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FCC TO SELL FREE-USE SPECTRUM, FIRST EFFORT TO PRIVATIZE INDUSTRY

WASHINGTON-Is this the future?

The Progress & Freedom Foundation, the libertarian think tank of House Speaker Newt Gingrich, R-Ga., that wants to abolish the Federal Communications Commission, would be proud.

But more likely, it would scoff, and call it a meager effort at reform.

Whatever, the FCC is at least taking a stab at what telecom futurists are loudly and frequently advocating these days: privatizing, or dezoning, spectrum.

The agency has taken 25 megahertz (4660-4685 MHz) of the 200 megahertz surrendered so far to the private sector by the federal government and told American companies to use those frequencies as they like so long as they pay for them.

The 25 megahertz under discussion is ensconced in the General Wireless Communications Service. Virtually anything goes: wireless telephony, microwave links, airline passenger entertainment, in-building communications, interactive services and public safety. Only broadcast, radiolocation and satellite services are off limits.

“Those who win licenses for this spectrum will be challenged to find its most innovative and efficient uses to meet the needs of consumers,” said Regina Keeney, chief of the Wireless Telecommunications Bureau at the FCC.

In each of 175 economic areas (larger than basic trading areas but smaller than major trading areas), five-megahertz blocks will be auctioned subject to a 15 megahertz aggregation limit in each area. In all, 875 licenses go up for grabs next summer.

Buying spectrum from the U.S. government is relatively new; Congress gave the FCC authority to sell wireless licenses in 1993?

The GOP-led Congress and the Clinton administration want to broaden the FCC’s auction authority this year, a prerequisite to raising $14 billion during the next seven years.

Letting firms decide what to do with the spectrum they buy is even newer and pushes the envelope further. While the FCC is not on the verge of overhauling the current regulatory regime, the agency is steadily integrating market-based incentives and technical flexibility into its rules.

The general wireless band represents a radical departure from traditional block allocation, an approach historically employed by the FCC whereby chunks of the airwaves have been designated for a particular purpose on a national basis. That means as many taxicab channels are set aside for New York City as for the Grand Canyon and as many forestry conservation channels for the Pacific Northwest as for, well, New York City.

While block allocations help regulators control electromagnetic interference and give manufacturers design standardization and stability, the scheme has been criticized as too rigid and spectrally wasteful.

A 10 percent bidding credit, installment payment options and reduced down payments will be available in the general wireless band to small businesses, those firms that averaged $40 million or less during the past three years.

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