SPECTRUM USERS URGE GOVT. TO CREATE MORE REGULATORY CERTAINTY

Defense Dept. Chief Information Officer John Stenbit raised issue of private sector liability in cases where commercial and govt. users share spectrum. He cited “dramatic asymmetry” in risk that govt. users faced in potential spectrum-sharing scenarios, raising hypothetical example of sharing in band used by military for precision guided munitions. One way to create market-based mechanism for that is to have licensee who is sharing spectrum be liable for lack of service that incumbent may suffer. “That puts the burden on those that are trying to change the world as opposed to those who are trying to defend it,” said Stenbit, who is asst. defense secy. for command, control, communications and information. In general, govt. has too many “layered bureaucratic processes and too few market-based processes,” he said when asked by Victory to cite negative and positive aspects of current policy. “We can have the market judge some of these transitional issues a lot better than we do. I am terrified of the relocation uncertainty that we face as we go forward.”

Stenbit characterized risks now shouldered by military users as disproportionate to risks commercial licensees bear, citing example of how DoD users would be compensated for relocating to make way for 3G uses. He said under current proposal for reimbursing military users, money would go from auction, to U.S. Treasury, to “where it might get to me,” he said. “That asymmetry in my mind is absolutely untenable,” Stenbit said. “The risk is all mine.” He said he would even be willing to ease his own precepts about liability if military users could have access to spectrum now underutilized by other licensees.

Evans said his experience dealing with ultra-wideband, for which FCC approved order at Feb. agenda meeting after lengthy proceeding, made clear govt. had to improve how it managed spectrum. “We should not have to go through a drawn- out and contentious process every time a new spectrum-based technology comes along.” Work on UWB “is far from over, but we are on the right path,” he said. Evans cited need to ensure that U.S. retained technology leadership position “without jeopardizing existing spectrum use that is crucial to our safety and security.” He said 96% of spectrum use was in less than 10% of spectrum, which is below 3 GHz. “It is not an option to close the door on new technologies,” he said.

Powell said summit “in many ways is long overdue… The challenges that are facing both us, this institution and the many industries and consumers out there are crying out for solutions and high-level involvement to try to find them.” Powell said key elements he saw as needed in spectrum policy included: (1) “First and foremost,” cooperation within federal govt. (2) Greater use of market mechanisms for ensuring that spectrum resources got to “highest and best valued use without excessive government intervention.” (3) Greater understanding “within the government and elsewhere” of technology with object of protecting users against interference while promoting new innovation. (4) Need for enforcement tools to measure and protect against harmful interference.

In 1993, Congress passed Sec. 112 of NTIA Act that called on head of NTIA and FCC chmn. to meet regularly to conduct joint spectrum planning, Powell said. “This mechanism has been allowed to lay fallow and Nancy and I have committed ourselves to get back to the important work of biannual meetings and important coordinated activity to improve spectrum management policy,” Powell said, standing before huge frequency allocation chart in packed auditorium at Commerce Dept. He reiterated that Commission was committed to moving forward on market-based policies that allowed more flexible uses of spectrum. He said more than 40 FCC staffers were participating in 2-day event.

Dennis Roberson, Motorola senior vp & chief technology officer, said: “The observation that all of us have become increasingly uncomfortable with is that most of the spectrum, most of the time in most places is unused.” Degree of inefficiency is “inherent” in way U.S. now handles spectrum, but “at the same time we do have critical needs,” he said. “None of us wants the police to be unable to come to our house when someone is breaking in.” Long-term challenge policymakers face is to create opportunities for reuse of spectrum that lies fallow, he said. “This is the crucial issue,” he said. “There are technologies being worked on that will provide some of this capability.” That requires “careful policy work” on who gets preemptive use of spectrum, he said.

Responding to question from Victory on how policymakers could make decisions amid uncertainty about future technologies, VoiceStream Chmn.-CEO John Stanton said harder question was predicting what demand for those services would be. Historically, policy bifurcation between NTIA and FCC has created inefficiencies, so better communications between govt. and users can help in assessing where technologies are going, he said. “Historically, there’s been an underestimate of demand. Even now we can do a better job of that,” he said. Assn. of Public Safety Communications Officials International Pres. Glen Nash said that when forecasts about end-user demand turned out to be wrong, govt. had been unwilling in some cases to change allocation decisions “and take that spectrum back.” Nash said FCC “needs to take a harder stance on pushing for spectrum efficiency.” He referred to refarming initiative of several years ago when channel bandwidths for land mobile spectrum were narrowed. Over time, many end users haven’t implemented those narrower bandwidths in their radio equipment, he said. “We develop a new policy, but we fail to say [that] in order to implement that new policy we have to end a legacy system,” Nash said.

As for regulatory uncertainty, Stanton stressed challenges of 700 MHz auction, now scheduled for June 19. CTIA asked Powell Wed. to postpone auction, citing “contradictions” in process (CD April 4 p8). In response to audience question, Stanton said uncertainty over auction was heightened by extent to which carriers still had capital tied up in NextWave re-auction, referring to fact that carriers could be held to their bid commitments pending outcome of U.S. Supreme Court review. “There are people in the broadcast industry that already have warned people in the wireless industry that ‘we are going to hold you up,'” Stanton said. “We'll hold an almost fatal auction on almost every criterion if that auction goes ahead.”

Panel of economists moderated by Victory and FCC Comr. Martin generally agreed on at least quasi-property rights for spectrum that are needed to allow secondary market to grow. But panel diverged on how much govt. should retain control of spectrum, what those rights should be and how much flexibility spectrum users should have turned over to them by govt. “It would be helpful for not only government policymakers but the investment community to have a clearer sense of the bundle of rights,” said Rudy Baca, vp-global strategist for Precursor Group. “What is needed is clarity on everybody’s part. What the market wants more than anything is predictability,” he said. Baca cited Nextwave “debacle,” in which commercial assets were turned over to control of govt. entity. Michael Calabrese, dir.-public assets program, New America Foundation, suggested “hybrid of models” that would allow licensing to be more generic and flexible and “internalize opportunity costs and facilitate trading on secondary markets.” He said that “on the other hand, government should move aggressively to enable entrepreneurial rights of spectrum.” Freeing up more spectrum for unlicensed devices could be more immediately effective for broadband deployment than 3G, he said. Manhattan Institute for Policy Research Senior Fellow Thomas Hazlett was among those backing most hands-off approach for govt. when it came to spectrum. Point to think about is where new competitors and technologies will go to get permission to provide services, he said. “Will they go to the market or will they wait in line at the FCC to try to get an allocation to get in and offer service to the public.”