COMPANIES STILL AWAITING FCC'S SPECTRUM AUCTION RULES
Cross-section of industry could join bidding when FCC issues auction rules for spectrum for multichannel video distribution and data services (CD April 24 p1). Commission opened up satellite spectrum in 12.2-12.7 GHz to terrestrial companies in effort to advance broadband services in rural areas. Final order is expected this week. Companies are anxiously awaiting rules splitting spectrum into hundreds of geographic licensing areas. It’s unclear how many bidders auction will attract. Satellite companies may want to buy licenses to create satellite-terrestrial combination, using terrestrial spectrum to provide local and broadband service.
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Satellite Receivers and MDS America will bid for spectrum, they told us. DBS companies EchoStar and DirecTV are taking “wait-and-see” attitude, spokesman for companies said last week, while cable and wireless companies haven’t tipped hand on what they might do. MDS America CEO Kirk Kirkpatrick predicted new service would be 3rd cable-like service in U.S.: “We believe the spectrum has a high intrinsic value.” Northpoint CEO Sophia Collier said company still was reeling from Commission decision to conduct auction but new service “could be Southwest Airlines” of subscription TV, and new entrants would be limited in what they could do because Northpoint held 5 patents for service. New companies also must meet standards of independent tests for interference, Collier said.
Northpoint won’t participate in any kind of auction, Collier told us, saying company “strongly believes” there won’t be “any kind of auction.” She reiterated plans for court challenge of Commission system to auction spectrum once final decision is made public. “Through our legal efforts we will prevail and we will receive parity with satellite companies” that received licenses without auction, she said. No matter what happens, Northpoint “won’t fold our tent,” Collier said: “We will find a way to start service.”
Collier also said geographic licensing regime was mistake: “Wireless cable companies failed before because they didn’t get a nationwide license. There’s no business plan for having a little license here and a little license there. It’s just not successful.” She said auction would end up in “Swiss cheese deployment,” with larger companies “cherry-picking the best locations… The large telecom companies can redline the U.S.”
Auction may raise prices for services substantially, industry official said. Northpoint had built business plan on fact it would receive free spectrum and it was planning to offer 96 digital channels and high-speed Internet access for $40 per month, compared with $80-$100 for same offering from cable.