Wireless Spectrum Auctions

FCC late Fri. postponed upper 700 MHz PCS band auction until Jan. 14, 2003, but kept existing date of June 19 for lower band, leaving open window for congressional action. Move, which elicited partial dissent from FCC Comr. Martin on lower band timing, came days before upfront payments were due May 28 for both bands. Commission turned down CTIA application for review that asked full Commission to overturn Wireless Bureau decision to hold both auctions on time. It also rejected, on procedural grounds, application for review by Paxson Communications and Spectrum Clearing Alliance that asked FCC to clarify that bidding for both bands would move forward June 19. In long separate statement, FCC Chmn. Powell stressed that Commission was aware of “late inning legislative drive” by industry to change statutory deadlines for bidding. “It bears repeating that, with this temporary delay, we are not imposing a deadline on Congress,” he said. “Instead, we are making an affirmative policy judgment to move the auction to a date of our choosing.” He emphasized circumstances that warranted different outcome for 2 bands, including number of bidders teed up to vie for Ch. 52-59 spectrum and pace of digital TV transition that would clear both bands.

FCC appeared to be weighing at least brief delay for one upcoming 700 MHz auction, although details still were in flux at our deadline and final decision on whether there would be postponement still wasn’t clear. Staffs of Sen. Stevens (R- Alaska), House Commerce Committee Chmn. Tauzin and Senate Commerce Committee Chmn. Hollings (D-S.C.) met late Wed. on potential compromise scenarios, although no progress appeared to have been made, sources said. Several industry observers also said that because FCC decision was coming so close to May 28 deadline for upfront payments in auctions, it could approve short delay in payment deadline. Among possibilities Commission appeared to be mulling Thurs. was holding lower band auction on time for 700 MHz and allowing short delay, possibly of 6 months, for upper band. One source said that several companies as of late Thurs. already had made wire transfer payments to FCC to participate in lower band auction.

Key “threshold” question to ancillary terrestrial component request by mobile satellite service (MSS) licensees is whether such sharing is technically feasible, FCC Comr. Abernathy said at National Spectrum Managers Assn. conference Tues. “If it is, the Commission should hold an auction to allow those rights to evolve to the most highly valued use, and that includes potentially being bought by the satellite licensees who have the satellite rights,” Abernathy told conference in Arlington, Va. She said MSS licensee New ICO had asked FCC for approval to develop terrestrial spectrum using bands allocated to MSS. Sprint PCS and Cingular Wireless submitted new technical data to Commission last week that contended MSS operators didn’t plan to share spectrum between MSS and ATC, but wanted to separate band into one segment for each, conclusion to which ICO objected. In other areas, Abernathy told reporters after her speech that Commission decision on 700 MHz auction probably still was several days away.

“It would be a shame if the government would choose to perpetuate the mistakes that were made in the past on spectrum allocation by moving ahead with the 700 MHz auction rather than seeing the 700 MHz band in its entirety as part of the solution to future spectrum problems,” CTIA Pres. Tom Wheeler told reporters Mon. He responded to auction question in press briefing that outlined CTIA’s semiannual wireless industry survey: “I am about as much of a political realist as you can find. I am saying that if you split the bands, you are going to be limiting your options going forward. The best policy is to delay the 700 MHz auctions period and not to come up with Solomon-like decisions of cutting babies in half.” Meanwhile, discussions still appeared to be under way on Capitol Hill that could spell out potential compromise, although time was running short before Congress recesses Fri. for Memorial Day holiday. Rural Telecommunications Group and National Telecom Co-op Assn. have shifted away from position in which they had entertained possibility of keeping June 19 date for rural service and metropolitan statistical areas in lower band while economic area group licenses from lower band would be added to Ch. 60-69 bidding, and that upper band auction would be delayed beyond June 19. Rural telecom groups no longer are backing any kind of split and want both auctions to be held on time. In past, several rural interests had expressed most concern that auction for 734 MSAs and RSAs move forward on time, so shift toward advocacy of delay on no part of auctions was subtle but important one, source said. One concern has been time it would take to put software changes in place to allow that type of division of licenses to go forward at different times, several sources said. Office of Sen. Ensign (R-Nev.), who is sponsoring bill to delay auctions along with Sen. Kerry (D-Mass.), is said to be interested in compromise that would pull out C-block licenses from lower band and hold upper band auction at later date while keeping lower band auction relatively intact (CD May 20 p6). FCC is expected to issue public notice as early as today (Tues.) announcing short-form applications for auction that it had accepted for filing. Upfront payment date for prospective auction participants is May 28 and typically short-form public notice is released about one week before that deadline. Short-form applications include financial information on prospective bidders and details on which licenses they will seek. One step FCC could take would be to provide short delay of May 28 upfront payment deadline because that wasn’t statutorily mandated date, industry observer said. Prospects for congressionally backed compromise still weren’t clear at our deadline Mon., although talks appeared to be continuing on Hill. CTIA last month filed application for review of FCC Wireless Bureau decision to keep June 19 date for both auctions. “I think there is a very real legal argument,” Wheeler said. He said Sec. 309(j) of Communications Act required Commission to give bidders opportunity to prepare adequately for auction. “How do I know how to prepare right now if I have to put my money down on the 28th and today I don’t know whether there’s going to be an auction or not? How can I possibly prepare?”

Regulators should allow wireless networks to evolve on Internet model of interconnected end-user devices without central network, rather than along model of Bell-based landline phone network, N.Y.U. Prof. Yochai Benkler told conference sponsored by New America Foundation and Public Knowledge (CD May 13 p2) recently. He said spectrum allocation threatened to make wireless communications -- including high-speed data services envisioned by 3G -- tied down to antiquated technologies and gatekeepers. “Wired networks will never be free,” Benkler said: “Wireless could be.” FCC last week liberalized Part 15 rules to allow greater flexibility in use of unlicensed spectrum for such services as 802.11 or Wi-Fi, which is used to extend broadband networks (CD May 17 p4). But Benkler called for more dramatic approach, “open spectrum commons,” where airwaves would be free and end-user devices would determine what was received.

FCC tentatively expects to release long-awaited notice of proposed rulemaking (NPRM) next month on upper millimeter wave bands, Michael Marcus, associate chief technical adviser of FCC’s Office of Engineering & Technology, said Wed. He outlined plans for NPRM at National Spectrum Managers Assn. conference in Arlington, Va. Bands expected to be covered by upper millimeter wave NPRM include fixed point-to-point operations at 71-76 GHz, 81-86 GHz and 92-95 GHz, said John Lovberg, chief technology officer of Loea Communications. NPRM stems from petition for rulemaking filed by Loea, which sought service rules for 71-76 MHz and 81-86 MHz. Loea said rulemaking would allow rollout of gigabit-per-sec. broadband capacity with fixed wireless applications in areas where fiber capacity can’t reach. Creating rules for this spectrum on unlicensed basis is one possible alternative, Marcus said. Potential for narrow beams in this spectrum is one factor that may point toward unlicensed regulatory scheme for these upper frequencies, Marcus said. Another option is take large geographic area, of up to several hundred square miles, and auction it off, he said. “No one outside the FCC likes this,” Marcus acknowledged. One potential benefit of this type of plan is for rapid development of technology because licensee who controls area “can decide what the rules are,” he said. Otherwise, “when technology changes, changing the rules is difficult,” Marcus said. This would address “major technical problem” of trying to regulate technology that moves in Internet time with regulatory processes that move in “Administrative Procedures Act time,” he said. Third option would be that if FCC makes upper millimeter wave spectrum available, it should license spectrum on traditional Part 101 basis, he said. “That certainly is an option,” he said. “It’s not very popular with the FCC at the moment, but it certainly is an option.” NPRM will include proposal for one of these options but won’t rule out other 2, Marcus said. Loea’s Lovberg said company has recommended that Commission enact Part 101 provisions for fixed point-to-point licensing as opposed to unlicensed. “People who use this for very high data rate back-haul connections really want to know that they're protected,” he said. Loea also proposed 3rd-party registration system, rather than band manager, to keep track of where systems are deployed, he said. Company also has sought geographic area based licenses that would be provided on first-come, first served basis, he said.

FCC adopted report and order Thurs. that puts in place new service rules covering total of 27 MHz in 7 separate bands that have been reallocated from govt. to non-govt. use. More broadly, FCC officials also said at agenda meeting that agency will issue notice of inquiry (NOI) by year’s end on provision of wireless services in rural areas, topic that emerged during Commission negotiations on order. FCC Wireless Bureau Chief Thomas Sugrue said at press briefing after meeting that NOI will be fairly wide-ranging, touching on topics such as roadblocks and opportunities for provision of wireless service in rural areas, as well as auctioning and licensing policies. Order itself covers service and licensing rules for wide range of bands, including ways to continue protecting wireless medical telemetry service at 1.4 GHz. FCC Comr. Copps dissented in part on item, expressing concerns about spectrum rights given to band managers, which Chmn. Powell later defended as part of Commission’s purview. In lengthy separate statement, Copps also voiced concern that FCC shouldn’t rely on spectrum partitioning and disaggregation to help promote service in rural areas until it receives better data on how these tools are working.

House Telecom Subcommittee Vice Chmn. Stearns (R-Fla.) introduced bill late Wed. that would compel FCC to return remaining deposits of bidders in NextWave re-auction. In March, Commission returned 85% of deposits from re-auction but concluded winning bidders such as Verizon Wireless should continue for now to be held to nearly $16 billion in potential auction obligations until pending Supreme Court review played out (CD March 28 p1). Stearns bill would: (1) Require FCC within 15 days of passage of legislation to return full amount of re-auction deposits “for licenses that the Commission has not by that date delivered to such winning bidders.” That would amount to $400 million for 13 winning bidders. (2) Let each bidder wipe out its license rights under NextWave re-auction so it would be free of all remaining payment obligations. Bill’s co-sponsors include Reps. Boucher (D-Va.), Terry (R-Neb.), Pickering (R-Miss.), Towns (D-N.Y.), Rush (D-Ill.). “This is a matter of fairness,” Stearns said. “The successful bidders on Auction No. 35 have not received the spectrum they bid on and they have not received their total deposits back.” Verizon Wireless sued U.S. in April to obtain remaining deposit and sought ruling from U.S. Court of Federal Claims that auction “contract” for disputed licenses was void (CD April 9 p1). Lawsuit, also filed in U.S. Appeals Court, D.C., centered on $8.4 billion in auction prices for which Verizon bid in Jan. 2001 and for which it technically still would be liable should FCC prevail in Supreme Court case and be able to return licenses from NextWave to re-auction winners. Supreme Court earlier this year granted FCC request that it hear challenge to D.C. Circuit ruling that overturned agency decision to cancel NextWave’s licenses for missed payment. Verizon has argued that it has been harmed by its continuing debt obligation to FCC and that overhang from bid prices has affected its credit rating and ability to borrow. Carriers have contended that even if high court reverses D.C. Circuit, there’s likely to be further litigation on remand there. “The result is that there is not likely to be a final resolution of the status of the NextWave licenses, and the FCC therefore will not be in a position to deliver licenses to the winners of Auction No. 35, until 3 or more years from the time the auction was concluded,” bill said. It said FCC position was that winning bidders remained obligated to pay full amount of their bids on 10 days’ notice if Commission established its right in court to deliver those licenses. PCS licenses were returned to NextWave following D.C. Circuit decision last year. Several re-auction winners, including representatives of Salmon PCS, VoiceStream, NextWave and Verizon Wireless, recently met with staff of Sen. Stevens (R- Alaska) on possibilities of settlement in case. Settlement agreement last year reached by U.S., re-auction winners and NextWave expired Dec. 31 after Congress failed to pass legislation backing it up.

Industrial Telecom Assn. (ITA) asked FCC for additional 90 days to file reply comments on notice of proposed rulemaking (NPRM) soliciting feedback on ways to ameliorate public safety interference at 800 MHz. “The significant impact on the public safety, private wireless and communications industries as a result of this proceeding, as well as the volume of comments, is such that an extension of time is warranted,” ITA told FCC. It also cited substantial volume of initial comments (nearly 200) that NPRM had generated so far. Among options on which Commission has solicited comments is plan submitted by Nextel last fall that would reconfigure systems at 700, 800 and 900 MHz and 2.1 GHz, including additional spectrum for public safety. American Mobile Telecom Assn. (AMTA) said that while FCC ultimately might decide rebanding was needed to address interference, existing record wasn’t conclusive on that point. AMTA Pres. Alan Shark said his group thought that “we aren’t doing our members a service by coming up with a proposal when there is so much uncertainty about the technical underpinnings.” While much attention in proceeding has focused on Nextel White Paper last fall, Shark told us: “It’s the wrong thing to drive this.” Shark, who counts Nextel among AMTA’s members, said he would like to see 7 issues drive discussion: (1) Extent to which that was immediate problem and potential fixes to address interference at 800 MHz should address not just long-term ramifications but must “recognize that this is happening now.” (2) Need for “voluntary mediation” when public safety or private wireless enterprises find they can’t work out solution with interfering party. Neutral, 3rd parties could be part of pool in such cases that could make recommendations on fixes, Shark said. (3) Some reshuffling at 800 MHz. “Under any rebanding proposal, we need to pull something out of 800 MHz to come up with greenspace to make it happen,” he said, and process would have to account for extent to which equipment moves in that band would need to be done in “orderly” manner. (4) Consideration of moving Nextel out of 800 MHz. Shark said that while commercial wireless operators had expressed concern about part of Nextel proposal that would give carrier spectrum at 2.1 GHz without auction, he didn’t have problem with it. “It would leave some greenspace and take out some incredible congestion.” (5) Examination of filtering aspects of new equipment to address radiofrequency interference “on the front end.” (6) Longer term strategy that could include moving all of public safety at 700 MHz, although several conditions would be needed. Key would be to have date certain by which analog broadcasters would vacate spectrum as part of DTV transition, he said. Another condition would be postponement of current date for 700 MHz auction, which AMTA supports, Shark said. Another caveat would be that relocated operators would be given assurances equipment would be available for them in new band. (7) Guarantees of reimbursement for relocating incumbents. Shark said there was need for congressionally mandated national emergency telecom that could address that issue.

Consensus is building that Bush Administration needs to articulate national broadband strategy, but White House is getting varied signals on just what that policy should look like. Those contrasts were on display Tues. at forum sponsored by Computer & Communications Industry Assn. (CCIA). Twelve representatives of IT, content and telecom industries joined with FCC official at George Washington U. (GWU) Va. campus in Ashburn to debate broadband deployment and copyright protection, with many echoing IBM E-Commerce Program Dir. Greg Waddell: “By the end of ‘02, the Administration should have a clear 10-year vision for wired and wireless infrastructures [for broadband] and adopt them as part of an economic development strategy.” Progressive Policy Institute Vp Robert Atkinson agreed, although he told us after session that Bush Administration “doesn’t have the ideological ability” to craft broadband strategy that didn’t rely solely on free-market solutions. Several panelists said wireless would play critical role in broadband deployment, and with its management of spectrum, federal govt. would be key player in that rollout.