Wireless Spectrum Auctions

Vincent McBride, who was small business bidder in NextWave re-auction, asked FCC Chmn. Powell last week not to delay June 19 700 MHz auctions, saying in April 19 letter: “Any further delay… undermines the Commission’s efforts to ensure that small businesses are given full opportunity to participate in the wireless industry. We ask the Commission to remain confident in the numerous small businesses, which have shown a high interest in the 700 MHz auctions.” Separately, wireless provider Southern LINC, which was formed by energy company Southern Co. in 1993 to provide land mobile radio service to affiliated electric distribution utilities, also backed delay. FCC Wireless Bureau turned down CTIA request earlier this month to delay June 19 start for upper and lower bands in that spectrum. Southern LINC is commercial mobile service provider that also serves public safety agencies and other users. In April 15 letter to Powell, carrier cited “open issues” that it said remained on 700 MHz spectrum, including availability of spectrum for 3G services and role that 700 MHz could play in improving public safety communications that now experienced interference at 800 MHz. “Because of these significant uncertainties surrounding the future of the 700 MHz band, prospective bidders have inadequate information on which to develop business plans, assess market conditions and evaluate the availability of equipment,” Southern LINC wrote.

Echoing legal concerns raised by FCC Chmn. Powell over 700 MHz auction earlier in week, FCC Comr. Abernathy said Fri. that “absent a statutory change, I believe it is responsible for the FCC to move forward with the auction of this band before the end of the year.” Speaking to reporters after speech at World Computer & Internet Law Congress in Washington, Abernathy didn’t rule out “very brief” temporary delay to give Congress time to weigh in on statutory deadline of Sept. 30, 2002, for lower portion of the band. “It’s a very difficult situation,” she said. “The question for us is how do you explain not following a statutory mandate.”

PGTV’s business plan “is long on promises but short on details,” and company doesn’t even plan to hire its first full-time employee unless it wins 700 MHz auction, Spectrum Clearing Alliance said in ex parte FCC filing opposing PGTV’s bid to delay auction (CD April 16 p5). “The mere possibility that PGTV might participate in and win the auctions and then one day provide new services in the band cannot justify the substantial harm that any delay of the auctions would cause to the expeditious provision of much-needed spectrum for public safety agencies and new commercial wireless services,” Alliance said. Group also said PGTV shouldn’t expect FCC to shelve 2 years of auction planning to launch rulemaking on changing 700 MHz power limit: “PGTV should bid for the spectrum first and then, if successful, request the changes necessary to facilitate its proposed service.”

Commerce Secy. Donald Evans urged FCC Chmn. Powell, in letter released Thurs., to postpone June 19 auction of 700 MHz band, even without congressional action. Writing on behalf of Administration, he warned that until there was more certainty about spectrum clearing, auction “would be premature and contrary to public interest.” While lauding recent FCC proposal for voluntary steps for accelerating DTV transition, Evans said: “Significant uncertainty remains today about the date on which the spectrum in those bands will become available for new wireless services.” He said Administration still believed legislative postponement of auction deadlines was “preferable” and that it would continue to work toward that. But he said FCC previously had “exercised its discretion” to delay 700 MHz auction and urged it “to do so again.” Evans’ letter came day after Powell testified before House Appropriations subcommittee that in absence of legislative change, he would be uncomfortable about delaying auction again and violating congressional mandate (CD April 18 p1).

FCC issued memorandum opinion and order Thurs. that, among other issues, rejected arguments that Commission shouldn’t consider use of band manager licensing in future for private wireless services. Decision, unanimously adopted March 14, addressed order and further notice on 1997 Balanced Budget Act changes to Sec. 309(j) and 337 of Communications Act. Action: (1) Reiterated that public safety radio services exemption of Sec. 309(j), which authorized FCC to award spectrum licenses through auction, applied to services and not specific users. FCC affirmed dominant use test previously laid out by Commission as way to ascertain whether particular service qualified for public safety exemption. (2) Retained mandatory 5-year holding period for modification of 800 MHz private land mobile radio service authorization to permit commercial use. (3) Affirmed earlier FCC decision that applicant must demonstrate there was no public safety spectrum available to “satisfy the public safety service use before it can be granted a waiver” under Sec. 337. On band managers, which FCC adopted for 700 MHz guard bands, Commission rejected arguments by several utilities that allowing band managers in utility bands such as 900 MHz appeared to be way to circumvent auction exemption for public safety radio services. “In essence, these entities equate band manager licensing with the use of competitive bidding, which they oppose in the private services,” Commission said, noting it had rejected such arguments in past. Objections of utilities are “premature” because FCC has said it would examine eligibility restrictions in future on service- specific rulemakings, agency said. FCC previously examined scope of public safety radio services exemption and how it would handle cases in which mutually exclusive applications were filed for public safety services. At that time, it concluded exemption applied to specific services, not users. Nearly dozen petitioners argued exemption should apply to specific users and that all private radio spectrum users who met terms of statutory exemption were “auction-exempt.” Energy companies Cinergy and Entergy, for example, argued that FCC lacked authority to conclude that spectrum allocated for use by utilities was subject to competitive bidding. Commission disagreed, noting that Congress specifically referred to “services” in statute. In other areas, United Telecom Council asked FCC to clarify certain spectrum issues for private wireless services, such as whether there would be future allocations for public safety and whether utilities, pipelines, metro transit systems and railroads would have access to existing public safety allocations. FCC said it could create separate designation for public safety services under Part 90, either by allocation or service rules, but it declined to speculate on amount of spectrum that would be available, saying it would be decided in specific proceedings.

Paxson Communications said Spectrum Clearing Alliance had added dozen new members since FCC Wireless Bureau last week turned down CTIA request to delay June 19 date for 700 MHz auction. Paxson, which has urged FCC not to delay auction for upper and lower bands, also contended that some wireless carriers were “eager to participate,” citing examples such as Council Tree Communications and Nextel. Council Tree, which is investor along with AT&T Wireless in Alaska Native Wireless, which had won spectrum in NextWave re-auction, recently urged FCC to not delay auction, citing interests of small bidders. But Nextel spokeswoman said that carrier hadn’t publicly stated position on auction date. She said she couldn’t comment on Paxson press release that she said she hadn’t seen. Paxson also listed board members to Spectrum Clearing Alliance elected at NAB convention. They included Andrew Hobson, Univision Communications; Lowell Paxson, Paxson Communications; Leon Brown, Clear Channel Communications; Walter Ulloa, Entravision Communications; Bennett Smith, Shop at Home; William Smith, Unicorn Communications; Benton Miller, Trinity Bcstg. Network; Christian French, WRNN-TV; Joe Kelley, Josie Park Bcstg. Alliance has planned to negotiate with 700 MHz bidders on compensation for broadcast incumbents and is working on “private market mechanism” for clearing Ch. 60-69.

NTIA Dir. Nancy Victory told FCBA policy forum late Tues. that among themes that emerged at recent NTIA spectrum summit were need to address length and complexity of regulatory proceedings, which in some cases were seen as too “reactive.” In other areas, discussion turned to extent that innovative technology in receivers could maximize spectrum use by reducing size of guard bands and channel spacing, she said. “Not surprisingly, there’s a sliding scale between cost and efficiency,” she said. One issue that “surprised me most” at summit was interest in govt. and commercial users in exploring ways to use same system, Victory said. “Obviously this won’t work for all uses,” she said. “But if we can eliminate some redundant systems we can clearly increase efficiency and open up some spectrum for new services.” Among themes from summit that Victory said she expected would figure prominently in NTIA’s spectrum management agenda was “need for teamwork to replace turf wars. Spectrum needs are too important to be undermined by internecine squabbling between and among and within branches of government.” Victory said she planned to talk with FCC Chmn. Powell and David Gross, U.S. deputy asst. secy. of state for international communications, on developing action plan that would “facilitate the efficient functioning of the nation’s spectrum management team at home and abroad.” Victory also said: “We need to make a concerted effort to eliminate unnecessary government micromanaging of spectrum uses. This means a fresh look at legacy rules and restrictions to assess their ability to accommodate emerging technologies or spectrum needs.” In separate panel discussion moderated by Bryan Tramont, senior legal adviser to FCC Comr. Abernathy, Cingular Vp-Federal Relations Brian Fontes expressed dismay at recent Wireless Bureau decision to keep 700 MHz auction date intact. Bureau last week turned down CTIA request to delay June 19 start. Decision by bureau amounted to “no, we will do this auction come hell or high water,” Fontes said, noting that FCC had notice of proposed rulemaking on potentially reconfiguring 800 MHz band that could be affected by decisions in 700 MHz. Nextel Vp-Chief Regulatory Officer Robert Foosaner on separate panel said CTIA had set up committees on 800 MHz NPRM stemming in part from White Paper on band reconfiguration floated by Nextel last fall. Seven other associations have set up similar committees and 5 alternative plans are known to be in works other than Nextel’s original paper, he said: “Spectrum allocation… is about the most difficult decision that faces policymakers at the FCC.” Nextel proposal attempts to address “in a hard and concrete way with $500 million on the table” issue of interference in that band.

Private wireless operators asked FCC Chmn. Powell Tues. to delay June 19 start of 700 MHz auction, citing proceeding at Commission to eliminate interference at 800 MHz. FCC Wireless Bureau turned down CTIA request last week to delay auction for upper and lower bands at 700 MHz (CD April 11 p1). Letter by 8 representatives of private land mobile radio services (PLMRS) cited comment period that Commission had opened for notice of proposed rulemaking that addressed interference experienced by public safety operators at 800 MHz. Private wireless community said several proposals “under preliminary discussion” involved retuning some incumbents 800 MHz licensees to 700 MHz band, including licenses covered by Ch. 60-69 auction. “While it is premature to assume that one of these proposals is the best course of action available, or the course of action the Commission ultimately will follow, it is equally premature to eliminate such proposals from consideration by going forward with the auctions on the scheduled date,” letter said. Groups said comment period for NPRM ends May 6, 2 days before short forms from auction participants are due at Commission. “It would be a disservice to thousands of 800 MHz incumbent licensees, and to the nation’s public safety needs, to allow the 700 MHz auction to proceed after interested PLMRS parties have expended extensive time and resources to devise a workable solution dependent on the availability of that spectrum,” letter said. Filing was signed by Aeronautical Radio Inc., American Assn. of Railroads, Forest Industries Telecommunications, Industrial Telecommunications Assn., frequency coordinator MRFAC, National Assn. of Mfrs., Small Business in Telecommunications, United Telecom Council. Groups said FCC appeared “eager to consider any and all reasonable solutions to 800 MHz public safety interference.” Saying that that was among themes raised at recent NTIA Spectrum Summit, letter said holding auction on current timeline could compromise “the Commission’s ability to meet that imperative.”

PGTV’s Total.TV, prospective bidder in 700 MHz auction that bills itself as potential new competitor to satellite and cable TV, is latest to ask FCC to delay June 19 auction. FCC Wireless Bureau last week turned down CTIA request for delay (CD April 11 p 1). Newly formed Total.TV told FCC Chmn. Powell in letter Mon. that it supported “brief delay” in auction date, saying it would increase competition in provision of video services and bolster DTV rollout. Total.TV said company was created by Phil Goldman, one of founders of WebTV. It said it would like to use all of 78 MHz available in upper and lower bands of 700 MHz auctions. Under plan that bears similarities to NorthPoint proposal, though at different frequency, company said it proposed to use spectrum to create multichannel video service that would compete with existing multichannel video programming distributors (MVPDs). “The availability of the 700 MHz spectrum offers a once-in-a-generation opportunity to promote new technologies, while providing needed competition between and among MVPDs, as well as fostering the digital television transition,” letter said. PGTV attorney Henry Goldberg said in letter that Total.TV planned to: (1) Deliver multichannel TV program networks using over-air digital terrestrial transmission on 700 MHz frequencies, “which are already receivable by digital TV sets.” (2) Require neither satellite dish nor cable installation. (3) Offer national programming with access to all free local broadcast channels plus local pay-per-view. (4) Price service aggressively compared with satellite and cable MVPD services. (5) Use less expensive set-top box, particularly for multiple receiver homes, and eventually eliminate need for device. Filing Mon. marked first time that Total.TV had publicly disclosed plans for service. It also is seeking changes in rules for 700 MHz spectrum that would encourage participation by businesses other than wireless voice and data service providers, it said. Rules for upper band of 700 MHz allow wide array of wireless services, including broadcast type, but Total.TV said that while such services would be allowed in theory, they must be consistent with technical rules that impose 1 kw power limit per transmitter. “It is impossible to deploy a competitively viable multichannel video programming service operating under such a power constraint,” company said. Service rules for lower band of 700 MHz, by comparison, have 50 kw limit. Such differences make it hard for potential MVPD competitor “to bid in both auctions in order to acquire sufficient blocks of spectrum for a competitive multichannel video service,” Total.TV said. “While it is imperative to protect the incumbent TV broadcasters and future public safety users from harmful interference, the 1 kw power limit is not necessary for either purpose.” To allow bidders to obtain blocks of spectrum large enough for MVPD services, Total.TV asked FCC to consider single auction for both bands with package bidding.

Wireless industry is mulling options now that FCC Wireless Bureau decision has turned down CTIA request to delay 700 MHz auction set for June 19 (CD April 11 p1). Several sources said that because decision was by bureau, rather than FCC, door was left open for review by full Commission. Efforts on Capitol Hill to delay bid start date -- already under way before bureau decision -- also are expected to accelerate this week. “CTIA believes that the FCC was a little quick on the draw in their response and may have not looked at all the benefits that could be derived from a moderate delay of the auction,” said CTIA Vp-Govt. Relations Steve Berry: “We hope that the full Commission will have a much broader scope in its review.” Berry said CTIA hadn’t made any decision on whether to seek full FCC review of its request to delay start date, but said group was evaluating alternatives. Even before bureau decision last week to keep date, efforts were under way to have letters sent to FCC from key Senate and House appropriators and Commerce Committee members. One industry source said hope was that House Commerce Committee Chmn. Tauzin (R-La.) would lead Republicans in urging FCC to delay auction and that Rep. Dingell (D-Mich.) also would back delay. As early as end of this week, legislation is expected to be drafted that would delay auction, source said. White House Office of Management & Budget apparently is monitoring plan to retain auction date in light of language in Administration’s budget proposal that would push back dates of 700 MHz bidding, source said. Budget blueprint indicated that if upper band auction were moved to 2004 from 2001 and Ch. 52-59 bidding to 2006 from 2002, budget offset of $2.6 billion for fiscal 2002 would be realized. Before bureau decision, some Senate offices were close to including report language on fiscal 2003 budget that would direct FCC to delay auction date. Some in wireless industry also hope that NTIA might weigh in on auction timing with letter that would underscore language in Administration’s budget proposal, source said. Cingular Wireless last week had submitted ex parte filing to back CTIA request for delay, saying FCC had started proceeding to examine ways to eliminate interference for public safety users at 800 MHz. Cingular said one possibility would be to relocate existing 800 MHz public safety operations to 700 MHz to resolve interference, move that could finance relocation through auctioning vacated 800 MHz spectrum. “Delay of the 700 MHz auction is warranted to allow these issues to be fully addressed in the pending public safety rulemaking,” Cingular said. One industry source said Wireless Bureau letter to CTIA last week denying request for delay might have “raised bar” for signals FCC would need to receive from Hill to push back date of upper band auction for 6th time. FCC Wireless Bureau Chief Thomas Sugrue said bureau had adopted reserve price of $2.6 billion for upper band, meaning that if bidding didn’t reach that level, licenses wouldn’t be awarded.