Wireless industry continued Thurs. to step up calls for policymakers to move quickly to free up spectrum and to examine auction plans that would use part of proceeds from bidding to move incumbents. One theme of wireless panel at Precursor Group conference in Washington was that decisions needed to be made quickly to keep U.S. competitive with wireless data offerings unfolding elsewhere in world. FCC Wireless Bureau Chief Thomas Sugrue told conference that Commission planned to make decision by fall on notice of proposed rulemaking on whether there still is need for spectrum cap.
Congressional telecom leaders heavily criticized spectrum policy changes contemplated by President Bush’s budget blueprint (CD March 1 p1), with some saying they seemed motivated more by attempts to free up money for tax cuts than sound telecom policy. They predicted quick defeat in debacle that probably would teach Administration lesson about talking with them before assuming such far-reaching proposal would gain quick acceptance. “Once Congress kills it, they'll remember to call us next time,” said Ken Johnson, spokesman for House Commerce Committee Chmn. Tauzin (R- La.). “They're just looking for extra money to pay for their excessive tax cuts,” said aide to House Telecom Subcommittee ranking Democrat Markey (Mass.): “The job for Telecom Subcommittee members is to make sure these plans make sense for telecom.” Another staffer said chances of plan’s passing Congress were “infinitesimal” and predicted that it would be greatly scaled back when full budget book is released in April.
Large carriers informed FCC and SEC of details of financial arrangements with designated entities in recent C-block re- auction, including $2.6 billion pledged by AT&T Wireless to Alaska Native Wireless (ANW). Cingular Wireless said it has planned $460 million in loans to designated entity Salmon PCS. FCC released public notice late Tues. (CD Feb 28 p5) on long forms filed by successful bidders in PCS auction that raised $17 billion. Relationships between major carriers and designated entities, which qualified to bid on licenses closed to smaller bidders in auction, have been subject of scrutiny by some smaller carriers.
Wireless and broadcasting industries and their regulators were caught offguard Wed. when Bush Administration seemed to propose mysterious multibillion-dollar initiative to hasten broadcasters’ departure from analog spectrum. White House buried section in tables in back of “budget blueprint,” which otherwise didn’t mention FCC or telecom issues even once. By end of day Wed., our sources still were trying to figure out exactly what policy shift was being contemplated. White House and OMB didn’t return calls for explanation. Fuller budget book with line items and explanations isn’t expected until April.
While differing on some details, wireless carriers and equipment makers in comments last week urged FCC to make additional spectrum available for 3rd generation and advanced services. Among most pointed recommendations were those of equipment vendors such as Ericsson, Motorola and Qualcomm, which pointed FCC toward spectrum now occupied by federal govt. users in 1.7 GHz band as ideal for 3G. Motorola urged Commission to alter auction process so that part of proceeds could be used to help pay for relocating incumbents. In move that may require legislative change, Motorola said that would avoid pitfall of current system “where the true costs of relocating incumbents only becomes known to successful bidders after the auction.” Several commenters stressed need for FCC to make more spectrum available on faster timeline than that laid out under several agency proposals.
Dept. of Defense (DoD) and wireless industry remain apart on some technical issues regarding how bands occupied by military users could be altered for 3rd-generation uses. Govt. and industry officials, at meeting hosted by NTIA Thurs., emphasized that analyses of bands that could be used for additional 3G spectrum were continuing, with final FCC and NTIA reports due late next month. “We still have a lot of work to do,” Motorola’s Steve Sharkey said. “We have at least an idea of where the paths to move forward are.” Meanwhile, Congressional Budget Office (CBO) raised budget projections for proceeds from FCC spectrum auctions through 2007, with rosier outlook attributed to interest in 3G.
Original C-block bidder Airadigm is awaiting answer to petition for reinstatement of its PCS licenses, which FCC cancelled after carrier missed payment after entering bankruptcy in July 1999. Petition still is pending before agency nearly one month from oral argument before U.S. Appeals Court, D.C., March 15 in litigation involving NextWave, bankrupt C-block bidder that also had its licenses cancelled for nonpayment. Airadigm has pointed out that only similarity between it and NextWave is that both are C-block bidders that entered Chapter 11 protection and missed installment payment for licenses. Because of disparities such as fact that Airadigm is offering service and NextWave isn’t, question is whether 2 carriers potentially could be treated differently by Commission. Proceeding raises complex web of legal issues for FCC, making outcome uncertain, industry observers said. At press time, item on Airadigm petition wasn’t yet circulating on 8th floor. Meanwhile, group of large carriers asked Commission to put off Airadigm decision longer, citing how circumstances had changed since NextWave litigation began.
CTIA Pres. Thomas Wheeler said Tues. that wireless carriers were eyeing 1.7 GHz spectrum occupied by military users as “first choice” for obtaining more spectrum for 3rd-generation services. He and former FCC Chmn. Reed Hundt, now senior adviser with McKinsey & Co., spoke at New America Foundation lunch on wireless spectrum shortage. Turning to 1755-1850 MHz band would add to “global harmonization” of wireless bands used beyond U.S., Wheeler said, and 2500-2690 MHz band occupied by Multichannel Multipoint Distribution Service operators would be “2nd choice.” FCC and NTIA are looking at both bands as potential source of additional spectrum for next-generation services such as 3G.
Several wireless carriers told FCC that any steps to pave way toward development of secondary wireless market should rely on simple leasing rules, not existing limits such as spectrum cap restrictions. They strongly urged agency not to apply spectrum cap or unjust enrichment rules to lease deals. One theme among smaller carriers is that leasing arrangements can give them entree to truly compete in auctions because they could use proceeds from transactions to build out markets while retaining license ownership. Commenters on notice of proposed rulemaking (NPRM) on secondary wireless markets differed on details, including how regulatory requirements of original licensee should apply to lessees.
Mark Crosby, longtime pres. of Industrial Telecom Assn., is stepping down to head Access Spectrum, separate guardband bidding unit set up last year by ITA, Motorola, others. He also will remain senior policy adviser to ITA. ITA spokesman said move was “strategic shift” designed to “make sure Access Spectrum succeeds as a healthy source of frequency coordination for ITA.” ITA “already has been molded,” allowing Crosby to concentrate on unit that as band manager paid $69 million for 19 licenses in guardband auction, spokesman said. Crosby, who joined ITA’s predecessor Special Industrial Radio Service Assn. as intern 31 years ago, has been pres. for 26 years. He will be succeeded by ITA Exec. Dir. Laura Smith, ex-FCC staffer who moved to ITA in 1998. Smith worked at FCC for 8 years in Mass Media and Wireless bureaus.