WASHINGTON-“This is an exciting wireless opportunity for businesses with clear vision and a good business plan,” commented Michele Farquhar, chief of the Federal Communications Commission’s Wireless Telecommunications Bureau, at a bureau-sanctioned wireless communications services auction forum held Feb. 28. “There will be no commercial mobile radio spectrum cap, and unlimited partitioning and disaggregation. This flexibility will serve as a vehicle for new services.”
The wireless communications service spectrum, located in two areas of the 2.3 GHz band, is set for auction April 15, with all proceeds going to the Treasury by Sept. 30; The auction was mandated to fulfill budgetary plans outlined by Congress last year. The commission will not speculate on how much money will be made from this sale, although others in the wireless industry have said that, because of all the unknowns connected to WCS, revenues could be less than the $2 billion made during the D-, E- and F-block personal communications services auction.
The rather nebulous service-said to be capable of supporting fixed mobile, broadcast satellite, radiolocation, wireless Internet, return links for cable and broadcasting, and wireless local loop-is the first instance in which the commission will allow licensees to decide how their spectrum will be used. Satellite services and broadcasting will not be allowed. It also represents the most iffy proposition to date, in that no installment payments will be allowed (although generous bidding credits of 25 percent and 35 percent have been built in for small businesses), and there currently is no equipment available that works in that band. Regarding wireless Internet service, potential licensees were told that while such a service works in the band, the better opportunity might be found in the commission’s unlicensed narrowband spectrum.
According to WTB deputy chief Jerry Vaughan, the spectrum “probably can’t be used for mobile services, although others disagree with this.”
Associate bureau chief Jonathan Cohen, however, agreed, saying that “mobile in the near-term future will be technologically difficult.”
Four spectrum blocks-A and B at 10 MHz each and C and D at 5 MHz each-will be available, with two 10 MHz licenses sold in 52 major economic areas that include Guam and the Northern Marianas along with American Samoa, and two 5 MHz licenses that will cover each of 12 regional economic area groupings. The licenses run for 10 years, at which time auction winners will have to prove “substantial service” in their areas.
Because the spectrum-2305 GHz-2310 GHz, 2310 GHz-2320 GHz and 2345 GHz-2360 GHz-is split by a 25-megahertz allocation to the digital audio radio service, interference engineering is a must. “DARS is a low-power satellite service bordered on both sides by a high-power terrestrial service,” said Steve Sharkey, chief of the International Bureau’s Satellite Engineering Branch. “There are specific interference limitations that are more stringent than with other services.” Besides DARS, licensees may experience problems with protecting the government’s deep-space operations and its radioastronomy operations. However, if a WCS licensee is operating within FCC guidelines and interference occurs to other licensees and/or services, it will be up to the other licensee to fix the sensitive receivers.
“The service will require good, solid engineering to avoid interference,” Vaughan cautioned. “You have to design it and build it. The best engineers will build in the most flexibility.” He added that WCS has “more possibilities than [personal communications services],” but that the commission still was not in a position to guarantee success.
Money, of course, is key in an auction situation, and John Williams of the FCC’s Office of Plans and Policy told attendees, “Be sure you can make the money to pay for the spectrum. There are a lot of opportunities, but there is a lot of risk.” The 10-year build-out plan allows licensees to make a lot of mistakes without the worry that the commission will take back their licenses. Because all costs for the spectrum will be paid to the commission, and thereby to the Treasury, by the end of September coupled with the commission’s built-in service flexibility, licensees can change service offerings as many times as they choose if a particular plan fails.
The partitioning/disaggregation opportunity also could be attractive to WCS licensees as a method of disbursing unneeded or surplus capacity or as a possible exit strategy. “It’s our way of saying you can slice and dice your license as you see fit,” said David Furth, chief of the Commercial Wireless Division. The same auction rules for selling to a like buyer apply here, though, and if small-business licensees sell to a larger entity, they would be liable for extra fees to reimburse the government for lost funds.
