Wireless Spectrum Auctions

FCC’s Spectrum Policy Task Force outlined to Commission Thurs. its recommendations for updating agency’s decades-old spectrum management regime, concluding access to spectrum was bigger problem than scarcity. Full report of 39 recommendations is expected to be released next week, with notice of inquiry planned for consideration at Dec. 11 FCC meeting.

In next step toward carving out more 3G spectrum, FCC Thurs. approved spectrum allocation order and proposed service rules for 2 blocks of 45 MHz of contiguous spectrum. Allocation means 5 MHz of Multipoint Distribution Service (MDS) spectrum, which is itself connected to other proceedings, and incumbent point-to-point microwave licensees will have to relocate. FCC officials said order, which appeared to contain no surprises, didn’t make any decisions on potential relocation spectrum for MDS, but said it would be taken up in future proceeding.

Before FCC rules on proposed merger of AT&T Broadband and Comcast, it will decide whether pending motion by Media Access Project (MAP) to force Commission to examine Internet access agreement with AOL Time Warner has merit, Comr. Abernathy told reporters Mon. She said Commission was unlikely to release both orders together and that MAP’s motion would be dealt with first, probably in next few days. Tues. will mark Day 180 of merger review, which was Commission’s self-imposed target for deciding on deal. It appeared from her comments that Commission probably would miss that target, but Abernathy said she expected ruling on merger “soon… I would hope it could come out this week, but stay tuned.” She declined to discuss whether she or other commissioners already had voted or merger’s status. Sources have told us that staff of Media Bureau had recommended that commissioners approve merger (CD Oct 30 p2).

Sponsors of NextWave bill in Senate and Senate Commerce Committee Chmn. Hollings (D-S.C.) sent letter to FCC Chmn. Powell urging Commission to “immediately complete consideration” of agency’s proposal for opt-out provisions of NextWave auction. Letter urged complete release from auction, return of all deposits and freedom for companies that did opt-out to acquire spectrum in future. Sen. Kerry (D-Mass.), sponsor of S-2869 to allow auction opt-out, signed letter, along with principal co-sponsor Sen. Brownback (R- Kan.). Letter said potential $16 billion liability on companies was damaging wireless industry credit rating and was impeding carriers’ ability to take “interim steps, such as building out their networks further or leasing spectrum from others, that may be urgently needed to improve service for its customers.” It said there was no “sound policy sense” to hold carriers to liability when govt. couldn’t deliver spectrum. U.S. Supreme Court heard NextWave’s objections to FCC’s seizure of licenses after company failed to make payments (CD Oct 9 p1). In comments to FCC on opt- out plan, several carriers recommended that companies that did opt out should be forced to forgo participation in spectrum auctions for period of time (CD Oct 16 p1). Nextel recommended 3 years. Hollings isn’t listed as co-sponsor of legislation, but he has floated alternative language to bill that included longer time for companies to decide whether they want to opt out. Alaska Native Wireless urged FCC to provide 180-day period to allow opt out. Sen. Stevens (R- Alaska) said he had concerns about bill and Senate aides have told us he was seen as obstacle to passage. Senate aide told us bill wasn’t likely to pass with limited time left in Senate session. It has collected 59 co-sponsors. Senate returns Nov. 12, but length of lame-duck session hasn’t been announced. Senate aide also told us Sen. Biden (D-Del.) had placed hold on bill for reasons unrelated to issue. Biden also is listed as co-sponsor.

NTCA released survey results Thurs. that it said underscored increasing challenges rural wireless carriers faced in vying with large nationwide operators. NTCA cited factors such as dwindling access to capital of some operators in current economic downturn and difficulty they faced in competing with large rivals in current FCC auction system. Survey showed that 51% of respondents had no plans to participate in future auctions and many were turning to unlicensed spectrum to provide services, even though they faced congestion in those bands. Study said 71% of respondents complained it had become more difficult to obtain financing for wireless projects in last year. “Obtaining access to spectrum is a major problem for survey respondents,” NTCA Economist Rick Schadelbauer said at Thurs. briefing.

FCC Chmn. Powell told U. of Colo. at Boulder conference late Wed. that one of most “obvious” gaps in Commission’s current approach to wireless interference was lack of receiver standards. Rather than simply outlining need for more spectrum for both licensed and unlicensed technology, Powell stressed need for receiver standards, importance of underutilized or “white space” spectrum and focus on clear measures of what constituted acceptable interference.

Senate Commerce Committee Chmn. Hollings (D-S.C.) remains interested in moving legislation that would consider subsidies to aid broadband rollout, but time ran out this session to float bill on which everyone could agree, said Kevin Kayes, panel’s Democratic staff dir. Kayes spoke Mon. on regulatory panel at Yankee Group Telecom Industry Forum in D.C. “It’s not such a far-fetched idea,” he said of subsidization possibilities. “It shouldn’t be dismissed out of hand.” While Senate drafters went through 4-5 versions of bill that would include subsidies, he told reporters after panel that in discussions with equipment-makers, incumbents and competitors: “Nobody was really ready to subsidize. There was sort of a feeling that this was interesting but nobody was really ready to do this.”

Rep. Markey (D-Mass.), ranking minority member of House Telecom Subcommittee, wrote to FCC Chmn. Powell Fri. urging him to adjust Commission rules and frequency allocations in effort to promote widespread availability of technologies and services utilizing unlicensed spectrum, thus creating “Spectrum Commons.” WiFi wireless Internet protocol is one of leading technologies to use unlicensed spectrum. “If additional unlicensed frequencies can be put out into the marketplace sooner, entrepreneurs and high-tech companies will be freed up to experiment, innovate, invest, and challenge marketplace incumbents in meeting the wireless needs of consumers,” letter said: “By making such additional frequencies available quickly and without the administrative delay of auctions, it is possible for these new, ‘disruptive’ wireless technologies to assist in rejuvenating a key sector of our economy and to create jobs.” Markey cited FCC’s agreement with NTIA to open 90 MHz of spectrum for advanced wireless services, but said that spectrum was not likely to be available for several years. Clearance of that spectrum will require additional govt. funds, he wrote, and some areas may not be cleared until Dec. 2008. “The real world economic impact of the additional 90 MHz, therefore, will be many years off,” Markey said. Consumers will be forced to continue relying on current wireless licensees to meet the “burgeoning” marketplace demand for wireless networks, including wireless links for broadband access, he said. Unlicensed wireless protocols such as 802.11 have been “bright spot in a telecommunications sector otherwise stuck in the doldrums,” Markey said. He also cited proposed Wireless Technology Investment and Digital Dividends Act (HR- 4641) that includes provisions to make additional unlicensed spectrum available. “Spectrum commons” portion of bill “challenges” FCC and NTIA to develop plan that would establish a 20-MHz band of contiguous frequencies below 2 GHz, as well as between 3 and 500 MHz between 2 GHz and 6 GHz, letter said. Markey described continuous frequency as “a significant swath of the airwaves that would remain open to the public and unlicensed and thus open for entrepreneurial investment and experimentation.” He asked that Powell by Nov. 13 present his plans to make available any additional frequencies for “spectrum commons.”

LAS VEGAS -- FCC is moving forward on 3G spectrum allocation and should have it on meeting agenda by year-end, speakers said at CTIA Wireless IT & Internet 2002 conference here late Wed. Julius Knapp, deputy chief of Office of Engineering & Technology (OET), indicated Commission would have rulemaking lined up for agenda meeting by then on service rules for 90 MHz being made available for 3G and other advanced wireless services. Two items are expected to be lined up for Commission approval: (1) Allocation report and order. (2) Notice of proposed rulemaking covering service rules. Bush Administration had released report earlier this year that outlined way to clear total of 90 MHz for advanced wireless services, including 1710-1755 MHz used by military incumbents and 45 MHz of 2110-2170 MHz occupied by nongovt. users.

Wireless carriers urged FCC to provide relief to NextWave re-auction winners, but some differed on details, including whether withdrawing winners should be penalized. FCC last month floated alternatives for allowing NextWave re- auction winners that faced potential payment obligations of $16 billion to opt out of their bid commitments, which were entangled in pending litigation. FCC returned licenses to NextWave after U.S. Appeals Court, D.C., reversed agency’s decision to cancel licenses for nonpayment. Nextel told FCC that applicants wanting to opt out of their commitments shouldn’t be able to re-bid on them in subsequent auctions or acquire them in secondary market for limited period. Alaska Native Wireless, on other hand, argued that winners shouldn’t be penalized for withdrawals and should have at least 180 days to make decision.