FCC APPROVES SERVICE RULES FOR 27 MHZ OF SPECTRUM

Order will: (1) License telemetry services at 216-220 MHz on secondary basis using “frequency coordinated site-by- site approach” in line with technical specifications provided for these operations under Part 90. (2) Assign 52 major economic areas at 1390-1392 MHz, for which general competitive bidding rules will apply. Open eligibility will be allowed for initial licenses assigned by geographic areas. Licensees will be allowed to partition or disaggregate their licenses. (3) Assign 6 economic area groupings for 1392-1395 MHz paired with 1432-1435 MHz. Competitive bidding rules also will apply, as will assignment of geographic area licensing. (4) Continue to license 1427-1429.5 MHz to wireless medical telemetry service (WMTS) on primary basis, with telemetry services licensed on secondary basis using frequency coordination. Order also will “adopt certain elements of a proposal to allow telemetry to operate on a primary basis in this band in certain geographic ‘carve-out’ areas.” (5) License telemetry services on primary basis for 1429.5-1432 MHz. FCC also adopted parts of proposal to allow WMTS to operate on primary basis in certain geographic carve- out areas. (6) Assign 1670-1675 MHz on single, nationwide basis. Initial licenses will have open eligibility, with assignments by geographic area licensing. Competitive bidding rules will apply. (7) Assign on single, nationwide basis 2385-2390 MHz, for which competitive bidding rules will apply.

Commission said report and order recognized several bands in proceeding are encumbered by co-channel incumbent govt. operations that must be protected from interference either indefinitely or until they have been relocated. Order puts in place certain coordination procedures that require some fixed and mobile wireless licensees to receive approval from govt. incumbents before starting operation within incumbent’s protected zone.

Point of NOI on rural services, according to FCC, is to develop “a more current and substantial record on the Commission’s mandate to ensure that rural telecommunications companies are given the opportunity to participate in the provision of spectrum-based services.” Issue of extent to which carriers are using wireless spectrum partitioning and disaggregation rules has popped up at FCC for years. Concern has been that while rules were designed to make it easier for carriers to disaggregate spectrum that more easily could be used to serve rural areas, regulatory and market incentives haven’t existed for operators to do so with any frequency. One concern voiced by rural interests is that large carriers may be unwilling to split spectrum in areas that aren’t heavily used now out of concern that in several years, market may have grown and they will need capacity. Rural Telecommunications Group (RTG) lauded planned NOI, noting it shows FCC is acknowledging current reliance on secondary markets to serve rural areas isn’t working. “We have known for some time that partitioning and disaggregation is a failure and have been very vocal about this issue at the FCC and on the Hill,” said RTG Gen. Counsel Carri Bennet.

Copps noted Sec. 309(j) of Communications Act requires FCC to design competitive bidding to promote objectives such as disseminating licenses among diverse array of applicants, including rural telcos. “I also believe that the Commission has far too little information to rely on partitioning and disaggregation as fulfilling our statutory responsibility to promote service in rural areas,” he said. Copps said rural carriers have told Commission that partitioning and disaggregation aren’t resulting in “significant new service to rural areas.” He noted in some cases, rural carriers have found that cost to national carrier of signing such deal with smaller telco can be higher than profit larger operator would realize from agreement. “Therefore, they find it better business to let the rural spectrum lie fallow, even if rural carriers are interested in using it,” he said.

Separately, Copps voiced concerns about both “general propriety” of band managers and practical questions that he said remain “unresolved” in this area. In 2000, FCC for first time auctioned spectrum to band managers as part of 700 MHz guard band bidding. In this case, guard band managers must subdivide spectrum for lease to 3rd parties for commercial and private wireless uses, while complying with frequency coordination and interference rules. Band manager concept has been part of overall efforts at FCC to allow licensees to use spectrum more flexibly. Copps said band managers can gain “private profits by brokering public spectrum.” He noted these entities, who act as “broker” rather than service provider, can sell spectrum to whoever is willing to pay for it. Commission hasn’t yet adequately evaluated success of this initiative, he said. Unlike FCC, band managers aren’t required to make spectrum decisions in transparent, public way, Copps said. “It is legally obligated to maximize profits for its shareholders rather than serve primarily the public interest,” he said, noting that Congress chose FCC to manage spectrum as part of agency’s public interest obligations. “I do not believe that Congress wanted the FCC to delegate its spectrum authority to private speculators who can turn public spectrum into private profits with no intention of providing communications services,” he said. Among questions Copps said remain unanswered about band manager system is what happens if lessee violates FCC rules.

Powell said that while band manager issue is legitimate point of debate: “I don’t share the characterization that that’s a privatization of that [public interest] responsibility and that we've washed our hands of it.” When Commission makes decision to provide vehicle such as band manager concept that relies on market-based mechanisms, “it’s incorrect to characterize that as an abdication of its responsibility in the public interest or a delegation or in essence a privatization of that function,” Powell said: “I think it represents the Commission’s judgment that doing it that way is in the public interest, that the public benefits balance to a greater degree than the alternatives.” He said he doesn’t believe that public interest is always “synonymous” with govt. maintaining all controls in such areas.

In other areas, FCC Comr. Abernathy emphasized importance of “more detailed than usual interference protections” in 1427-1432 MHz band. She noted that medical and utility telemetry communities have created solution that addressed potential interference concerns. American Hospital Assn. and utility telemetry developer Itron agreed to power limits and geographic separation among adjacent users in 1.4 GHz band. No commenters opposed interference limits agreed to by these parties, Abernathy said. “While I generally support flexibility in allocations and service rules, I cannot support flexibility in the face of the identified public interest harms associated with that approach for these bands,” she said.

ArrayCom, like other developers in Time Division Duplexing (TDD) sector, expressed interest in FCC decision to allocate spectrum in 27 MHz order for flexible use that would allow TDD-based uses. In recent comments, ArrayCom has expressed concern to FCC that its rules specify that National Weather Service operations adjacent to 1670-75 MHz band must be protected by prospective commercial operations. ArrayCom asked that FCC include in its rules site locations to be protected and requisite protection criteria. Officials said it was too early to tell extent to which service rules addressed concerns of all prospective users in band. “We are generally very happy with the decision but we are still awaiting the details,” said ArrayCom’s Randy Coleman. -- Mary Greczyn

FCC Considers Bells Separate Affiliate Rule

FCC also opened proceeding at agenda meeting 0Thurs. to decide whether to allow automatic sunset for certain separate affiliate rules for Bell companies. Sec. 272 of Telecom Act requires Bells to provide in-region long distance service in each state through separate corporate affiliates and sets out variety of “nondiscrimination safeguards” guiding those affiliates’ behavior. Telecom Act says requirement continues for 3 years after Bell receives Sec. 271 approval to offer long distance in a state and then automatically sunsets unless FCC extends it. Verizon would be first Bell permitted to offer long distance in a state without separate affiliate because in Dec. it will have marked 3 years of offering long distance service in N.Y.

Agency asked for comment on: (1) Whether it should make decision that would apply to all states or should weigh sunsets on state-by-state basis. (2) Nature of current competitive marketplace and how it affected sunset decision. FCC Comr. Copps said he was particularly interested in competition inquiry because he had been pushing agency to keep better track of what happened to competition when a Bell entered long distance business. (3) Whether costs of separate affiliate and related requirements outweighed benefits. FCC also asked about variety of options it could take on sunset issue: (1) Allow affiliate rule and related safeguards to sunset. (2) Extend separate affiliate rule but for defined amount of time. (3) Allow sunset but adopt less stringent separation requirements, such as audits or reporting requirements.

BellSouth said it “welcomes” FCC review of separate subsidiary sunset and is “encouraged” that agency will weigh cost of complying with Sec. 272 rules vs. benefits. “We are confident that once that analysis is done, the case for letting those rules sunset on schedule will become all the more apparent,” said BellSouth Vp Bob Blau.