Wireless Spectrum Auctions

Wireless carriers urged the FCC, as part of its proposals to reallocate spectrum to make way for advanced wireless services, to consider that potential interference to existing and planned services must be “paramount.” Several commenters this week on a Feb. proposal to reallocate spectrum for advanced wireless services, including 3G, backed plans that would create a significant spectrum block for PCS- like terrestrial services. CTIA backed the creation of a new “G-block” that would pair 1910-1915 MHz with 1990-1995 MHz for a PCS-like terrestrial wireless service.

The international telecom market will grow at 10.1% this year to $1.4 trillion, reversing declines in 2001-2002, the TIA’s “2003 Telecom Market Review & Forecast” said. It predicted the market would grow at a 10.3% compound average growth rate through 2006, encouraged by increases in wireless and support services. TIA said the underlying demand for telecom remained strong, as Internet traffic and the need at the enterprise level for high-speed data transmission continued to grow rapidly, and the demand for mobile connectivity for both voice and data was expanding. The report said spending on landline transport services was beginning to be cannibalized by wireless services. International spending on communications transport services is expected to reach $788 billion in 2003 (up 10.5% over 2002) accompanied by a 2.7% uptick in international spending on telecom equipment to $247 billion in 2003, TIA said. It said the Asia-Pacific market was the largest regional area outside N. America, with total telecom revenue expected to reach $421.6 billion this year from $380 billion in 2002. TIA predicted that market would increase at a 9.1% clip through 2006. The report said the Japanese market continued its modest gains and China and India were growing rapidly with mobile phones subscribership growth in both countries exceeding 80% in recent years. It said revenue in Western Europe, the 2nd largest regional telecom market outside N. America, was expected to reach $362 billion in 2003, up 5.8%. Despite the difficulties faced by many carriers resulting from the 3G spectrum auctions, European operators are beginning to plan their strategies for rolling out advanced wireless networks encouraged by the decision to allow wireless carriers to share infrastructure, TIA said. It also said broadband rollout was beginning to accelerate in Europe and was expected to reach 10% penetration in 2003. Unlike in N. America, the report said, DSL is the most popular broadband access technology there, surpassing cable modems and accounting for 60% of broadband connections. TIA Pres. Matthew Flanigan said broadband and wireless were “the big drivers for the international market for” this year. He said broadband deployment was approaching critical mass in 2003 in many countries, “putting the market on an accelerated growth curve.” He said 3G and unlicensed wireless networks also were taking off this year and had “the potential to be a driver for the entire global market.”

FCC Comr. Adelstein voiced support late Wed. for Congress’s giving the Commission the ability to impose spectrum user fees, which also have the backing of the Bush Administration’s latest budget request and the Spectrum Policy Task Force. “While we may not need to impose fees in all situations, the Commission should have the discretion to impose fees to promote efficiency, particularly for those services in which incumbents did not pay for their licenses,” he said at the U. of Colo. at Boulder, in his first major speech on spectrum since he joined the FCC 4 months ago. Adelstein addressed the university’s Silicon Flatirons Telecommunications Program, the same venue in which Chmn. Powell in Oct. had unveiled several spectrum policy shifts under consideration. He stressed the need to make spectrum available to rural areas, use smaller licensing areas in some cases and rethink build-out requirements.

The FCC Wireless Bureau will audit the operating status of certain site-specific licenses at 220-222 MHz. The bureau said the point was “to promote intensive use of the radio spectrum by updating and increasing the accuracy of the Commission’s licensing database” for: (1) Nonnationwide 5- channel trunked systems. (2) Nonnationwide data. (3) Nonnationwide “other.” The bureau said the audit excluded geographic area licenses granted in the 220 MHz auctions or 220 MHz licenses authorized for public safety, mutual aid or emergency medical services. Every covered licensee must certify its station hasn’t discontinued operations for one year or more. The bureau has conducted a similar audit of private land mobile radio station operators to identify licenses no longer in use. That effort involved Part 90 licensees with authorized facilities below 512 MHz and sought similar information on station operating status. The object of the efforts has been to update the FCC’s database of those licenses and return of spectrum in cases of cancellation or notification that the licenses no longer were needed. The bureau said that for the 220 MHz audit it would send letters to all licensees operating in those covered services the week of May 12, outlining information such as call signs. A licensee will receive only one audit letter for all of its covered authorizations if it has verified its address listing in the FCC’s Universal Licensing System by May 9. The bureau stressed that responding to the letters was mandatory, with an electronic submission required within 30 days of the audit letter. “Failure to provide a timely response may result in the Commission presuming that the station has been nonoperational for more than one year, and thus the license may be presumed to have automatically cancelled,” the bureau said. Failure to respond in time also could result in enforcement action, including fines, the bureau said.

The House Telecom Subcommittee Wed. approved an amended bill by Subcommittee Chairman Upton (R-Mich.) that would create a trust fund from auctioned spectrum to reimburse federal agencies that vacated spectrum. Upton told reporters after the markup that, based on the support of the Bush Administration, “I'm pretty encouraged by the prospects of this bill.” He said Commerce Committee members would rally together to ensure the bill’s passage, given likely opposition by appropriators. He said he had recently discussed the legislation with Senate Communications Subcommittee Chmn. Burns (R-Mont.) and was confident the Senate would act as well.

On the eve of a markup of spectrum relocation trust fund legislation, scheduled for today (Wed.) by the House Telecom Subcommittee, CTIA told Commerce Committee Chmn. Tauzin (R- La.) and ranking Democrat Dingell (Mich.) that it supported recent changes. At a March 25 hearing, Pentagon officials told the subcommittee they had some limited, technical concerns about HR-1320, including timetables in subcommittee Chmn. Upton’s (R-Mich.) bill that would be difficult to meet. The changes made since that hearing address congressional oversight issues -- how reviews are to be integrated into the process to ensure that DoD cost estimates for relocation from spectrum don’t go out of control while guaranteeing that federal users that move are fully reimbursed, an industry source said. The modifications also provide more opportunities for congressional oversight, as well as processes for submitting expenses for General Accounting Office review and subsequent reviews if costs exceed 110% of the govt.’s estimate. CTIA Senior Vp-Governmental Affairs Steven Berry told Tauzin and Dingell that the wireless industry supported the changes “because they remain true to the legislation’s central aim of providing a certain, predictable and accountable relocation process.” CTIA also urged Tauzin and Dingell to “oppose any amendment that would tip the careful balances struck in the legislation. While other ideas may have merit, it is unwise to place government reimbursement at risk.” Berry said Stephen Price, deputy asst. secy. of defense for spectrum, had called for a “trustworthy trust fund” at the March hearing. The measure is considered key to clearing Defense Dept. incumbents from spectrum earmarked for advanced wireless services. Last year, the Pentagon agreed to clear most of 1710-1755 MHz, which is part of 90 MHz being made available for advanced commercial wireless services, including 3G. Current law requires commercial entities to reimburse federal users for the costs of relocating from reallocated spectrum. The proposed spectrum relocation trust fund would change the system to a central relocation fund financed from auction receipts from the current system of direct payments from commercial entities to federal agencies. “The current process is a ‘black hole’ for both government agencies and the private sector -- filled with uncertainty, punctuated by unknown costs and bereft of predictability,” Berry wrote in the letter to Tauzin. “The current process works for no one.” Telecom Subcommittee ranking Democrat Markey (Mass.) at the hearing supported a bill he recently introduced that would create a spectrum commons and would set up trust fund provisions that would include a $5 billion cap and a separate fund for technology training for schools. Both Price and NTIA Dir. Nancy Victory expressed concerns about the Markey proposal, including the idea of a cap on the fund.

LAS VEGAS -- NAB and the Assn. for Maximum Service Television (MSTV) will tell the FCC that it shouldn’t allow unlicensed spectrum devices into broadcasters spectrum until the DTV transition is complete, David Donovan of MSTV said at the NAB convention here. The FCC has an inquiry under way on unlicensed devices in the broadcast spectrum, with comments due April 17. Donovan said at this point there was very little room for unlicensed spectrum in the broadcast spectrum, particularly in large markets. “The last thing we want is more victim receivers,” Donovan said. Bruce Franca of the FCC said there were some unique features of the broadcast frequencies that made it worth studying for unlicensed usage. “We think these technologies can use these bands,” he said, stressing that issue still was under study. “The most important goal for us is to protect the existing usage of the band.”

The Wireless Communications Assn. (WCA) petitioned the FCC for reconsideration of part of a recently adopted proposal that would move away from a broadcast-style regulatory approach for the Instructional TV Fixed Service (ITFS) and Multichannel Distribution Service (MDS). WCA urged the FCC to reverse its decision that immediately froze the filing of applications for new or modified ITFS and MDS facilities. The FCC opened what it called a “comprehensive” examination of MDS and ITFS rules to promote competition and investment in wireless broadband services. WCA asked the FCC to limit the applications freeze so it would ban only ITFS stations located outside of existing protected service areas that essentially would be seeking licenses for ITFS “white space” or unassigned spectrum. “WCA is not questioning the Commission’s authority to suspend the filing of applications for new or modified facilities,” the petition said. “However, it does question the wisdom of that action under the circumstances present here.” The group argued that although the FCC’s review of the ITFS and MDS rules was designed to encourage competition and investment, a freeze on applications for new or modified stations would be “contrary to those objectives.” WCA said the scope of the freeze wasn’t clear because part of the decision talked only about freezing ITFS applications but elsewhere it referred to MDS stations. WCA said it agreed applications to serve unassigned ITFS spectrum shouldn’t be accepted until the Commission had finalized rules for auctioning unassigned ITFS spectrum. “Despite the well-documented difficulties associated with licensing MDS/ITFS facilities that can be used to deploy wireless broadband services, a small but not insignificant number of system operators have chosen to undertake the costly and unnecessarily burdensome licensing process rather than await new rules,” WCA said. “The Commission’s impositions of a freeze threatens to leave a wide variety of interests in the proverbial lurch,” WCA said. It said unless the freeze was lifted: (1) Licensees wouldn’t be able to deploy new wireless broadband wireless systems. WCA said 24 wireless broadband systems had been under development for a 2003 rollout, but couldn’t emerge because of the application freeze. (2) Capital expenditures in the wireless broadband sector would be put on hold as investors reacted to the uncertainty of the freeze. (3) Pending acquisitions of MDS licenses and leases of ITFS excess capacity would be put off until new entrants could open facilities. “WCA is aware of at least 2 transactions ready to close within the next 2 weeks where the acquiring party is threatening not to close because of the freeze.” (4) Operators of existing wireless broadband systems would be unable to add cells or conduct upgrades at existing cells to expand capacity. “As a result, operators will be unable to serve consumers for no other reason other than a lack of network capacity,” WCA said.

Outlining changes under examination in the FCC’s spectrum regulatory regime, Wireless Bureau Chief John Muleta in a speech Thurs. stressed spectrum access and flexibility but said such reforms couldn’t be viewed in a vacuum. Addressing the Land Mobile Communications Council (LMCC) annual meeting in Washington, Muleta said one challenge the bureau faced in contemplating changes teed up by last fall’s Spectrum Policy Task Force report was to assess “the applications that can ride on this spectrum and then make the access to spectrum available.”

The House Telecom Subcommittee plans to mark up the spectrum relocation trust fund legislation April 9, following a hearing last week in which Pentagon officials expressed concerns about timetables. The proposed Commercial Spectrum Enhancement Act, by subcommittee Chmn. Upton (R-Mich.), is considered key to clearing Defense Dept. incumbents from spectrum earmarked for advanced wireless services. Last year, the Defense Dept. agreed to clear most of the 1710-1755 MHz band, which is part of 90 MHz being made available for advanced commercial wireless services. Stephen Price, deputy asst. secy. of defense for spectrum, said at a subcommittee hearing last week that DoD would need more time than allotted in HR-1320 to evaluate spectrum relocation. Current law requires commercial entities to reimburse federal users for the costs of relocating from reallocated spectrum. The proposed spectrum relocation trust fund would change the current system of direct payments from commercial entities to federal agencies to a central relocation fund financed from auction receipts. The markup will be at 10 a.m., Room 2123, Rayburn Building.