FCC ADOPTS RULES FOR ADVANCED WIRELESS SERVICES IN 1.7 GHZ, 2.1 GHZ BANDS

Muleta said he expected the auction to take place “in 9 to 12 months from adoption of the order,” but “the timing might reflect” the Spectrum Relocation Trust Fund legislation currently pending on the Hill. He said the order didn’t specify any auction methodology: “That’s usually done [in] subsequence to the service rules… We have a normal process of announcing and establishing the auction procedures. We want to make sure that people understand that relocation issue… the legislation that’s pending [will affect] what we are doing here.”

Under the new rules, licenses for the bands will have an initial 15-year term, with 10-year renewals. By the end of the term, licensees will be required to show they have provided substantial services, but no interim construction requirements were imposed. Licensees also will be able to aggregate spectrum in the bands and to partition and disaggregate their licenses, which will be assigned via auction in the future. The Commission said 15% bidding credits would apply for entities meeting the definition of small business used in the broadband PCS auctions, with 25% bidding credits for very small businesses. The order also provides potential licensees with information on incumbents in the bands, which will be covered by clearance and reimbursement rules, and establishes rules to protect co- channel and adjacent channel govt. and nongovt. operations from interference.

The FCC said the 1710-1755 MHz and 2110-2155 MHz spectrum would be licensed on the following basis: (1) For 1710-1720 MHz and 2110-2120 MHz the license would be based on economic area (EA). (2) 1720-1730 MHz and 2120-2130 MHz, 1730-1735 MHz and 2130-2135 MHz, and 1740-1755 MHz and 2140- 2155 MHz, on regional economic area group (REAG). (3) 1735- 1740 MHz and 2135-2140 MHz on cellular market area (CMA). The Commission said that to accommodate the needs of a variety of providers, including large carriers, as well as small and rural providers, the band plan for the spectrum included a “mixture of license sizes and geographic areas.”

Muleta said that, consistent with the findings of the Spectrum Policy Task Force report, the order would “allow the marketplace, rather than the Commission, to determine what services [would] be offered in those bands and what technologies [would] be used to deliver those services.” The FCC said the framework also would ensure that “this spectrum is used efficiently and will foster the development of new and innovative technologies for consumers. The decision brings the FCC closer to achieving its goal of widespread availability of broadband services” that it said would stimulate economic activity and competition, increase productivity and improve education. “These objectives can best be met by implementing a market-based approach to licensing spectrum that provides greater certainty, minimal regulatory intervention and greater benefits for consumers,” the FCC said.

FCC Chmn. Powell said the availability of 90 MHz of additional licensed spectrum was a “key building block for the broadband Internet future of licensed wireless service.” He said the service rules reflected several key principles for efficient use of spectrum, including: (1) Maximizing the flexibility of licensees to choose the types and characteristics of the services that they would offer in their licensed spectrum. (2) Grouping like spectrum uses together so that technically compatible operations remained close to one another. (3) Defining spectrum users’ rights and responsibilities “in the clearest manner possible.” He also said designating spectrum for smaller license areas “may be particularly useful in rural America.”

FCC Comr. Copps expressed “serious” concern with the Commission’s decision “to move ahead without consolidation protections in the form of a spectrum aggregation limit. Under the rules… one company could apparently end up controlling the entire AWS band in a city or a geographic region, leaving no AWS spectrum for competitors. That’s a result I do not like.” He said the FCC had arrived at that point because it had eliminated the overall spectrum cap more than a year ago “in a decision from which I dissented. So, the Commission has already crossed the Rubicon. Establishing a limit for one band alone will not fix the larger mistake that we have already made.” He said he believed that “we would be better served by protection against one company dominating too much spectrum in a particular city or region, and my concurrence instead of approval is intended to make this point.”

FCC Comrs. Abernathy, Martin and Adelstein supported the decision, saying it would benefit consumers by fostering competition and the development of innovative technologies. The order “represents just the right framework for further innovation in the wireless arena by promoting continued industry development while employing a light regulatory touch,” Adelstein said. He said the Commission should continue to improve the availability of spectrum to providers willing to serve smaller areas: “Determining a band plan is an inexact science, at best.” Martin said sufficient spectrum was a “critical ingredient” to advanced wireless services, and the order should “lead to substantial consumer benefits, as new and better quality service develop in the 1.7 GHz and 2.1 GHz bands.”

Adelstein said he was concerned that “large license areas [could] raise auction prices so high that many companies that want to serve smaller areas cannot even afford to make a first bid. Large service areas also can have the effect of creating swaths of fallow spectrum in areas outside of our nation’s populated service areas.” He said although there was “value” in offering larger service areas for economies of scale and to facilitate larger scale deployments, “I believe we got the balance right here.” He said he was “especially pleased” that the band plan provided for licenses to be available not only on an REAG basis but also on a RSA/MSA and EA basis: “In providing a balance of smaller and larger areas, we hopefully offer something for everyone.”

NTIA Acting Dir. Michael Gallagher said the FCC’s action on 3-G “underscores” the need for Congress to pass spectrum relocation trust fund legislation (HR-1320), which would free up spectrum for 3G and other commercial uses by creating a fund to pay costs associated with moving govt. spectrum users. “It is incumbent on us to deliver the spectrum in time to meet the continued demands of consumers for voice and, more exciting, for data applications,” Gallagher said. The bill passed the House June 11 (CD June 12 p1) with strong support and the Defense Dept. already has agreed to vacate the 1710-1755 MHz band of spectrum targeted in the FCC order, with the condition that Dept. of Defense expenses would be covered. However, the legislation became more complicated when Sen. Sununu (R-N.H.) added a controversial “Northpoint” amendment that would allow Multichannel Video Distribution & Data Services (MVDDS) to obtain use of the 12.2-12.7 GHz band of spectrum without going through an auction.

CTIA applauded the FCC action, saying it was “pleased” to see the Commission, working closely with the NTIA, “move forward with pro-competitive service rules for this significant block of spectrum for advanced wireless services.” CTIA Pres. Tom Wheeler said the additional spectrum, matched with the flexibility provided by the new rules, would “help carriers meet America’s future wireless demands in all their forms and variations.”

CTIA praised the FCC’s decision to: (1) Provide long license terms, with strong renewal expectancy, to encourage the investment necessary to develop the band. (2) Divide the band so that licensees would have sufficient bandwidth to offer broadband services, while providing for multiple licenses in each geographic area. (3) License the band using a combination of larger regional and smaller geographic areas. CTIA said it believed such a “combination” approach best served the goal of balancing efficiency with the dissemination of licenses among a variety of applicants. (4) Support market incentives to ensure that spectrum was put to its highest and best use, following the success of the “substantial service” construction requirement in the PCS environment. (5) Allow both partitioning and disaggregation to promote efficiency and flexibility. (6) Provide for auction of the individual licenses in that band without aggregation limits.