Wireless Spectrum Auctions

After 5 years of legal wrangling over NextWave’s PCS licenses, similarly situated bankrupt bidder Urban Communicators asked the FCC to reinstate its C- and F-block licenses. The company, which won 10 C-block and 13 F-block licenses in 1996, cited the Jan. Supreme Court ruling that the FCC had erred when it cancelled NextWave’s licenses for nonpayment. Urban Comm also urged the agency to adjust the interest rates charged for the revised installment payment period to reflect the lower rates that would apply if the licenses were granted today. Arguments on the application of lower interest rates are part of discussions between NextWave and the FCC on that carrier’s installment payments, many sources said.

Coordination within the wireless industry is required to avoid interference in the unlicenced band, a panel of experts said Thurs. at a Wireless Communications Assn. (WCA) conference in Washington. “It really does take some cooperative effort when you've got an open space involving spectrum,” said Peter Tenhula, FCC Wireless Bureau deputy chief. He said interference problems often could be solved by individual companies: “Industry spends a lot more time figuring out a lot more issues, [and] they are sometimes a lot smarter in those issues,” while “the process of putting restrictions [by the FCC] is mind-numbing to say the least.” NextWeb CEO Graham Barnes said there was “no guarantee for any of the operators to operate without interference. As an operator, you have to keep your head up and be aware that there are other operators out there.” For example, he said Cal. operators were in the process of creating a group called “The Area Network Coordinators” to share information on network changes: “I don’t believe it’s something the FCC should do, I think that it should be left to the individual operators.” UniiGo Communications CEO Dudley Freeman suggested “the industry itself should do some type of registration with some type of a database… It’s something that we have to govern, so that all our businesses are together, rather than against one another.” WCA attorney Robert Primosch said a “remedy” for interference was to “to demonstrate that [the interfering parties] are not operating within the parameters of Part 15” of the FCC’s rules. Barnes and Freeman agreed the Commission should release extra spectrum to help companies eliminate interference. Barnes said unlicenced spectrum presented a “great opportunity to start in the business,” but “as we get more customers, we need more spectrum… We [continue to] operate in the unlicensed spectrum because we don’t have access to some of the [licensed] band because it all has been auctioned off.” In a separate panel discussion, Karen Possner, BellSouth vp- national security & strategic policy, asked whether it was secure to share critical infrastructure information with the govt.: “This world is a different place after 9/11… Release of such information could provide a road map for the terrorists.” She said physical telecom facilities remained a “target, and we have responsibility to increase security of our physical facilities. We want to be certain [the information] we share with the government is used for the purposes it’s been asked for and it’s not shared with the people who are not legitimate.” She said she was sure the solution would be found, “but we are not there yet.”

AT&T Wireless and Verizon Wireless filed a petition for review Tues. with the U.S. Appeals Court, D.C., against the FCC decision in Jan. allowing mobile satellite service (MSS) operators to use an ancillary terrestrial component (ATC). The petition was filed the day after petitions for reconsideration were due at the FCC on the issue (CD July 9 p5). The wireless carriers’ charged that allowing MSS providers to provide terrestrial service with satellite spectrum was unlawful: “Converting a satellite-only authorization into a license for mixed satellite and terrestrial use was a major license change requiring the FCC to conduct an auction under Section 309(j) of the Communications Act.” The carriers said they were “aggrieved” by the ATC order, not only as competitors in the mobile telephony market but also as licensees that had to pay for spectrum. Mobile Satellite Ventures Vp Lon Levin said the companies were exhibiting consistent behavior by “challenging us from going forward in every forum they can find.” Meanwhile, he said, issues raised in petitions for reconsideration by Cingular and CTIA were “creative ways to kill the MSS business. They keep on coming up with more and more ways to stop us from going forward without any regard for the fact that the satellite business is challenging.”

Top FCC officials said Wed. at the Wireless Communications Assn. (WCA) show in Washington that they expected decisions by early next year on a series of interlocking spectrum issues, including efforts to solve public safety interference at 800 MHz. The outcome of the 800 MHz proceeding has implications for replacement spectrum that Multipoint Distribution Service (MDS) operators seek in the planned reallocation of some MDS spectrum for advanced wireless services.

Wireless and satellite petitions ask the FCC to reconsider an order on technical specifications in the use of ancillary terrestrial components (ATCs) with mobile satellite service (MSS) spectrum. The Commission clarified one of the major issues -- when ATC applications could be submitted -- in a separate order Thurs. (CD July 8 p3). Inmarsat and Mobile Satellite Ventures (MSV) addressed interference protection limits adopted by the Commission to protect Inmarsat’s MSS system satellites and mobile terminals (MTs) from harmful interference in the L-band. MSV said the technical restrictions on co-channel ATC user terminals in the L-band were too restrictive, allowing Inmarsat’s next- generation satellites an interference protection level of 1.4%: “This level of protection afforded Inmarsat is arbitrary because there is no record evidence to support that Inmarsat needs this level of interference protection.” The accepted international protection level is 6%, MSV said, and the FCC should adopt that as well. Not only will that level protect Inmarsat satellites, but the L-band spectrum can be use more efficiently, MSV said. A more-lenient protection level combined with an interference reduction factor of 3.5 dB for a half-rate vocoder (a device that compresses the voice signal) will allow applicants to deploy a larger number of base station carriers, 14,785, instead of 3,450, in the L- band, the company said. The Commission also should allow L- band base stations to operate at higher signal, power flux density and gain levels, all of which are set at “unreasonably conservative parameters” to protect Inmarsat user terminals, MSV said. Inmarsat told the FCC it was pleased with the adopted protection levels, but said they would be effective only if based on accurate assumptions about ATC systems and if they could be modified to account for system proposals that differed from FCC assumption. Peak gain levels specified by MSV in previous letters to the FCC are 1.5 dBi lower than what the Commission proposed, Inmarsat said, and could cause more interference than expected without certain additional limitations: “If one took this 1.5 dB adjustment into consideration in the Commission’s calculation of the expected level of self-interference from L-band ATC systems, the number of permissible MSV ATC base stations per channel would decrease to 1,221 (from 1,725).” The FCC also should clarify that the limit on the number of simultaneous transmitting ATC mobile terminals should be 90,000 to protect Inmarsat spacecraft from adjacent channel interference, the company said. Meanwhile, Boeing asked the FCC to clarify its rules on the geographic and temporal coverage requirements for MSS ATC systems. Where 2 GHz MSS licensees must provide service to the entire U.S. all of the time, 2 GHz MSS geostationary orbit licensees must provide service to the entire U.S. only “if technically feasible,” Boeing said. It’s not technically possible to provide MSS to all of Alaska from a GSO satellite and “the Commission’s geographic gating requirement for 2 GHz MSS operators should use the identical language as its geographic coverage requirement for 2 GHz MSS networks,” Boeing said. Cingular Wireless and CTIA also petitioned for reconsideration, raising concerns that gating criteria designed to ensure substantial satellite service weren’t adequate. Cingular argued that nothing in the order would prevent an MSS licensee from using 99% of its spectrum for terrestrial operations and having only terrestrial customers. “Porous gating criteria which allow predominant, if not total, terrestrial operations expose the unlawfulness of the FCC’s decision to not utilize auctions and the inconsistency with its satellite-only decisions,” Cingular said. The gating criteria don’t ensure ancillary terrestrial service will remain “truly ancillary,” it said. “While the rules do require the launch and continued operation of a mobile satellite system that meets the coverage requirements for the various MSS bands,” Cingular said, “those coverage requirements are defined solely in terms of one or more satellites being ‘in view’ of potential subscribers anywhere in the United States.” Similarly, it contended that commercial availability as defined in the order was linked to meeting coverage requirements, not requiring that an MSS licensee have paying satellite service subscribers. It called for 2 gating criteria changes: (1) Limiting the ability of MSS licensees to reduce satellite system capacity. (2) Requiring that customer equipment look first to the satellite to complete a connection. “The Commission must also make clear that MSS licensees bear the burden of demonstrating by credible evidence -- not just mere certification -- that the ATC gating criteria have been satisfied,” Cingular said. It also urged the FCC to clarify that an MSS licensee must satisfy all of its implementation milestones as part of the gating criteria. The rules “do not explicitly require” the satisfaction of implementation milestones to obtain ATC authority, but stipulate that a licensee’s service “must be commercially available” under the coverage requirements of a particular band. Similarly, CTIA said the FCC didn’t go far enough to ensure “ATC service would remain ‘ancillary’ in practice.” It said the order directed MSS ATC applicants to demonstrate that the ancillary offering was integrated with the MSS offering, which they could meet by satisfying a “safe harbor” standard or an individualized FCC assessment. A footnote to the order says such requirement shouldn’t be imposed on PDAs, laptops or other computers. But CTIA said the exact application of the footnote wasn’t clear. “There is no reason to treat PDAs or other computing devices that contain an MSS offering with an ATC component differently than a handset with the same functionality,” CTIA said.

Northpoint said late Fri. that opponents of a spectrum- sharing amendment attached to the spectrum relocation trust fund bill “made erroneous comments to the media” by saying the amendment “sought an exemption to an existing auction policy. The amendment would allow existing and proposed multichannel video distribution & data services (MVDDS) to share the 12.2-12.7 GHz band with DBS (CD June 27 p1). Northpoint said that, despite comments by opponents, “the amendment established licensing parity by extending an already existing prohibition on auctions obtained from Congress by the satellite industry in 2000 (the ORBIT Act) to all terrestrial applicants who would share spectrum with satellites in a specific narrow spectrum band.” The Satellite Bcstg. & Communications Assn. (SBCA) disputed that characterization and said the ORBIT Act didn’t include DBS and certainly not a “terrestrial wireless cable service like the one Northpoint has proposed.” Comments that the amendment is a “costly addition” the bill and that mobile telephone service would be offered also are false, Northpoint said.

Senate approval of a spectrum relocation trust fund was placed in jeopardy Thurs. when the Commerce Committee voted an amendment to aid Northpoint, which would create fierce opposition from both the House and the Administration. Despite the “strong” opposition of Committee Chmn. McCain (R- Ariz.), the panel voted 13-8 to approve the amendment that would let multichannel video distribution & data services (MVDDS) share spectrum with satellite services in the 12.2- 12.7 GHz band. Support for the amendment didn’t follow party lines.

An FCC report to Congress Thurs. said 800 MHz rebanding proposals that involved relocation scenarios for 700 MHz spectrum would be difficult to implement because statutory changes would be needed. When delaying 700 MHz auctions last year (CD June 20 p1), Congress directed the Commission to return a year later with a report on the progress of the DTV transition and the assignment of additional spectrum for advanced wireless services. It also sought information on the implications of the 800 MHz public safety interference proceeding. “Although some commenters in the 800 MHz public safety interference proceeding have suggested the possibility of using some 700 MHz spectrum to address public safety interference issues, any such proposal would be difficult to implement because legislation would likely be required to amend the 24 MHz/36 MHz public safety/commercial split required by Section 337 of the Communications Act,” the FCC report said. “Pursuant to our existing statutory authority, we do not believe the 800 MHz proceeding should implicate the timing of the 700 MHz auctions, because substantial steps in that proceeding will be taken well before any auction date, and certainly within the next several months.” Last year’s legislation delaying the auctions also directed the FCC to specify when it planned to reschedule the lower and upper 700 MHz auctions. The agency said it planned to do so “upon or near” the completion of proceedings on advanced wireless services (AWS) and the DTV transition. “Barring unexpected circumstances, we anticipate announcing new 700 MHz auction schedules near or upon completion of the AWS and DTV proceedings,” the report said. Such rescheduling would have to keep in mind the current expiration of the FCC’s auction authority on Sept. 30, 2007, the report said. The agency told Congress it anticipates adopting service rules for the initial 90 MHz that had been made available for AWS “in the coming months.” As for 800 MHz, the FCC said some commenters, including CTIA and Cingular, had suggested that rebanding could involve removing public safety systems from 800 MHz to the nonpublic safety portion of the upper 700 MHz band. Under that scenario, the upper 700 MHz band wouldn’t be subject to competitive bidding and incumbent TV stations would be required to vacate the spectrum by a date certain. The 800 MHz public safety systems would be relocated to the upper 700 MHz and the remaining 800 MHz spectrum would be subject to competitive bidding. The report said it wasn’t prejudging the outcome of the proceeding but such a plan would require legislative action. Another plan, backed by Nextel, public safety and private wireless groups, involves rebanding at 700, 800 and 900 MHz, in part by Nextel’s giving up some spectrum in return for capacity elsewhere. The carrier also would pay $850 million to help relocate displaced incumbents. An alternative backed by CTIA, the United Telecom Council and others would rely on best practices and enforcement measures rather than relocating incumbents.

Qualcomm was by far the highest bidder in the FCC’s lower 700 MHz auction that closed Fri., with the wireless equipment-maker submitting $38.03 million in high bids for all 5 economic area group (EAG) licenses. The nearly 2-week auction, after 86 rounds, generated $56.8 million in high bids, with 35 participants winning 251 licenses. The EAG spectrum covers regional areas of the Southeast, Northeast, Central/Mountain areas, Great Lakes and Mid-Atlantic. The licenses make up the D-block of unpaired spectrum at 716-722 MHz. Other spectrum included 246 C-block licenses. Both the C- and D-block spectrum involve licenses that remained unsold in an auction in Sept. 2002. Far behind Qualcomm, the 2nd highest bidder was Aloha Partners, with $5.8 million, followed by Cavalier Group with $2.1 million and LIN TV with nearly $2 million. The FCC’s Wireless Bureau earlier had granted Qualcomm an extra year to use the remainder of an auction discount voucher that had been set to expire June 8. Qualcomm had told the FCC it was considering using the $114 million voucher in the lower 700 MHz bidding.

The House overwhelmingly passed the Commercial Spectrum Enhancement Act (HR-1320), with 406 members approving the bill that would create a trust fund for govt. spectrum relocation, and only 10 members against the bill, 9 of them Republicans. The bill was widely expected to pass after appropriators dropped their concerns.