WASHINGTON-With the exception of some very large carriers in some very large markets, cellular carriers today are not starved for spectrum capacity, but they expect to be in the future.
Spectrum scarcity “is a near-term problem. It is not a current problem, but it is not a long-term problem. It is a two- to three-year problem,” said Donald C. Brittingham, government relations director of wireless matters for Bell Atlantic Corp.
Notwithstanding a current need, the Cellular Telecommunications Industry Association continues to wage a campaign to urge the Federal Communications Commission to lift the spectrum cap that restricts carriers from controlling more than 45 megahertz of spectrum in urban areas and 55 megahertz in rural areas.
CTIA in November asked the FCC to reconsider its decision. It also is possible the trade group will file a lawsuit.
The cellular trade group was heartened by a recent FCC decision not to impose the caps on carriers that win spectrum being made available with the transition to digital TV because it believes that makes its arguments easier.
“In my opinion, that really set up an inconsistency in the FCC’s theories. They are prepared to allow one commercial mobile radio service carrier in a market to have 45 megahertz plus 30 megahertz in a single market but they are not prepared to have a second CMRS provider have more than 45 megahertz,” said Michael Altschul, CTIA vice president and general counsel.
While CTIA’s position has been the opposite of the Personal Communications Industry Association, which represents start-up personal communications services carriers, PCIA isn’t opposed to the cap being left out of the 700 MHz proceeding.
The issue of the spectrum cap has pitted the older more entrenched wireless carriers, most of which have cellular operations, against the newer all-digital PCS carriers. But the issue has been whether competition has fully developed, not whether cellular carriers-which have only 25 megahertz of spectrum-are at a disadvantage to PCS carriers that have 30 megahertz of spectrum. Indeed, capacity was not an issue when the FCC reviewed the spectrum cap in 1999.
If cellular carriers are at a disadvantage, it is because they must continue to serve analog customers, Brittingham said.
Bell Atlantic Mobile’s “ability to satisfy future demand under the spectrum cap is constrained by the large base of analog customers it must continue to serve. Even as customers migrate to digital service, this embedded base of analog customers is expected to remain large for the foreseeable future … Cellular carriers are required to serve analog customers under the [FCC’s] rules-a requirement that does not extend to PCS operators. This `analog penalty’ accelerates the cellular carrier’s need for additional spectrum in advance of the needs of most PCS operators,” Brittingham said.
Additional spectrum capacity will be necessary for third-generation wireless, but since these offerings are two or three years down the road, the FCC has said it will consider spectrum capacity constraints when it makes 3G spectrum allocations. To address the 3G question, the FCC plans to initiate a proceeding in the near future to allocate more spectrum. The FCC indicated when it makes its 3G allocation, it could relax the spectrum cap, not make it applicable or keep it in place based on the market at that time. A U.S. working group on 3G allocation indicated 160 megahertz of spectrum needs to be made available by 2010.
Rural rules
Large urban carriers say they are perplexed that the FCC relaxed the cap in rural areas where there aren’t capacity problems. Brittingham said he thinks the FCC relaxed the cap in rural areas to encourage advanced services.
“You cannot drive the development of those new services in rural America … the idea that some of these services will develop first in rural markets is a little short-sighted,” Brittingham said.
Many rural wireless carriers also are incumbent local exchange carriers and want to provide an entire package for their customers. This package would include both cellular and PCS services, said Caressa D. Bennett, an attorney representing rural carriers.
Bennett said that is why a group of rural carriers asked for spectrum cap waivers. Those waivers were conditionally granted just prior to the September decision to raise the cap for rural areas.
The FCC relaxed the cap in rural areas because it believes those markets are different so the rules could be different, said James D. Schlichting, deputy chief of the FCC’s Wireless Telecommunications Bureau.
“We came up with a different balance. We thought the markets were sufficiently different for a different cap,” Schlichting said.
The issue of the spectrum cap will continue to haunt the FCC. The agency said in September that it will again review the cap as part of its 2000 biennial review, and CTIA continues to urge Congress to convince the FCC of the uselessness of the cap.
