MSS May Get 2/3 of Available 2 GHz Spectrum, Commission Seeks Comments on Rest

In the first notice, the Commission said it “intends to modify” TMI/TerreStar and ICO spectrum by distributing 5 1/3 MHz more spectrum to each, boosting the MSS firms from 8 MHz to 13 1/3 MHz. In the 2nd, the FCC proposed 3 scenarios for the remaining 13 1/3 MHz: 1) Evenly distribute the spectrum to ICO and TMI/TerreStar, 2) Solicit applications for a new MSS licensee, or 3) Allocate the spectrum for another service.

MSS licensees ICO and TMI/TerreStar, hungry for extra spectrum, are expected to keep seeking 20 MHz each. But wireless carriers are anxious for access to spectrum in the 2 GHz band, and the CTIA has been lobbying the FCC for it.

The FCC said in the public notice it need not seek more comment on whether TMI/TerreStar and ICO should get at least a third of the spectrum, but “finds in this case that it would be in the public interest to do so.” The International Bureau gave 14 days for comments, and 10 days for replies. On the 3 reallocation proposals in the 2nd notice, interested parties have 30 days to comment, and 15 days to reply. The proceeding will be run by the International Bureau (IB), potentially in cooperation with the Office of Engineering and Technology (OET), an industry source said. Should 13 1/3 MHz go to wireless, the Wireless Bureau would devise the service rules.

“The wireless industry is very interested in this spectrum because it’s near the PCS band,” said a carrier source. “It’s very suitable for CMRS.” The spectrum is close enough on the radio spectrum to PCS spectrum to be usable for PCS calls, making its auction value potentially billions of dollars.

A carrier source said the spectrum’s characteristics are akin to those of the 10 MHz Nextel gets as part of the 800 MHz rebanding. The decision to give Nextel that spectrum led to a huge fight as other carriers initially insisted Nextel instead get less valuable 2.1 GHz spectrum. Nextel ultimately will pay more than $4 billion.

Citing rising buzz and investment around MSS, lawyers on the satellite side said they are optimistic that the FCC will split the available 13 1/3 MHz evenly between the two MSS licensees. “Opening a new processing round or reallocating the spectrum to another service would be inconsistent with the Commission’s previous rulemaking decisions to provide enough spectrum for competitive MSS providers,” said TMI attorney Greg Staple.

In fighting to keep the extra 2 GHz spectrum, MSS players are likely to argue that terrestrial wireless doesn’t need more spectrum. Staple called attention to what he termed “an unprecedented overhang of unauctioned 3G terrestrial mobile spectrum” reaching market soon. “There is now about 170 MHz of unauctioned spectrum that can be used for terrestrial mobile,” Staple said.

Between 2006 and 2008, the FCC is expected to auction as much spectrum for terrestrial wireless as was previously licensed for all terrestrial mobile services -- cellular and PCS -- during the 1980’s and 1990’s combined, Staple said. Soon to be on the table is 110 MHz for AWS at 1.7-2.1 GHz and 60 MHz of unauctioned UHF band spectrum to be emptied by the DTV transition, said Staple.

Industry members said the Thurs. announcements bode well for ATC’s further development. Both 2 GHz licensees, ICO and TerreStar have said they will file for ATC authority. But industry members also said if MSS systems are to be viable, they need adequate spectrum, and 13 1/3 MHz might not be enough. Even if ICO and TMI/TerreStar emerge from the fray with 20 MHz of spectrum apiece, they still would have less spectrum than MSS rivals Inmarsat, MSV, Iridium.

“MSV welcomes ATC competition,” said Mobile Satellite Ventures (MSV) CEO Alexander Good. Spectrum boosts for ICO and TMI/TerreStar make those firms stronger MSS competitors. “We realize because of the substantial expense of building out the space segment, there needs to be sufficient spectrum to ensure these systems are economically and technically viable,” said Good. MSV’s system is underway in the L-band. The firm is the sole MSS provider with ATC clearance from the FCC. Sibling companies MSV and TMI/TerreStar are expected to compete in MSS from their respective bands. The 2 firms share Motient as a common investor. Motient has a 61% stake and operational control of TerreStar and a 49% stake in MSV.

With an ATC application pending before the Commission and a 2 GHz petition also being considered, Globalstar said it “will continue to be active” in the proceeding. The firm will continue to protest cancellation of its 2 GHz license and oppose a 20/20 MHz split between ICO and TMI/TerreStar, said William Adler, vp-legal and regulatory affairs at Globalstar.

“A third of the spectrum needs to go to a new MSS license, and we may file a new license application depending on what the FCC does,” said Adler. Globalstar’s position remains that the Commission “ought not to compromise the 40 MHz of spectrum by assigning it to any use other than MSS,” said Adler: “We want to make sure that if we do persuade the Commission to restore our license, that we have an equitable amount of spectrum to build a 2 GHz system.”

Analysts speculated that Inmarsat, MSV’s prime MSS competitor, also might want the 13 1/3 MHz, should it be made available for license to another MSS provider. Inmarsat officials declined to comment on the company’s plans.