Wireless Spectrum Auctions

Arctic Slope Regional Corp., Council Tree Communications and VoiceStream argued in brief filed with U.S. Supreme Court Mon. that U.S. Appeals Court, D.C., “erroneously” allowed U.S. Bankruptcy Code to trump FCC’s “regulatory mission” in NextWave case. Carriers argued in intervening brief filed on side of FCC that D.C. Circuit allowed NextWave to keep licenses worth more than $15 billion, “which the FCC determined were not in the public interest for NextWave to hold.” U.S. appealed ruling by D.C. Circuit last year that essentially overturned FCC decision to cancel NextWave licenses for nonpayment. Decision led to FCC’s returning these PCS licenses to NextWave, upsetting results of re- auction of licenses that generated nearly $16 billion in bids. Carriers argued that D.C. Circuit allowed carrier under Sec. 525 of Bankruptcy Code to frustrate FCC’s regulatory duty “by the simple expedient of declaring bankruptcy.” Sec. 525 bars govt. units from revoking licenses of debtor or bankrupt entity solely because they haven’t paid dischargeable debt. FCC has argued that D.C. Circuit’s reading of Sec. 525 impedes market-based mechanisms for allocating spectrum set out by Congress in Sec. 309 of Communications Act. VoiceStream and other wireless carriers told high court Mon. that “Congress never intended for that bankruptcy provision to force agencies to grant exclusive licenses to entities that, like NextWave, fail to satisfy an express regulatory condition for holding a license.”

Coalition of private wireless operators on Mon. backed Cingular Wireless plan for 800 MHz rebanding that would move public safety operators to 700 MHz. But in face of “political” challenges expected to beset proposal, including required legislative changes, private wireless licensees called their alternative “repacking” 800 MHz band at cost of $1.2 billion, compared with $2.7 billion of original Nextel proposal, officials said Mon. FCC filing deadline closed Mon. on notice of proposed rulemaking (NPRM) soliciting comments on alternatives for alleviating public safety interference at 800 MHz. Among plans on which Commission sought feedback was proposal submitted by Nextel last fall that would swap 4 MHz of guardband spectrum at 700 MHz, 8 MHz of specialized mobile radio spectrum in lower channels of 800 MHz and 4 MHz of SMR spectrum at 900 MHz. Under that plan, Nextel would receive another 16 MHz at 800 MHz and from reserve mobile satellite services spectrum. One theme running throughout comments was thorny issue of who would pay cost of relocating incumbents. “There’s an issue of can anybody really afford to do this,” Washington attorney Robert Schwaninger said at Mon. news conference of private wireless operators.

Cingular Wireless cited continued uncertainty over NextWave re-auction as among reasons that FCC should delay 700 MHz auctions now set for June 19. In comments filed late Fri., Cingular said some re-banding plans to alleviate interference at 800 MHz involved relocating public safety operators to 700 MHz, so Commission shouldn’t foreclose that possibility by holding Ch. 52-59 and 60-69 auctions now. Comments of Cingular and others at FCC come as several spectrum proceedings are intersecting. Commission is expected to issue decision as early as today (Tues.) on timing of 700 MHz auction. Floor vote also is scheduled in House today on bill by Commerce Committee Chmn. Tauzin (R- La.) that would compel FCC to postpone auctions. Short forms, in which companies first formally notify agency they plan to participate in auction, are due Wed. Meanwhile, FCC is receiving comments on 700 MHz re-banding proposals for notice of proposed rulemaking (NPRM) that closed Mon. (see separate story, this issue). Cingular emphasized continued uncertainties over NextWave re-auction. FCC is appealing U.S. Appeals Court, D.C., ruling last year that overturned Commission decision to cancel NextWave licenses for missed payment. Ruling led to FCC’s returning licenses that had produced nearly $16 billion in bids at re-auction. “Despite the fact that the auction concluded more than one year ago, the spectrum has been tied up in litigation that, as the result of the Supreme Court’s recent decision to grant certiorari in the matter, may now continue for several years,” Cingular said. Incumbent analog broadcasters, which don’t have to move until completion of DTV transition in 2006 or later, also create uncertainties over 700 MHz spectrum that warrant delay, Cingular argued. It said FCC had “rejected imposing mandatory relocation requirements” for those broadcasters. Cook Inlet Region Inc. (CIRI) also supported CTIA petition for full Commission to review bureau decision to keep June 19 auction date: “The Wireless Bureau’s decision to proceed with the auctions, despite the fact that policies and procedures have not been established with respect to incumbent users, will actually impede the development of existing spectrum-based services and the deployment of new technologies in the 700 MHz band.” As expected, Paxson Communications urged FCC to reject CTIA’s application for review. Paxson said CTIA “presents the Commission with a simple choice: Follow the law or ignore it in favor of speculative legislative and regulatory proposals created as part of a massive last-minute lobbying campaign by the large wireless services providers who are the only parties that stand to gain from delay.” In lengthy comments, Paxson said FCC already had missed Sept. 30, 2000, statutory deadline for auctioning Ch. 60-69. If Sept. 30, 2002, deadline for depositing proceeds in U.S. Treasury from Ch. 52-59 auction were missed, that would “constitute a second and continuing violation of 2 controlling statutory provisions,” company said. “It is time that the Commission step up to its obligations under this statute and enforce the law. As an instrument of Congress, the Commission is required to enforce existing statutes, not positions contained in congressional letters, not arguments of lobbyists hired by the wireless industry.”

Sens. Ensign (R-Nev.) and Kerry (D-Mass.) introduced bill that would delay 700 MHz auctions from scheduled date of June 19. Bill reflected text of HR-4560, which House Commerce Committee marked up Thurs. and which is scheduled for House floor vote Tues. Ensign-Kerry bill, unveiled late Thurs., came as Sen. Stevens (R-Alaska) continued to press for countervailing legislation that would compel FCC to hold auctions for upper and lower 700 MHz bands on time. Meanwhile, source said Stevens was hosting meeting in his office Tues. with NextWave re-auction winners to discuss possibility of settlement. His office declined to comment on talks, which were said to be exploratory in nature.

House Commerce Committee approved indefinite delay of 700 MHz auctions Thurs., although Chmn. Tauzin acknowledged that Sen. Stevens (R-Alaska) continued to have concerns about any postponement. Tauzin’s bill (HR-4560) would direct FCC to delay upper and lower 700 MHz band auctions now set for June 19 without setting new deadline. But he told reporters after brief markup that he had talked with FCC Chmn. Powell about possibility of one-year delay and indicated he would consider request. That would be enough time for both House and Senate to take legislative action, Tauzin said. Powell has indicated in recent congressional testimony that without new legislation, he was reluctant to flout existing statutory mandates, including requirement to deposit proceeds from Ch. 52-59 auction in U.S. Treasury by Sept. 30. Some of most strident arguments for delaying bidding came from ranking committee Democrat Dingell (Mich.), who repeatedly called previous decisions to hold auctions to raise revenue “asinine” and said keeping June 19 date would result in “another auction debacle.”

FCC Comr. Copps said Wed. that while current economy didn’t appear to be ideal time to hold 700 MHz auction, Congress was “pretty specific that there needs to be an auction.” He said at press breakfast that he was researching legislative record to see whether there were countervailing statutory mandates that FCC needed to take into consideration on timing issue. Commission now faces statutory deadline of Sept. 30 to deposit proceeds of Ch. 52-59 auction in U.S. Treasury. It’s considering CTIA request for review of Wireless Bureau decision last month to keep June 19 date for both Ch. 60-69 and Ch. 52-59. If auction were held on time, “I'm not terribly optimistic that huge sums of money would be raised,” Copps said. He also said he wasn’t “thrilled” about Ch. 52-59 and Ch. 60-69 spectrum “being thrown together in the same auction.” But he said his examination of statutory issues on auction didn’t mean he was backing delay. “I'm supposed to be implementing laws passed by Congress,” he said, and he’s in mode of looking at merits of various statutory requirements. While Copps said he had personal opinion about timing of auctions, he said “I'm not here to implement my personal opinion.” Meanwhile, National Emergency Number Assn. (NENA) weighed in on timing of 700 MHz auction, saying availability of 24 MHz in that band for public safety was “a reason worth some delay.” FCC already has allocated 24 MHz at 700 MHz for public safety, although availability of that spectrum also is subject to efforts to clear band of analog broadcasters as part of DTV transition. “We would not wish to put the already allocated 24 MHz at risk, but so far as we can tell, it is already at risk of tardy availability, given the slow pace of DTV implementation,” NENA told FCC in filing Wed. It said Commission’s Public Safety Wireless Advisory Committee projected in 1996 that almost 100 MHz would be needed by 2010, although only 24 MHz had been allocated in former UHF TV spectrum. “With the Administration, the Congress and the FCC all recognizing that there are reasonable arguments for delay, it is unseemly and unnecessary for this issue to remain unresolved beyond the May 8 deadline for submission of notice of intent to bid at auction,” NENA said. It also urged FCC not to allow issue to remain in “limbo” even closer to June 19 auction date.

Citing U.S. Appeals Court, D.C., decision involving biennial review of broadcast ownership rules, CTIA petitioned FCC late Mon. to eliminate “unnecessary regulations” in policy areas such as local number portability (LNP) and Enhanced 911 (E911). Earlier this year, Commission appealed to D.C. Circuit, seeking rehearing of Fox ruling that overturned FCC’s cable-TV station cross-ownership ban (CD Feb 20 p1). Decision is seen as potentially changing burden of proof FCC must use in determining whether rules should be kept or eliminated under biennial reviews. FCC Chmn. Powell has raised concerns that biennial review standard could evolve under ruling from Commission’s having to prove why it eliminates regulation to also include why rules should be kept (CD Feb 21 p1). CTIA Pres. Tom Wheeler said Tues.: “The Fox decision gave clear direction to the FCC: Prove a regulation is vital and indispensable or get rid of it.” Wheeler said CTIA wanted to “help” FCC meet new standard by “jump-starting the 2002 biennial review process.”

Cross-section of industry could join bidding when FCC issues auction rules for spectrum for multichannel video distribution and data services (CD April 24 p1). Commission opened up satellite spectrum in 12.2-12.7 GHz to terrestrial companies in effort to advance broadband services in rural areas. Final order is expected this week. Companies are anxiously awaiting rules splitting spectrum into hundreds of geographic licensing areas. It’s unclear how many bidders auction will attract. Satellite companies may want to buy licenses to create satellite-terrestrial combination, using terrestrial spectrum to provide local and broadband service.

Passage of spectrum reform legislation this Congress “is pretty remote and difficult,” Sen. Sam Brownback (R-Kan.) told U.S. Chamber of Commerce Tues. Brownback, co-chmn. of Congressional Wireless Caucus, said in Chamber broadband summit that “it would be a Herculean effort” to delay or set firm date for FCC’s 700 MHz auction. House Commerce Committee Chmn. Tauzin (R-La.) and other committee members recently introduced legislation to delay June 19 auction of upper and lower bands of 700 MHz indefinitely (CD April 25 p1). Senate Appropriations Committee ranking Republican Stevens (Alaska) is drumming up support for proposal he will introduce this week that would compel the FCC to hold the auction (CD April 30 p4).

Amid some wireless industry efforts to delay June 19 700 MHz auctions, FCC held first pre-auction seminar for upper band bidding Tues. (Pre-auction seminar on lower band auction is set for today -- Wed.) “We are ready to go, at least operationally,” Deputy Wireless Bureau Chief Kathleen Ham said. She said CTIA had petition pending at Commission to review bureau decision in April to retain June 19 date for auctions of both upper and lower bands at 700 MHz. “I think we are going to resolve that as soon as possible,” she said. (FCC set expedited filing schedule on CTIA petition late last week, with oppositions to group’s petition due Fri.). Meanwhile, filing window opened Tues. for applicants for Ch. 60-69 auction to submit Form 175 short forms. Deadline for final submission of that preliminary bidding form is May 8. Few FCC presenters at day-long seminar made passing reference to tug-of-war between some large wireless carriers, which want auction delayed, and broadcasters and others that are fighting delay. “The ground may move beneath my feet at any moment,” quipped Stanley Wiggins, attorney with bureau’s Policy Div. More than 30 on-site attendees at seminar included representatives of Verizon, AT&T Wireless, Spectrum Exchange, Nextel. Actual participation in auction, however, isn’t signaled until carrier files short form application that contains financial information. Because meeting was streamed, presence of other participants was less visible. As for pending petitions that could affect availability of licenses, Wiggins cited petition for reconsideration filed by National Public Safety Telecommunications Council (NPSTC) last year. NPSTC objected to FCC decision not to change certain technical rules for commercial operators in 747-762 MHz and 777-792 MHz bands. Group said lack of modifications could “greatly increase” harmful interference to public safety operations.