WASHINGTON-While President Clinton and FCC Chairman William Kennard called on federal agencies, broadcasters and others to take steps to free up spectrum for third-generation wireless services, allegations surfaced last week that the administration lobbied against legislation that could have accomplished the same thing and that wouldn’t have been subject to coming political changes.
During the summer, there was an attempt to attach language to the Senate’s Commerce-State-Justice Appropriations bill that would have directed federal agencies to conduct studies to identify spectrum earmarked for 3G by the World Radiocommunication Conference this year; set deadlines to complete those reports; and establish parameters for 3G spectrum planning.
“CTIA has encouraged Congress to seek a legislative process for long-term spectrum planning,” said Steven Barry, senior vice president for congressional affairs at the Cellular Telecommunications Industry Association.
Berry said CTIA plans to push 3G spectrum planning again next year in Congress.
National Telecommunications and Information Administration head Gregory Rohde, who worked with others to elevate 3G spectrum requirements to a White House economic priority, is said to have lobbied to keep 3G spectrum language out of the appropriations bill.
“We don’t believe Congress needs to tell us what to do,” said Rohde, a former aide to Sen. Byron Dorgan (D-N.D.). “I never felt legislation was necessary in this area,” he said.
Rohde said he was aware of 3G spectrum legislation that mirrored the administration’s initiative, but did not lobby to kill it. However, Rohde said he has had ongoing discussions with Capitol Hill about how to free up spectrum in the 806-960 MHz, 1710-1850 MHz and 2500-2690 MHz bands currently encumbered by the Pentagon and other federal agencies, broadband fixed wireless carriers and religious and educational licensees.
Asked whether he voiced opposition to 3G spectrum legislation in any discussions with congressional staff, Rohde declined to answer.
Even with a presidential directive, clearing those bands for third-generation services will be a herculean challenge. The Defense Department claims it needs spectrum for its post-Cold War arsenal, a contention backed by a 1997 General Accounting Office report. Some large fixed-wireless firms like WorldCom Inc. and Sprint Corp. have invested $1 billion in 2.5 GHz licenses. Moving others off the 2.5 GHz band could ignite a big backlash from religious and educational licensees.
Another drawback is the Pentagon is not guaranteed relocation compensation, a big disincentive for moving to other frequencies.
The release of the executive memorandum and the Council of Economic Advisers report were meant to show how important 3G services are to the nation’s economy.
A press conference last Friday turned into a cheering session with representatives from the White House, NTIA, the Federal Communications Commission and the Defense Department each vowing to work cooperatively, as directed by the president, to identify and make available spectrum for 3G services.
Unlike other countries that have auctioned 3G spectrum, all of the spectrum identified for 3G use is encumbered, but this does not mean that the incumbents will be left without suitable spectrum, said Kennard.
“We are not proposing to take spectrum from any use. … I don’t want there to be any confusion that we are going to pull the plug on any user whether they be commercial or defense,” said Kennard.
Rohde agreed. “If this proposal were to degenerate into a spectrum grab, then there is no way we can succeed,” he said.
The executive memorandum lays out a time table that begins with NTIA coming up with a gameplan by this Friday that will allow the FCC to auction 3G spectrum by Sept. 30, 2002.
To achieve this goal, the president directed federal government spectrum users, including DOD and the departments of Treasury and Transportation, to work with NTIA, the FCC and industry to identify spectrum for 3G.
The Department of State was directed to “coordinate and present the evolving views of the United States government to foreign governments and international bodies.”
The report accompanying the memorandum puts a positive spin on the value 3G will have on the economy going forward, but it leaves in doubt exactly what impact the new technology will have.
“The precise value to U.S. operators of additional spectrum for 3G technology is uncertain. A simple analysis of the existing wireless industry indicates that, in the aggregate, U.S. wireless operators earned $238 million of revenues per megahertz under the existing spectrum allocation in 1999. At similar rates, an additional 150 megahertz of spectrum could bring an additional $35.7 billion of service revenues per year, depending on what services are provided,” says the report.
The wireless industry was ecstatic about the report, but the fixed-wireless industry was more dubious.
The executive memorandum “is an important first step. … We look forward to a government/private-sector partnership to benefit consumers by developing wireless products and service that will ensure our global competitiveness for decades to come,” said Thomas E. Wheeler, president of the Cellular Telecommunications Industry Association.
“All of this should be studied very thoroughly. One thing that seems to be overlooked is that Canada, Mexico as well as other Central American and Latin American countries use 2.5 GHz for fixed broadband wireless,” said Andrew Kreig, president of the Wireless Communications Association.
“If you’re talking about global harmonization, is the U.S. supposed to compatible with Canada and Mexico or some European countries?” asked Kreig.
Last Tuesday, in a speech in New York, Kennard set the tone for what was to follow later in the week by calling for broadcast fees in another chunk of spectrum-at 700 MHz-as a means to get TV broadcasters off spectrum that mobile-phone carriers also need for 3G.
TV broadcasters should be assessed an “escalating spectrum squatter’s fee” if they have not converted to digital by Jan. 1, 2006, said Kennard in a speech at the Museum of Television and Radio in New York.
“If you’re not going to use this valuable $70 billion resource to benefit the public interest, then perhaps you should give it back. And, if you’re going to tie up twice your allotted amount of the people’s bandwidth, perhaps you should pay some rent on it,” said Kennard.
Broadcasters were given an extra channel to convert to digital technology and were supposed to give back their “analog” channel by Dec. 31, 2006, and when 85 percent of the households in their broadcast area can receive digital signals. Some of the spectrum to be returned has already been auctioned off to guard-band managers and another 30 megahertz is set to be auctioned on March 6.
The FCC said Kennard envisions the “rent” on the first year-2006-to be relatively small, but an incentive for broadcasters to meet the 2005 deadline for simulcasting both analog and digital signals.
Not surprisingly, the wireless industry, which recently has had to participate in auctions to obtain spectrum, was elated over Kennard’s proposal. But the broadcasters said the proposal was ludicrous.
“Chairman Kennard has it right when he says that the public interest will be served by speeding the transition to digital TV and returning valuable spectrum to the American people. This spectrum holds great promise for third-generation wireless services, but that promise will only be realized if wireless companies like Verizon Wireless can use it. Chairman Kennard’s proposal to make this spectrum available for 3G sooner makes perfectly good sense for wireless consumers and the American taxpayer,” said Verizon Wireless spokesman Jeffrey Nelson.
The N
ational Association of Broadcasters believes the transition to digital service is going better than expected, with 158 station
s transmitting digital signals today. If broadcasters are having a difficult time transitioning to digital technology, it is the fault of the FCC, not broadcasters, said Dennis Wharton, NAB senior vice president for communications. Wharton said the FCC said it would release rules on digital TV signals more than a year ago. Wharton added that of the 158 DTV stations broadcasting today, only five are being carried on cable systems.
“[Kennard] He seems to suggest Congress needs to make the tough calls. It is his agency that is charged with making sure there is a seamless transition to DTV,” said Wharton, when asked if broadcasters would fight any move on Capitol Hill to remove the 85-percent benchmark and make firm the 2006 deadline.
The manufacturers of TV sets agreed with Kennard, blaming broadcasters for the lack of digital TV sales. “The fact is there is very little content. We strongly support [Chairman Kennard’s] efforts to make the broadcast industry accountable to commit to the [DTV] transition,” said Jeff Joseph of the Consumer Electronics Association.
Kennard’s proposal was not vetted among the other commissioners. FCC Commissioner Harold Furchtgott-Roth, reacting to press reports of the proposal, said the idea was preposterous.
“This is just a complete misuse of bad numbers,” said Furchtgott-Roth during his monthly press briefing, noting that there is no basis for the $70 billion figure quoted by Kennard. In his speech, Kennard said that industry experts value the spectrum at $70 billion.
