MSS TERRESTRIAL RELIEF TAKING SHAPE AT FCC

Several sources said decision on ATC proposal, which has sparked concern from wireless carriers, is expected early next year, although item isn’t on circulation on 8th floor. Eighth floor appears to agree with idea of granting measure of terrestrial flexibility to MSS operators who meet milestones for operating in this spectrum, source said. Next step is how to work out parameters so allowing MSS licensees to do some terrestrial operations in band doesn’t become “de facto” reallocation to terrestrial wireless service, sources said. One attraction of ATC is that it’s in line with flexible use philosophy laid out in recent Spectrum Policy Task Force report, lobbyist said. “The dilemma that ATC has presented from Day One is how do you do it without opening the door to a de facto reallocation?” source asked. “The Commission is struggling to come up with a regulatory scheme that has enough firewalls that that doesn’t happen.”

“We believe the Commission will grant the MSS operators ATC authority,” Legg Mason said in report. It said ancillary use definition appeared unresolved for now: “This matters to the wireless carriers, which want to ensure that an MSS licensee cannot segue over to providing an essentially competing terrestrial wireless service using free spectrum. The issue also matters to the MSS operators, which, depending on how the issue is finally determined, may or may not benefit from the expanded authority.” Globalstar, Motient and New ICO are among operators best positioned to take advantage of flexibility, if granted, Legg Mason said. Boeing, Inmarsat and Iridium, MSS licensees operating in different bands, haven’t sought ATC authority. Boeing and Inmarsat have said they didn’t need ATC for their service plans and “Iridium has somewhat of a head start in the field,” Legg Mason said. On another related MSS issue, Legg Mason said it believed FCC might make 14 MHz of reserve MSS spectrum available, in addition to at least part of spectrum that agency would reclaim if licensees in band failed to meet their milestones. “This could amount to somewhere between 25 and 30 MHz of additional spectrum that the wireless carriers could obtain, through auction, for fixed or mobile use,” Legg Mason said.

Commission in Aug. 2001 opened rulemaking in response to New ICO request to develop terrestrial spectrum using bands allocated to MSS. In March, agency sought additional technical feedback on proposals that would allow flexibility in services that used MSS spectrum. MSS licensees such as Globalstar have been urging FCC to take quick action to allow ATC usage in spectrum as way of keeping their operations financially viable. Meanwhile, CTIA has urged FCC to reallocate that spectrum and make it available to other services such as 3G. AT&T Wireless, Cingular and Verizon Wireless also have asked FCC to take another look at MSS to assess whether it could be viable technology without ATC.

Key questions remain on how FCC would fill in details of ATC, with several industry sources saying agency was examining “gating criteria” that would put boundaries on terrestrial operations in that spectrum. One possibility would be requiring handsets to sample satellite signal first, industry source said. Another potential limit would be for FCC to require full deployment of satellite system before ATC was permitted, source said. “For example, just because ICO has one satellite up there that’s circling the globe, that wouldn’t entitle them to start doing ATC tomorrow,” source said. “They are going to have to put up the rest of that constellation.” For companies such as Globalstar and Iridium that are further along than New ICO, they still could face “a host of other technical requirements,” source said. “Nobody will be able to hang out the ATC sign the next day.” Several sources said that legal issues also are tied to how ATC is defined because terrestrial wireless spectrum must be auctioned under FCC rules for mutually exclusive licenses. “There are some legal hurdles they would have to overcome,” one source said.

Several sources also said increased attention is being paid to milestone issues connected to MSS licensees. Interest among mobile wireless carriers is that spectrum returned to FCC because milestones aren’t met be freed up for other uses. “I don’t see it happening by the end of the year,” one source said. “There is a balancing going on. There will be a reallocation of some MSS spectrum to 3G. How much is still up in the air.”

Issue of milestones came up in recent filing by AT&T Wireless, Cingular Wireless and Verizon Wireless concerning application by Constellation and Mobile Communications Holdings to transfer license to ICO. Wireless carriers said this application would violate FCC rules established in 2 GHz order. Commission had set strict milestones in lieu of financial qualifications to prevent spectrum warehousing as well as antitrafficking rule to block new licensees from transferring bare (nonoperational) licenses for commercial gain when rules were established in Aug. 2000, filing by wireless carriers said. In general, “the Commission is really going to hold the 2 GHz licensees’ feet to the fire in terms of have they met their due diligence milestones, and people are not going to get cut a lot of slack in that regard,” one lobbyist said. In past year or 2, FCC has started to enforce milestones more aggressively, source said. “There is certainly a lot of talk of fairly Draconian enforcement of milestones on 2 GHz,” source said. “To the extent that you take away licenses, you arguably free up allocations.”