencies in such a way as to compromise its mission capabilities,” said letter written by 7 Senate Democrats. “But executive agencies must take the initiative to drive the process forward.” Senators didn’t criticize recent FCC action to delay decision on which spectrum bands should be allocated for advanced wireless uses beyond July 2001 deadline set out in executive order by then President Clinton last Oct. “While this schedule may no longer be realistic, the Administration should move forward as rapidly as possible.”
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.
U.S. Supreme Court Fri. turned down FCC request to review 5th U.S. Appeals Court, New Orleans, decision that sided with C-block bidder General Wireless Inc. (GWI) on $166 million valuation of its licenses, just fraction of its original auction bid. After D.C. Circuit decision overturning $17 billion PCS auction results in NextWave case (CD June 25 p1), industry has been closely watching whether high court would agree to review GWI case because some -- but not all -- of same issues were at stake involving valuation of original C-block licenses by bidder that later entered bankruptcy. Supreme Court’s decision lets stand 5th Circuit ruling that sided with bankruptcy court valuation of GWI’s licenses at $166 million, versus $1.06 billion that carrier had bid in 1996. Unlike NextWave case, GWI’s 14 PCS licenses weren’t part of FCC re-auction late last year of C- and F-block licenses reclaimed from bankrupt bidders. Fifth Circuit ruling in Oct. didn’t come to all of same conclusions as 2nd Circuit in NextWave case. Specifically, 5th Circuit differed from 2nd Circuit conclusion that courts should defer to FCC’s interpretation of its regulations when payment obligations of winning bidders arose. FCC had said that obligation came up on date that auction closed. GWI contended bankruptcy court was correct in fixing later date of Jan. 27, 1997, as point when those obligations kicked in because that was when Commission actually transferred licenses. At point when licenses were transferred, bankruptcy court ruled they had dropped in value to $166 million, versus original bid by Dallas- based GWI, which now does business as Metro PCS. In GWI case, bankruptcy court prevented Commission from cancelling licenses. Brief filed with Supreme Court by U.S. Solicitor Gen. contended 5th Circuit’s ruling, which allowed bankruptcy courts to offer relief that FCC had chosen not to do as regulator, would create incentives that Commission had tried to avoid. Solicitor Gen. argued that reducing payments could foster speculative bidding in future auctions because bidders could hang on to spectrum even if financing didn’t work out. Not surprisingly, Metro PCS contended that FCC was responsible for company’s tough financial straits in first place by delaying issuing licenses. U.S. Supreme Court’s decision to not grant certiorari in GWI case came as FCC was debating options in NextWave case, in which D.C. Circuit said Commission had violated bankruptcy law when cancelling NextWave’s licenses for missed payment -- ruling that reversed agency and returned licenses to NextWave. FCC must decide whether to seek review before full D.C. Circuit or by Supreme Court. “If the High Court had taken the GWI case, that would have increased the FCC’s prospects for gaining a hearing of the D.C. Circuit decision on NextWave,” said research note issued Fri. by Legg Mason. “One of the questions about the NextWave case is whether the Supreme Court would consider the spectrum-bankruptcy issues serious enough to warrant review. The denial hints at, but does not provide, an answer to that question.”
BOSTON -- Equipment vendors and fixed wireless operators in closing session of Wireless Communications Assn. (WCA) show here Wed. stressed need for speed amid warnings that swift action was needed before DSL and cable modems cemented their hold on market. Uncertainty over how equipment costs would be driven down and need for standards must be resolved to reach “critical mass” of customers, several speakers said. “I am still not certain how quickly we are going to make broadband to residents happen,” Vyyo CEO John O'Connell said. But slowing of financial markets that has affected rollout of DSL and cable also gives fixed wireless industry lead time to capture broadband market share, Nucentrix Chmn. Carroll McHenry said. “We still have a substantial window of opportunity,” he said, especially in small and medium markets where DSL deployment and cable overbuild efforts aren’t moving as quickly as in top markets.
FCC plans to delay decision, due next month, on which spectrum bands should be allocated for 3-G use, FCC Chmn. Powell said in letter sent late Tues. to Commerce Secy. Donald Evans. FCC is working on spectrum allocation effort in coordination with Commerce’s NTIA. Under Executive Order issued last year by President Bill Clinton, FCC was scheduled to identify spectrum by July and auction licenses by Sept. 30, 2002. Powell told Evans that “as July draws near… it is apparent that additional time is necessary to allow the Commission and the Executive Branch to complete a careful and complete evaluation of the various possible options for making additional spectrum available for advanced wireless services.” Powell also made pitch for delaying auction as well, saying “relief from this deadline would allow all of the governmental entities responsible for U.S. spectrum management to have adequate time to develop a plan to make spectrum available for advanced wireless services in the future.” He told Evans that “the Administration’s support for flexibility on the auction dates would be appreciated.” CTIA Pres. Thomas Wheeler said Powell “made the right decision in delaying the allocation of spectrum in the 1710-1755 and 2110-2150 bands.” He said Powell’s “bold leadership will benefit U.S. consumers, the wireless industry and the U.S. economy by allowing those bands to be incorporated into a larger, long-term spectrum management policy.”
SAN FRANCISCO Wireless Advertising Assn. (WAA) released draft of standards for mobile and wireless devices in 3 platform areas: Short Message Service (SMS, used on phones and pagers), Wireless Application Protocol (WAP, phones and PDAs), and (PDAs, personal digital assts.). Standards are designed to make it easier for advertisers, ad agencies, publishers and 3rd party servers/networks, to collaborate on ad campaigns.
U.S. Appeals Court, D.C., decision overturning FCC’s $17 billion PCS auction bolsters position of critics of $1.3 trillion tax cut that excessive tax relief can “throw government into chaos” if “larger-than-expected” federal budget adjustments eventually are required, Senate Budget Committee majority staffer said. Court ruled late last week (CD June 25 p1) that FCC erred in cancelling NextWave’s 90 PCS licenses for missed payment, raising doubt as to when -- or whether -- govt. could factor projected outlays from re-auctioned spectrum into federal surplus. Democratic aide acknowledged that “it’s a little early to tell what the fiscal impact will be” on federal budget estimates, but aide and other sources said lawmakers now would have to decide where to cut funding of govt. agencies or programs.
BOSTON -- Implications of sagging financial markets raised at Wireless Communications Assn. convention here this week ranged from difficulty in renewing ITFS leasing agreements to FCC delay in setting auction date for 24 GHz market. Winstar Chmn.-CEO William Rouhana, in first comments before industry group since company’s Chapter 11 filing in April, assailed “schizophrenia” that has beset telecom sector, pitting perception of “overvalued” assets of broadband providers against growing consumer demand for services. “There is this incredible schizophrenia that has taken hold,” he said Tues.
BOSTON -- Despite overall economic downturn in telecom sector, international cross-section of fixed wireless industry at preliminary session of Wireless Communications Assn. (WCA) conference here said networks in Latin America and Europe were moving forward, with some changes. Regulators in some cases aren’t immediately seizing licenses if terms aren’t met and govts. are turning more frequently to so-called beauty contests rather than auctions, participants said Sun. Biggest change may be that both regulators and financial backers are expecting realistic business plans with controlled buildout, they said. Among challenges in Europe are that unbundled local loop regulations in some cases can make it easier for competitors to lease network elements from incumbents for DSL, making wireless network buildout less compelling, said Arturas Medeisis, radiocommunications expert with European Radiocommunications Office. “So far, we haven’t seen true success stories yet,” he said of Western European markets.
BOSTON -- FCC Comr. Abernathy sent strong signal to Wireless Communications Assn. (WCA) Mon. that she was reluctant to have MMDS and Instructional TV Fixed Service licensees tapped for 3rd generation wireless. “I am unwilling to jeopardize the rollout of wireless broadband services you are offering to consumers,” she told annual conference in her first speech before an industry convention as commissioner. “There are other options.” While Abernathy didn’t elaborate on other spectrum alternatives, she stressed importance of FCC’s moving quickly on 3G. “We owe you a prompt decision to eliminate the cloud that hangs over your particular spectrum,” she said.
In ruling that overturns $17 billion PCS auction results, U.S. Appeals Court, D.C., handed resounding victory Fri. to NextWave in its nearly 3-year battle to retain licenses for which it had bid $4.7 billion. Unanimous ruling by 3-judge panel reversed 1998 FCC decision that cancelled NextWave licenses for missed payment, meaning C-block licenses on which largest U.S. carrier Verizon Wireless bid nearly $9 billion would revert to NextWave. Several industry observers pointed out shortfall that decision, if not challenged by FCC or sustained on appeal, would mean to govt. coffers. NextWave bid $4.7 billion for 90 PCS licenses in 1996, but bidders such as AT&T Wireless, Cingular and Verizon in reauction agreed to pay nearly $15.4 billion. Unclear as of Fri. was what action FCC would take next, with request for en banc hearing before D.C. Circuit or for airing before U.S. Supreme Court among potential options. Verizon Wireless CEO Denny Strigl urged FCC and NextWave to “settle this dispute in a way that permits the FCC’s auction results to stand.” While NextWave immediately outlined plans to begin buildout of licenses, speculation turned Fri. to settlement possibilities, with ex-FCC Chmn. William Kennard seeing potential “tragedy” if carrier received “billions” to walk away from licenses.