Wireless Spectrum Auctions

Citing new data from Telcordia Technologies, Cingular Wireless and Sprint PCS told FCC Mon. that ancillary terrestrial usage of mobile satellite service (MSS) spectrum would eat up capacity of satellite uplink. Carriers said 90- page technical paper they commissioned from Telcordia researcher indicated even “modest” ancillary terrestrial networks “would pose a substantial risk of rendering the satellite incapable of providing any MSS services, including in remote and rural areas.” Sprint and Cingular said only “reasonable conclusion” to be drawn from proposal of MSS licensees is that they don’t plan to share spectrum between ancillary terrestrial component (ATC) and MSS use, but plan to separate MSS band into one segment for ATC and another for MSS operations. Wireless carriers filed late comments to FCC on possibility of using MSS spectrum for terrestrial wireless operations, either by MSS licensees or others. FCC last Aug. adopted notice of proposed rulemaking in response to request by New ICO to develop terrestrial spectrum using bands allocated to MSS (CD April 4/2000 p1). Data from wireless carriers comes as MSS licensees such as Globalstar are urging FCC to allow ATC usage in spectrum as means of keeping their operations financially viable.

VoiceStream filed motion with U.S. Appeals Court, D.C., last week asking to intervene in lawsuit filed by Verizon Wireless against FCC on bid obligations and refunds from NextWave re-auction. In March, Verizon Wireless challenged in D.C. Circuit FCC order that returned 85% of NextWave re- auction deposit and covered agency’s refusal to release carrier from its obligation to pay “on 10 days’ notice” $8.4 billion for licenses won in NextWave re-auction if Commission prevailed in litigation now pending before U.S. Supreme Court. Last year, D.C. Circuit reversed FCC decision to cancel NextWave’s licenses for missed payment, leading to return of that spectrum to bankrupt C-block bidder. Ruling had result of overturning re-auction of NextWave licenses, which generated nearly $16 billion from bidders such as Verizon Wireless, Cingular Wireless, Salmon PCS. VoiceStream said in filing that Commission had rejected Verizon argument that it should be allowed to avoid its obligation to pay full amount of its winning bids for licenses of NextWave and Urban-Comm, “regardless of the outcome of the pending litigation.” VoiceStream said it was high bidder for spectrum formerly licensed to NextWave and Urban-Comm and had joined Verizon Wireless and other re-auction winners at FCC in requesting refund of their down payments. “As such, VoiceStream will be adversely affected if the court does not modify or set aside the FCC’s order,” carrier said. In pending Supreme Court case, VoiceStream filed intervening brief on side of FCC along with Arctic Slope Regional Corp. and Council Tree Communications. Those carriers argued in brief last week that D.C. Circuit “erroneously” had allowed U.S. Bankruptcy Code to trump FCC’s “regulatory mission” in NextWave case.

Council Tree Communications urged FCC to craft compromise on 700 MHz auctions putting all or part of lower band licenses in Auction 44 up for bidding in time to meet statutory deadline of Sept. 30. “If the Commission believes that some delay of Auction 31 [upper band] is warranted, it should not also forestall opportunities for smaller bidders in Auction 44,” Council Tree told FCC last week in ex parte filing. At our deadline, Commission hadn’t issued decision on CTIA request to delay both upper and lower band auctions now set for June 19. CTIA filed application for review of Wireless Bureau decision to keep auction dates intact. House last week passed, under suspension of rules, legislation sponsored by Commerce Committee Chmn. Tauzin (R-La.) that would delay 700 MHz auction indefinitely. Sens. Ensign (R- Nev.) and Kerry (D-Mass.) are sponsoring similar legislation in Senate, where Sen. Stevens (R-Alaska) last week introduced contravening bill that would compel FCC to hold auctions as scheduled. “The Commission should not let Auction 44 follow the path of Auction 31,” Council Tree told FCC last week. “The Commission must make clear that Auction 44 will proceed without material delay.” Council Tree, which was among backers of NextWave re-auction bidder Alaska Native Wireless, told FCC that many smaller bidders might be interested in lower 700 MHz band -- 12 MHz blocks for service in metropolitan statistical areas and rural service areas. “There are 734 such licenses to be offered in Auction 44, representing only 12 MHz of the total 78 MHz allocated for commercial use in the 700 MHz band,” company said. But carrier still backed 30-day delay for lower band auction, including short-form filing, upfront payments, auction date. Additional time would “permit prospective bidders to regroup in the wake of the recent material scheduling uncertainty,” Council Tree said. It argued that because lower band of 700 MHz was more fragmented, that spectrum was not as useful for 3G services that larger national carriers were planning. Rural Telecommunications Group (RTG) told FCC Chmn. Powell last week in letter that competing bills in Senate had that chamber “deadlocked.” RTG said: “Compromise is unlikely in the time that the statutory deadline must be met by the Commission. If the Commission were to take its action on the basis of conflicting bills, the intent of Congress reflected in enacted legislation could easily and repeatedly be contravened, and the work of the agency and this Administration would become meaningless,” RTG said.

TV stations belonging to Spectrum Clearing Alliance have carefully avoided any appearance of “collusion” in violation of antitrust laws, said official of group that’s fighting effort by CTIA to gain 6th delay from FCC in upper 700 MHz auction. In fact, he said, Alliance first approached Dept. of Justice (DoJ) last Dec. to inform agency of its spectrum- clearing efforts and was “working closely with DoJ to ensure that the activities of the Alliance are in full compliance with any relevant antitrust laws,” it said in recent FCC filing. As part of those contacts, Alliance submitted business review letter to Justice on Alliance’s structure. Auction is scheduled June 19, but House last week voted to order FCC to postpone it indefinitely (CD May 8 p1). CTIA told FCC in filing last month that Spectrum Clearing Alliance could raise antitrust concerns. CTIA said “concerted action by a combination of licensees who clearly exercise market power over the disposition of the upper 700 MHz band spectrum” raised antitrust issues and created more uncertainty in band. Spectrum Exchange countered in subsequent filing that CTIA’s effort to keep 700 MHz band “off the market” could be viewed as similar concerted action in wireless industry that would trip antitrust concerns.

Alaska Sen. Stevens, ranking GOP member of Senate Appropriations Committee, introduced bill that would compel FCC to hold 700 MHz auctions as planned June 19. Bill, filed late Wed., complicates legislative picture on auctions and comes as FCC is in midst of deciding whether to grant CTIA request to delay bidding date. Stevens’s bill counters one sponsored by House Commerce Committee Chmn. Tauzin (R-La.) that passed House under suspension of rules late Tues. (CD May 8 p1) and would delay auctions indefinitely. Besides requiring FCC to keep auction date, Stevens bill would spell out that Commission alone -- not Congress -- should determine future auction deadlines. Industry attention now turns to how FCC will interpret conflicting signals from Capitol Hill and whether legislative compromise could be reached on 700 MHz deadline.

American U. in Washington plans to retire about half of its landline phones in fall and shut down campus Ethernet connections as it shifts to wireless LAN to carry voice calls, data and Internet services. While not new technology, wireless LANs -- also known by their specification number 802.11(b) or slang Wi-Fi -- have potential to be replacement technology for conventional voice and data connections and, unlike those traditional landline counterparts, it operates almost entirely without regulation. Industry itself isn’t subject to regulatory scrutiny other than requirement that antennas and routers meet standard noninterference requirements of any electronic communications device. Even airwaves services use are unlicensed, meaning entrepreneur can set up handful of football-sized $75 antenna arrays and service multiple dwelling unit (MDU) or office building with broadband tapped from single T-1 line.

Rural Telecommunications Group (RTG) criticized House passage late Tues. of HR-4560, which would direct FCC to delay 700 MHz auctions beyond June 19. House passed on voice vote, under suspension of rules, legislation that would indefinitely delay both upper and lower band auctions for 700 MHz (CD May 8 p1). Rural carriers have been urging FCC not to delay auction, particularly for Ch. 52-59. Bill was sponsored by Commerce Committee Chmn. Tauzin (R-La.), ranking Democrat Dingell and 50 other members of committee. “We are incredibly disappointed that Congressman Tauzin proceeded in this manner,” RTG Gen. Counsel Carri Bennet said. “He has managed to hoodwink folks into believing that a delay of this auction will cure everything that ails spectrum policy.” RTG said that in lower 700 MHz band, 734 licenses would be awarded using metropolitan statistical area/rural statistical area licensing system. Of those, only 8 TV stations on Ch. 52-59 would have to be relocated in states west of the Mississippi, not including Cal. and Tex., RTG said. It said that meant that in most cases in lower 700 MHz band, new licensees could use new spectrum without undertaking spectrum clearing arrangements with incumbent broadcasters. At our deadline, FCC was expected to rule shortly on CTIA application for review of recent Wireless Bureau decision that upheld June 19 auction date. Several industry sources expect FCC to announce brief delay of auctions this week, possibly up to 6 months. However, one option still in play this week was scenario in which all or part of Ch. 52-59 spectrum could be held on time and upper band bidding would be postponed, several sources said. Wed. at 6 p.m. was filing deadline for prospective bidders to submit short forms to FCC that notify Commission on which licenses companies would like to bid and provide financial information.

Senate Commerce Committee Chmn. Hollings (D-S.C.) has no intention of becoming involved in renewed wireless industry attempts to negotiate settlement among NextWave spectrum re- auction winners, according to knowledgeable source. Senate Appropriations Committee ranking Republican Stevens (Alaska) met Tues. afternoon with NextWave and carriers that last year bid nearly $16 billion on spectrum that bankrupt company had returned to FCC (CD May 6 p4).

CTIA opposed plan by Nextel to reconfigure several bands to ameliorate interference at 800 MHz for public safety users. CTIA said plan by Nextel, which is one of its members, “fails to fully remedy interference problems and it will not provide adequate long-term solutions to resolve the problems being experienced in the 800 MHz band.” CTIA raised particular objection to part of proposal that would assign 2.1 GHz of mobile satellite service spectrum to Nextel in exchange for making additional spectrum available for public safety at 800 MHz. Group said it was concerned that that part of plan would undermine efforts to gain spectrum for advanced wireless services, including proposal now under consideration by NTIA that involves 1710-1770 MHz paired with 2110-2170 MHz. Separately, Motorola estimated Nextel band reconfiguration proposal would cost $2.8 billion for equipment changes needed by private wireless and public safety. Competing proposal by National Assn. of Mfrs. (NAM) and its frequency coordinator MRFAC would cost $1.6 billion, Motorola said. It submitted comments to FCC on notice of proposed rulemaking adopted last month that weighed alternatives for curing interference caused by commercial operators to public safety at 800 MHz. Motorola said Nextel plan, which would reconfigure systems at 700, 800, 900 MHz and 2.1 GHz, would cost public safety $1.1 billion to retune and partly replace equipment and would cost private wireless users $1.7 billion for equipment replacement. NAM proposal, criticized by public safety community this week as not addressing relocation costs for those operators (CD May 7 p4), would cost public safety $1.1 billion and private wireless $500 million, Motorola said. Equipment manufacturer also included upper end estimates for each plan based on factors such as whether some systems could be moved more than once or whether labor costs were higher than expected. Motorola estimated upper end of Nextel plan at $3.9 billion and for NAM proposal at $2.2 billion. Meanwhile, several large wireless carriers urged FCC to move public safety operators to 700 MHz. AT&T Wireless proposed 2-part plan that would relocate public safety operators to upper 700 MHz band and fund relocation. In interim, because AT&T said relocation couldn’t occur immediately, carrier proposed steps to alleviate interference such as modifying public safety handsets to include additional filters and adherence by wireless licensees creating interferences to already established best practices guidelines. AT&T Wireless urged FCC to reject part of Nextel proposal that would provide mobile satellite service spectrum at 2 GHz without auction. “Nextel fails to demonstrate any public interest benefit that would warrant grant of this spectrum grab, and the fact that none of the other plans proposes free spectrum for commercial operators indicates that there is none,” AT&T Wireless said. Like other carriers, AT&T acknowledged that legislation would be needed to relocate public safety to 700 MHz. Bill ensuring that broadcasters now in that band would move by Dec. 31, 2006, or sooner “is being pursued by AWS and other operators,” carrier said.

With little fanfare, House voted under suspension of rules late Tues. to indefinitely postpone 700 MHz auction, earning plaudits of CTIA, which had sought delay, and disappointing rural carriers that had hoped to bid June 19 as scheduled. As late as Tues. afternoon, rural interests seeking to keep auction schedule intact were in touch with House Rural Caucus, but bill still passed on voice vote. Suspension of rules meant that debate was limited. Legislation is sponsored by House Commerce Committee Chmn. Tauzin (R-La.), ranking Democrat Dingell (Mich.) and 50 other members on Commerce Committee. With bill moving quickly through House, attention now turns to FCC, which can decide as early as today (Wed.) whether to postpone June 19 bid date, and Senate, where outcome is less clear.