ABERNATHY SIGNALS SUPPORT FOR NOT TAPPING MMDS AND ITFS FOR 3G

Calls to FCC to take MMDS and ITFS bands out of consideration for 3G dominated both hallway and panel discussions in first day of conference. Several participants said decision by U.S. Appeals Court, D.C., Fri. that would return PCS licenses to NextWave (CD June 25 p1) after bidders such as Verizon Wireless spent $17 billion in re-auction this year only heightened uncertainty over 3G options. Internet consultant Greg Simon said after news briefing that licenses acquired by carriers in PCS re-auction had been counted on by carriers as base of additional spectrum on which 3G would be deployed. “Their reservoir just went dry,” he told us. “Why punish these guys for a fight” that involves commercial bands, he asked. Another factor of uncertainty cited by MMDS and ITFS was expectation that FCC wouldn’t make spectrum allocation decision for 3G and advanced services by July target set out in Executive Order signed last Oct. Separately, several Commission officials said further notice of proposed rulemaking was due out shortly that would focus on alternative bands for advanced wireless services.

In hallway conversations later, participants seemed less surprised by Abernathy’s hesitation to delve into MMDS and ITFS reallocations than her emphasis on need for decision to move ahead quickly at FCC. She also outlined regulatory philosophy need for FCC to be guided by statutory mandates: “We are appointed officials, we are not elected officials.” Abernathy stressed her general preference for private market-based solutions over govt. mandates for “functioning markets.” She said she understands rationale behind govt.’s looking at MMDS and ITFS spectrum for potential 3G uses. “However, once the FCC made the decision to auction MMDS spectrum and encouraged close cooperation with ITFS licensees, it now becomes difficult for me to contemplate a major disruption of those services, particularly for a service band that is not the prime target of the 3G proponents,” she said. (CTIA has told FCC it prefers 1.7 GHz band held by Dept. of Defense over MMDS and ITFS bands that federal govt. also is considering for advanced wireless services such as 3G.) In analyzing 3G options, Abernathy said it also was important to factor in public interest benefits that resulted from rollout of competitive broadband services. On timing issue, she alluded to her stint in competitive LEC industry as providing perspective on link between timeliness of such regulatory decisions and financial uncertainty for new operators. “Time can mean survival,” she said. “When the stakes are as high as they are here, we must move as swiftly as possible to ensure that the market, rather than indecision in the regulatory arena, determines your fate.”

Several FCC staffers said further notice was expected soon on alternative bands of spectrum for advanced wireless services, including at 2.1 GHz and unlicensed spectrum in middle of PCS band at 1900 MHz. “We are hopeful that we can wrap it up fairly promptly,” said Bryan Tramont, senior legal adviser to Abernathy. As for FCC’s making spectrum allocation decision for 3G by July target he said, “I don’t know that that’s going to happen.” It’s possible allocation decision could be made by end of year, he said. Peter Tenhula, senior legal adviser to Chmn. Powell, said on another panel that he anticipated further notice would be out shortly. Besides alternative bands, which weren’t part of main spectrum pieces studied in FCC’s 3G evaluation last fall, Commission has proceeding on mobile satellite services teed up, including petition by New ICO to also use band for terrestrial services and counterproposal by CTIA to auction band for advanced wireless services. Speaking to reporters later, Tenhula said FCC was likely to release 2 separate filings on alternative bands and MSS, although they would be out at around same time. He said ITFS and MMDS advocates had done “phenomenal job” of making case for their spectrum at FCC. Not everyone at WCA conference was bullish on allocation decision’s being made by year-end. “It appears to me a final decision is not going to be made this year,” WorldCom Vp-Wireless Regulatory Affairs Robert Koppel said. “I hope I'm wrong.”

Not surprisingly, ITFS and MMDS operators reiterated familiar message that their bands should be taken off table now for 3G, even if overarching spectrum allocation decisions were delayed. Msgr. Michael Dempsey, pres. of Catholic TV Network, said in keynote that uncertainty was having ramifications for financially strapped educators who must hold off on expansion plans until there was regulatory certainty. At news conference later, he said some ITFS leasing arrangements were being renewed for terms that were shorter than is usual under such agreements. Patrick Gossman, chmn. of National ITFS Assn. and dir. of TV, Wayne State U., said: “It puts a halt to a lot of progress right now.”

Besides upcoming policy decisions on 3G, fixed wireless operators cited number of other technical and regulatory obstacles that industry has to overcome before broader commercial deployment. AT&T Fixed Wireless Services Pres. Michael Keith said remaining challenges include: (1) Tower siting, noting “if I don’t make my numbers this year it’s really about towers.” Existing fixed wireless operations AT&T has started are using 300 towers, although Keith said he expected 500 more towers would be used by year-end. (2) Need for per-unit systems costs to come down. (3) Importance of making number portability easier, which Keith said was “most onerous” problem. Without number portability, fixed wireless operators could fail to convince customers to migrate lucrative long distance revenue to their systems. Echoing standards concerns raised by European and Latin American operators in weekend session, Keith called for open standards so that equipment vendors could build to same air links. He pledged that he would “do what I could possibly do” to place $650 million that AT&T had invested in intellectual capital in that area into arena of open standards efforts.