WASHINGTON-The Federal Communications Commission, bowing to congressional and wireless industry pressure, scaled back a budget-driven proposal to raise $3 billion this year from the sale of flexible 2.3 GHz wireless licenses.
The FCC decided against auctioning a nationwide license, opting instead to sell two 10 megahertz Wireless Communications Service licenses in each of 52 major economic areas and two 5 megahertz licenses in every one of 12 regional economic areas.
The wireless industry strongly opposed nationwide license and flexibility options floated by the Wireless Telecommunications Bureau last November, saying the initiative would disrupt Wall Street funding of new personal communications services licensees and that it posed problems for manufacturers.
Moreover, the industry said the 2.305-2.320 GHz/2.345-2.360 GHz spectrum was better suited for wireless Internet access and public safety communications that Congress directed the FCC to take into account. Congress also ordered the FCC to begin the auction by April 15 and to deposit monies into the U.S. Treasury by Sept. 30, the end of fiscal 1997.
Those arguments made the industry vulnerable to speculation that it was trying to avoid competition.
The Personal Communications Industry Association and Cellular Telecommunications Industry Association were unavailable for comment.
Last week’s ruling gave the industry some, but not all, of what it sought.
Despite the emphasis of the debate on policy, the outcome was driven by an age-old technological factor: interference.
The WCS spectrum is adjacent to satellite-based digital audio radio service. The FCC, retreating from its original proposal, acknowledged “there is substantial risk that these technical rules will make mobile operations on WCS spectrum technologically infeasible, at least for the foreseeable future.”
That means the spectrum is more likely to be used for fixed rather than mobile wireless use, which is good news for the wireless industry.
Another plus for the wireless industry is the FCC’s decision not to count WCS licenses toward the 40 megahertz commercial mobile radio service spectrum cap.
Commissioner Rachelle Chong said the FCC should examine whether the spectrum should be retained.
The proceeding and its outcome, though, raises key wireless telecom policy issues that Congress and the industry have begun to grapple with.
First, the technical problems appear to underscore one of the dangers of letting budget priorities determine telecom policy. Congressional telecom policymakers are getting more vocal about budgeteers’ increasing reliance on spectrum auction revenues for budget-balancing purposes, effectively making telecom policy and bypassing telecom lawmakers.
The interference gliche also throws into question the $3 billion revenue projection from the WCS auction in April and auctions the Clinton administration are counting on to raise $36 billion during the next five years.
The Congressional Budget Office scored the WCS at $3 billion based on glittering pledges of $22 billion from mostly digital paging and pocket telephone license auctions and without knowledge of the interference concerns.
With the likelihood mobile use of the 2.3 GHz band will be less than anticipated, the $3 billion scoring for the WCS auction is thrown into question. Indeed, the technical parameters were found not suitable for public safety communications despite congressional urging that the FCC consider part of allocation for that purpose.
Second, the discovery that DARs and WCS mobile operations may be capable of co-existing at 2.3 GHz due to interference problems highlights the key role of spectrum management, a job overseen by the Office of Engineering and Technology. FCC Chairman Reed Hundt is toying with the idea of drastically downsizing OET as part of his second major restructuring since taking the agency over in late 1993. Hundt faces major opposition from agency engineers, however.
