ADELSTEIN LAYS OUT SPECTRUM PRIORITIES, BACKS FEES AS OPTION

Adelstein outlined what he called a “Framework for Innovation” on spectrum policy, lauding the task force’s efforts to examine how FCC policy in that area should be updated. He stressed that spectrum use didn’t constitute a “property right, but a contingent right to use a public resource -- it can and should be put to use to benefit consumers.” He said there was a role for both licensed and unlicensed services and the FCC needed to “push the boundaries to accommodate new technologies” such as ultra- wideband. “While we must be mindful of harmful interference, we cannot let frivolous claims stand in the way of innovation,” he said. “For example, provided that UWB does not cause real harmful interference, we must encourage its development.”

On user fees, Adelstein expanded on support he signaled for that concept in the FCC’s order earlier this year that granted ancillary terrestrial component (ATC) authority to mobile satellite service operators. Comr. Copps had dissented from the majority’s rejection of a proposal to charge licensees fees for the additional spectrum usage rights they gained through ATC. Copps said licensees who hadn’t “internalized the cost” of buying spectrum at auction didn’t have the same incentive to use their bands effectively. Adelstein said in his separate statement then that he shared Copps’ “keen interest” in this area. Powell had rejected arguments that the FCC should have solicited additional comment on its authority to impose a fee on satellite licensees that would be granted ATC and said he agreed with a task force recommendation that Congress consider granting the FCC that fee authority.

NTIA Dir. Nancy Victory said at the CTIA Wireless 2003 show last month that the Bush Administration was close to releasing a proposed bill that would give the Commission the authority to set user fees on unauctioned licensed spectrum. In theory, such spectrum could include bands ranging from public safety and some frequencies used by utilities to satellite and broadcast spectrum. Neither the Administration nor the task force has stipulated whether any of those bands would be of more interest than others for imposing such fees. The point of such fees would be to increase the incentives for efficient use of spectrum by imposing a cost on holding on to spectrum that was lying fallow or being underutilized, sources have said. Such user fees were part of the White House budget proposal for fiscal 2004. Victory also indicated the question of using fees to help promote more efficient use among govt. users was under “active consideration.” She said the Administration was preparing a bill that would follow up on the budget’s suggestion of giving the FCC the authority to set user fees on unauctioned spectrum licenses based on public interest and spectrum management needs. The White House budget estimated that fee collections, if they began in 2005, could total $1.9 billion over 10 years.

Aside from broader principles on spectrum policy, Adelstein: (1) Backed continued use of auctions to resolve cases of mutual exclusivity for applicants seeking wide area licenses. He said he still had some concerns over the rules used to determine bidding credits, “which I already have begun to address with my colleagues and our staff.” (2) Cited a need to rethink the FCC’s build-out requirements for exclusive services, particularly a recent shift to a 10-year period for many services. “Ten years is a lifetime in the spectrum business and I believe that such a policy can undercut the ability of carriers to get access to unused spectrum -- whether they are in underserved areas or have developed new technologies,” he said.

(3) Called for better FCC policies to improve spectrum access to operators who served rural areas, “particularly community-based providers.” He said he was concerned with large license areas that could raise auction prices to a level that many firms interested in serving rural markets couldn’t afford to bid. He reiterated his support that future auctions include smaller wireless areas that reflected a smaller customer base, as was the case in a recent 700 MHz auction. Adelstein said there were cases when there was value in offering larger service areas for economies of scale and to accommodate large-scale rollouts. “I believe that we can find a balance, and I am pleased to note that a number of commenters in the 3G proceeding supported different sizes of license areas for different blocks of 3G spectrum.” (4) Stressed there was no higher priority for the wireless industry or the FCC than providing Enhanced 911 services.

Adelstein likened his “Framework for Innovation” to a greenhouse that would protect spectrum from elements such as harmful interference while being flexible enough to allow a range of technologies to grow. He said he supported the effort to identify new unlicensed spectrum at 5 GHz and to identify new licensed spectrum for 3G. “However the Commission chooses to make spectrum available, it must not suggest the vesting of permanent property rights,” he said. “The Commission must always retain the authority and flexibility to regulate the rights and responsibilities of both licensees and users of unlicensed spectrum.” Adelstein also said that in allowing additional flexibility to already licensed services, “we should consider the feasibility of authorizing such rights through auctions or imposing some other financial incentive to encourage efficiency. It may not always make sense to actually adopt such an approach, but I do think we should always consider it.”

On secondary markets for spectrum, Adelstein said he wanted to encourage them while ensuring that license obligations still were satisfied. Spectrum regulatory changes “should promote a secondary market that accommodates new technologies, but does not cause the Commission to lose or cede control over the spectrum,” he said.