FCC EXAMINES REGULATORY OVERHAUL FOR ITFS, MDS SPECTRUM

The possibility of ITFS operators’ being able to sell off spectrum has sparked angst among some who view that spectrum as tantamount to national parkland for educators. Others see the spectrum as underutilized, with the possibility of selling it giving another option to ITFS operators who already lease part of those airwaves to commercial operators. Comr. Copps raised concerns about the proceeding’s potential outcomes, including the possibility of a windfall to licensees who sold spectrum they received free.

FCC Chmn. Powell stressed the extent to which the 190 MHz of contiguous spectrum occupied by MMDS and ITFS at 2.5 GHz was “prime spectrum real estate” that hadn’t yet lived up to its potential in the absence of needed regulatory changes. The spectrum is more than the 83 MHz that spurred Wi-Fi development at 2.4 GHz and is “roughly equal to all spectrum currently devoted to terrestrial, mobile wireless -- a ubiquitous, nationwide service characterized by a high level of competition, low prices and constant innovation,” he said. The proceeding isn’t designed to “undermine” the efforts licensees have made to date to deliver services under existing rules, Powell said: “Instead, we seek to expand the rights and opportunities of 2.5 GHz licensees, affording them greater flexibility to deliver services to the American people.”

The proposal aims to find a way to streamline rules “that existing users find cumbersome to work with” while examining ways to provide access for new uses in the band, Wireless Bureau Chief John Muleta said. He said the proceeding combined 2 of the FCC’s most important policy goals -- spectrum policy reform and building broadband capability. Several industry observers said the proceeding was significant as one of the first major proposals for changes in a particular band since the Spectrum Policy Task Force issued recommendations to the Commission last fall.

The FCC seeks comments on ways to reconfigure the 2500- 2690 MHz band, including recommendations submitted last year by the Wireless Communications Assn. (WCA), the Catholic TV Network and the National ITFS Assn. In a joint proposal, the groups said that with more flexible rules, those systems could provide the same kind of high-speed wireless service as Wi-Fi, but on a ubiquitous, rather than hot-spot, basis. They sought a new band plan for 2.5 GHz that would protect the one-way, high-power operations that some ITFS licensees would continue to use while allowing 2-way advanced services to operate without creating interference. The Wireless Bureau’s Charles Oliver said the proposal sought comment on “effective and efficient transition mechanisms for incumbent licensees,” including the rebanding plan floated by the coalition of WCA and others. It also asks about the use of competitive bidding procedures if the Commission ultimately adopts a new band plan, he said.

The Commission is considering how to promote increased access and “efficient utilization” of ITFS spectrum that it said in some cases was underutilized. The proposal considers a geographic licensing approach and an unlicensed approach for “available ITFS spectrum.”

ITFS licensees now can sign leasing arrangements of up to 15 years with companies such as WorldCom and Sprint. Under FCC rule changes adopted in the early 1980s, ITFS operators can lease excess capacity to commercial operators while maintaining a certain percentage of it for educational purposes. Copps said the rulemaking asks whether ITFS licensees should no longer be required to use that spectrum for educational purposes and whether the FCC should allow them to sell their licenses to commercial operators that wouldn’t face educational programming restrictions.

“Such an outcome would threaten this important educational tool,” Copps said: “If ITFS becomes just another commercial service, we will have lost the last place on the spectrum reserved specifically for education.” He said it worried him that a significant number of ITFS licensees leased spectrum to noneducators “and that some licensees have not built out their facilities even though they have had licenses for many years.” He said: “I would rather work to make ITFS a better educational tool than to say that it cannot be saved.” ITFS licensees, and some MMDS operators, received spectrum free, Copps said. “If we allow these licensees to sell their spectrum, we could see a rush of licensees who received their spectrum for free selling their licenses and pocketing the proceeds. If this occurs, we will be vulnerable to charges of allowing windfall profits using the public spectrum.”

The part of the proposal on updated, “workable rules” to speed the transition to wireless broadband on that spectrum is welcome, said Leslie Harris, a Washington attorney who represents ITFS licensees. “If they had stopped right there, we would have had an NPRM that we need and want,” she said. While it’s too early to tell whether the FCC would clear the way for ITFS operators to sell their spectrum, she called the possibility “troubling.” The greatest concern about that is that “once the ITFS license is sold or auctioned to something other than education, it’s gone and over time the spectrum loses its educational nature,” Harris said. Another complicating factor is that decisions by educators to sell may not necessarily be made by those who actually use the bands. “Given the current economic climate, there could be enormous pressure on educational institutions,” particularly for school districts where the local govt. is strapped for cash and may focus on the short-term benefit of monetizing the asset, she said.

Among the areas on which the FCC seeks feedback in the proposal, the Bureau’s Oliver said, are: (1) Whether and how to reconfigure the 2500-2690 MHz band to increase access to the spectrum and to resolve operational and compatibility concerns between high-powered one-way services and low-power cellularized services. (2) Alternatives for licensing unassigned ITFS spectrum, including a transition to a geographic licensing scheme or allowing unlicensed operation on a primary basis. (3) Technical rules to increase license flexibility and protect incumbents, including service rules for mobile operations. An FCC order in 2001 added a mobile allocation to the 2500-2690 MHz band, clearing the way for more than fixed wireless uses and sparing incumbent licensees from a relocation threat posed by 3G spectrum decisions (CD Sept 25/01 p1). (4) A proposed consolidation of the rules into 2 parts, down from 4, to reduce licensee confusion and ease FCC administration. (5) A proposed transition of MMDS and ITFS licenses to the Universal Licensing System.

The order adopted Thurs. suspends construction deadlines for current MMDS and ITFS licensees pending completion of the proceeding. The FCC said it considered a suspension necessary while it reexamined the performance requirements for operators in this area. It also created a Gulf of Mexico service area.

The proposal lines up consideration of MMDS and ITFS regulatory changes in light of some of the far-reaching spectrum reform recommendations last year by the Spectrum Policy Task Force. “A lot of those issues are addressed because a lot of them are relevant,” said Peter Tenhula, task force dir. One idea in the report was that of grouping like services together to mitigate interference concerns, such as high-powered and low-powered operations. Another concept was the use of unlicensed spectrum as an underlay to existing operations or as an “easement.” Tenhula said: “We tried to tackle as many of the recommendations in the task force report as possible.”

The FCC also seeks comment on the applicability of a 2- sided auction approach outlined last fall in a staff paper by the Office of Plans & Policy. Under such a system, incumbents voluntarily would turn in spectrum in return for greater flexibility. Encumbered spectrum that incumbents would turn in would be auctioned along with spectrum that was unassigned under this proposal, which seeks to make complementary spectrum available in a single auction by addressing the coordination challenges that arise when large blocks of spectrum aren’t available at the same time in a large-scale transition to new allocations. Incumbents could keep their current use and not get additional flexibility or they could participate in the auction, gain immediate flexibility and be allowed to keep the auction proceeds. They also could buy back their licenses in the auction and keep the proceeds from their own high bid.

Muleta told reporters after the meeting that the Commission wasn’t “prejudging” the issue of whether some of the spectrum should be auctioned. The proposal inquires whether there’s a market-based mechanism such as an auction “to identify the cost of transitioning and is that the best solution,” he said: “The item will outline several alternatives on how we can do that. We're not prejudging which is the right outcome at this point.” Asked about concerns that parts of ITFS spectrum were underutilized, Muleta said that to the extent they were leasing capacity to commercial operators “that’s not directed toward educational goals and there’s a mismatch there. We need to address that issue.”