WASHINGTON-In an unexpected twist pitting billionaire Craig McCaw against a mobile-phone industry he once towered over, sources say the Federal Communications Commission may propose making some mobile satellite service spectrum-including that held by McCaw’s New ICO and other struggling satellite firms-available for third-generation wireless systems.
At the same time, the mobile-phone industry-frustrated in efforts to secure 3G-designated spectrum in 1700 MHz, 2500 MHz and 700 MHz bands now occupied by military, school, church, broadcast and fixed wireless Internet licensees-is laying the groundwork for something even more dramatic. The Cellular Telecommunications & Internet Association and perhaps individual mobile-phone carriers are preparing to ask the FCC to reallocate 2 GHz MSS spectrum to the cellular industry, according to sources.
“In this country, we have people who have filed at the commission saying, `We can’t use the spectrum, we don’t have an economic model.’ I would pull the plug and reallocate it,” said CTIA President Thomas Wheeler last week at a conference sponsored by the European Institute.
Unlike digital mobile-phone carriers, New ICO, Globalstar Telecommunications Ltd. and Iridium L.L.C. and other mobile satellite firms did not pay for licenses via FCC auction.
CTIA last week sent a letter to the White House, urging the Bush administration to slow down a process set in motion last October by former President Clinton that calls for a final FCC decision on 3G spectrum by July 30 and the licensing of that spectrum by September 2002.
But just as the mobile satellite business has been criticized, so too have some questioned whether 3G-a high-speed mobile Internet technology in which firms here and abroad already have invested more than $100 billion-also is destined for massive failure.
“I have been hearing about these new technologies for some time and the need for new services. The problem I am seeing is that I am still not sure what 3G is. I still haven’t seen the killer app that will convince the world that this is such a great thing,” said Thomas Tycz, chief of the satellite and radiocommunications division of the FCC’s International Bureau, at the same meeting attended by Wheeler.
The battle over MSS 2 GHz spectrum-comprising a total of 70 megahertz-has being playing out behind the scenes for weeks in response to a request by New ICO in early March to use a portion of its satellite frequencies for ground-based cellular service. Since then, New ICO has been aggressively lobbying for support at the FCC and on Capitol Hill. In addition, New ICO-which McCaw saved from bankruptcy last year with a $1 billion investment -has held discussions with CTIA.
Now, it appears the controversy is about to break wide open into public view.
New ICO said it is wrong to view its proposal as a spectrum grab by McCaw. Besides New ICO, McCaw is working with Microsoft Corp. Chairman Bill Gates to get Teledesic-a global fixed satellite project-off the ground.
“ICO hopes this could be a win-win for both segments of the wireless industry,” said Gerry Salemme, senior vice president of New ICO. Salemme said allowing New ICO to provide ancillary terrestrial mobile-phone service would bring the promise of digital communications to rural areas that remain unserved because it is not economically viable for terrestrial wireless firms. Salemme said the trade off is that ground-based mobile-phone systems would get access to additional spectrum they need to roll out 3G services.
Salemme, noting that McCaw has far more capital investment tied up in Nextel Communications Inc. than in New ICO, said there is no intent to undermine the terrestrial wireless industry.
The New ICO proposal has created friction between the International Bureau and the Wireless Telecommunications Bureau, according to sources. RCR Wireless News was told last week the FCC is seriously considering issuing a notice of proposed rule-making that would address the New ICO proposal as well as 3G spectrum issues. It is unclear when the agency may take that step, however.
The International Bureau, which toiled throughout the 1990s to get MSS licensed, is said to be leaning toward accommodating McCaw. On the other hand, the Wireless Telecommunications Bureau, which is trying to complete a rule-making that would set aside more spectrum for 3G services, apparently sees the New ICO proposal more as an opportunity to help terrestrial mobile-phone carriers than as a regulatory goodwill gesture designed to salvage a mobile satellite sector that has yet to prove itself.
A major point of dispute between the two government bureaus is said to be over how much spectrum New ICO should be forced to give up in exchange for being allowed to offer terrestrial mobile-phone service.
Motient Corp., a mobile satellite firm licensed in the 1.5-1.6 GHz band, has filed a request with the FCC that is nearly identical to New ICO’s proposal. The Motient plan has drawn howls from top mobile-phone carriers.
“It would be patently unfair for the commission to award Motient, at no cost, a license to provide CMRS [commercial mobile radio service] while other CMRS providers must spend considerable sums to acquire the spectrum they need to compete,” Verizon Wireless told the FCC in written comments.
Cingular Wireless called Motient’s proposal an attempt to circumvent FCC rules.
“The commission should not give Motient what amounts to a free 3G license … because Motient’s original business plan was not well-received by the marketplace. This `backdoor’ approach to 3G should not be countenanced. If MSS is not desired by consumers, it should be reallocated for a new use that would satisfy consumer demand or a dual use should be considered,” stated Cingular Wireless.
AT&T Wireless Services Inc. had the same take on the Motient proposal. “In light of the growing demand for commercial wireless services and its attendant pressure on existing carriers’ bandwidth requirements, it makes no sense to permit spectrum to remain unused or underutilized.”
Meanwhile, at a House Government Reform hearing last week, Air Force Gen. John Jumper identified the cellular industry’s attempt to secure military spectrum in the 1700 MHz band as one of the challenges to military readiness.
The mobile-phone industry, for its part, continues to seek sponsors for a bill it has drafted that would delay the September 2002 3G licensing date and guarantee the Pentagon is reimbursed-to the tune of $4.5 billion or more-for moving military licensees to other frequencies.
The mobile-phone industry emphasizes that the relocation money-which would come from the 3G auction-would help the Pentagon gain access to modern radio communications facilities.
Reporter Heather Forsgren Weaver contributed to this report.
