Qualcomm Inc. last week asked the Federal Communications Commission to deny Omnipoint Corp.’s request to transfer its New York personal communications services license to VoiceStream Wireless Corp., a move that clouds the companies’ efforts to complete their $1.7 billion merger agreement by this year.
Qualcomm, which isn’t shy about stating its desire to have the New York license, believes Omnipoint hasn’t fulfilled its license requirements as a pioneer’s preference winner. A U.S. Court of Appeals recently ordered the FCC to find suitable spectrum and grant Qualcomm a pioneer’s preference license after Qualcomm and the commission battled more than seven years over the issue.
The FCC granted Global System for Mobile communications operator Omnipoint the New York major trading area license in 1993 under the now-defunct pioneer’s preference program that gave telecommunications innovators licenses without having to face competing applications. Omnipoint convinced the commission it deserved a license for developing spread-spectrum Interim Standard-661 technology and saved about $80 million from the program, paying $347 million for the license.
Omnipoint had five years to build out IS-661 technology. As the company heads for its December deadline, Omnipoint has said the technology is deployed in parts of Manhattan and other portions of its MTA, with no customers using it.
This, according to Qualcomm, doesn’t meet FCC pioneer’s preference rules that require winners to substantially deploy their innovative technology. Omnipoint said it has met its obligations.
Qualcomm points to Omnipoint’s press statements and an April Securities and Exchange Commission filing that indicated Omnipoint integrated IS-661 base stations into its GSM network and that the base stations cover nearly 10 million pops, allowing the carrier to comply with pioneer’s preference rules. Qualcomm concludes that since the New York license covers more than 27 million pops, slightly more than one-third of the New York pops are covered by IS-661 base stations and the dominate technology is GSM.
“This alone should not be considered `substantial use,’ ” said Qualcomm in its filing. “But there are further questions about the literal meaning of this sentence. What is the meaning of the word `cover’? If Omnipoint `covers’ 10 million pops from proprietary base stations, but there are no proprietary handsets in use, has Omnipoint met the requirements of its pioneer’s preference license? Qualcomm thinks not.”
Qualcomm wants the commission to require Omnipoint to reveal how many IS-661 handsets have been manufactured and how many are in commercial use in New York. It also wants to know whether customers are given a choice of purchasing IS-661 or GSM handsets when signing up for service and how many GSM handsets are in commercial use in New York.
“Qualcomm believes that Omnipoint’s responses to these questions will demonstrate that there is no `substantial use’ of the Omnipoint `pioneering’ technology in the New York MTA,” said Qualcomm.
Subsequently, said Qualcomm, the FCC should deny Omnipoint’s request to transfer the license to VoiceStream and revoke Omnipoint’s license. FCC rules prohibit pioneer’s preference winners from transferring their licenses unless they have substantially built out their technology.
Not only must the FCC decide whether Omnipoint complied with pioneer’s preference rules, but it also must define the term “substantial deployment.” The commission deliberately left the definition vague to spur technology innovation.
Qualcomm has protested Omnipoint’s pioneer’s preference award before, as has the Wireless Communications Council, which raised the issue in 1996. At that time, the FCC denied WCC’s petition and asked it to raise the issue again once the December 1999 deadline had passed.
