Appeals Court Sides With FCC on Auctioning MVDDS Licenses in 12 GHz Band

DBS’s appeal dated to the Commission’s 2000 decision to let MVDDS share the 12 GHz band with DBS. DBS providers said letting MVDDS operate in the 12 GHz band at all meant loss of 2 decades of protection from harmful terrestrial interference -- protection DBS had enjoyed since 1982, when the Commission allocated DBS the bandwidth to encourage competition with cable. In allowing MVDDS into the band, the Commission didn’t conform with a requirement that spectrum sharing cause no harmful interference, DBS argued.

But the court denied DBS’s petition for review, deferring to FCC authority. The court said the Commission consistently and fairly applied its existing definition of harmful interference. According to the court, the Commission “had a rational basis for concluding that MVDDS providers could share the 12 GHz bandwidth without causing ‘harmful interference’ to DBS service providers.”

When the Commission let MVDDS into the band, it said it would ensure that MVDDS-caused DBS outages would be at a level “generally unnoticed by DBS subscribers.” DBS signals are reliable 99.8-99.9% of the time, the Commission said in a subsequent order, and the small number of interruptions “are well tolerated by DBS subscribers.” In almost all cases, MVDDS in the band would lead to an increase of less than 10% in DBS signal outage, said the Commission. In April oral arguments, FCC lawyers said a 10% rise in a 0.1-0.2% unavailability is small -- 0.01-0.02% (CD April 12 p2).

The court also deferred to the Commission on interference levels, saying “there is a logical argument that if MVDDS increases that small number of interruptions -- which the DBS providers say consumers do not notice now -- to a level at which they still do not notice the interruptions,” then DBS service won’t be seriously degraded.

The decision made note of an FCC “safety valve” in its MVDDS technical parameters. According to a 2nd FCC order, if a DBS provider can show a tangible detrimental impact on its service from MVDDS operations, the FCC may adjust the relevant technical parameters to eliminate the problem. “Through this safety valve, the FCC can ensure that MVDDS causes no harmful interference even if, contrary to the FCC’s predictions, operation under existing parameters produces noticeable service interruptions,” the court said.

DBS’s 2nd argument was that the Commission’s interference call was unacceptable because it provided no firm upper limit on the level of DBS outages to be tolerated. But since interruptions are at or below a level “generally unnoticed by the DBS subscriber,” the court again disagreed.

DBS industry officials said it’s too early to gauge the impact of the court’s decisions on the DBS industry, mostly because MVDDS operators haven’t launched wide-scale operations in the spectrum. Said one industry official: “For the industry, it’s unclear that this will turn into anything.”

“This isn’t a sky-is-falling issue for us,” said another DBS official: “Most of the wireless technologies that were going to provide video haven’t been used -- they've been heralded as new competition, but they haven’t gotten off the ground… As a practical matter, I think it’s very unclear what this will mean.”

DirecTV attorney Richard Bress said DirecTV “applauds the court’s decision with regard to the auction issue, which we believe the court correctly decided.” As for interference concerns, Bress said DirecTV “is happy to work with the Commission going forward with regard to the rules for implementation of MVDDS, including their safe harbor provisions.” EchoStar had no comment.

The court also endorsed the Commission’s DBS subscriber protection rules, which DBS industry members had said weren’t sufficient. According to the court- upheld FCC rules, if a new DBS subscriber has an antenna installed more than 30 days after an MVDDS operator begins operation, the subscriber has no right of complaint against DBS outages experienced as a result of MVDDS interference. At that point, it’s up to the installer to fix the problem. For existing customers, MVDDS is charged with remedying DBS interference complaints for one year, the FCC said.

The Court also upheld an FCC decision to auction MVDDS licenses for the 12 GHz band challenged by Northpoint. Having lost in its administrative challenge, the firm skipped the Jan. 2004 MVDDS auction, which awarded 10 MVDDS licenses for the 12 GHz band. Northpoint said it should have been granted exclusive access without an auction, as the first MVDDS provider to apply to the FCC to use that bandwidth.

Specifically, Northpoint said the auction: (1) Violated an ORBIT Act ban on auctioning “spectrum used for the provision of international or global satellite communications services.” (2) Was arbitrary under the Communications Act and Ashbacker Radio v. FCC, when compared to a Commission decision to let NGSO-FSS providers use a simple licensing process. (3) Exceeded Commission auctioning authority under the LOCAL TV Act.

The court said “none of these theories unambiguously bar the Commission’s decision to auction the MVDDS licenses” for the 12 GHz bandwidth. Citing its earlier decision (CD June 22 p1), the Court said in the context of the ORBIT Act, the meaning of “used for the provision of international or global satellite communications services” is “not entirely clear… Because of this ambiguity, we defer to the Commission’s reasonable interpretation.” The Court’s June decision rejected the argument that regardless of whether DBS is an international satellite service, DBS licenses can’t be auctioned because DBS providers use spectrum also available for NGSO-FSS, an international satellite service.

The Court also dismissed Northpoint’s argument that the FCC violated Sec. 309(j)(6) of the Communications Act by not creating a way to avoid “mutual exclusivity” among MVDDS applicants for the 12 GHz band. It also called “off the mark” a Northpoint argument that since both NGSO-FSS and MVDDS licensees seek to use the same spectrum at the same time, Ashbacker dictates that the FCC can’t grant one competing application while relegating the other to a comparative hearing. “Northpoint’s use of Ashbacker Radio here is creative, but stretches a bit too far,” the Court said: “The NGSO-FSS and MVDDS licenses are 2 different kinds of licenses… and need not be considered together.”

Citing the Supreme Court’s Chevron decision, the court also dismissed Northpoint’s argument that under the LOCAL TV Act, it is the only “qualified applicant” for the 12 GHz band’s terrestrial use, so the FCC lacks authority to auction MVDDS licenses in that band. “Under the Chevron decision, the court is required to give some deference to an administrative expert agency when reviewing their decision,” an industry source said: “There would be a presumption in favor of the agency from the beginning.”

“It’s a split decision for us,” said Antoinette Bush, an attorney representing Northpoint. She said the company is “disappointed” about the Court upholding the auction of MVDDS licenses: “In the meantime, we are continuing to explore opportunities for licensing our technology.” But, she said, Northpoint is “happy” about the decision upholding MVDDS sharing the 12 GHz band with DBS: “The Court validated that our technology works and the FCC was correct on” allowing MVDDS to share the 12 GHz bandwidth with DBS.