Satellite frequencies could become the next 700 MHz band

The FCC is taking steps that could turn mobile satellite service spectrum into what is effectively another terrestrial cellular band available for use by any carrier for a 3G and 4G mobile broadband services. The FCC’s newly created spectrum task force today said it would recommend to the Commission that it lift the remaining restrictions from the MSS bands that hinder its full use in terrestrial networks and extend to the bands the second-market permissions, which would allow satellite operators to let their earthbound cousins use the spectrum for their own mobile broadband networks.

The FCC’s National Broadband Plan calls for identifying 500 MHz of spectrum for mobile broadband use in the next 10 years, 300 MHz of which will be made available within half that time. In the plan, the MSS spectrum represents the low-hanging fruit already licensed to service providers, most of which don’t have extensive satellite networks consuming its available capacity. The FCC has already identified 25 MHz of wireless communications services spectrum for mobile broadband use, but clearing obstacles in the MSS bands would free up as much as 90 MHz for terrestrial 3G and 4G operators.

According to Ruth Milkman, chief of the FCC’s wireless telecommunications bureau and chairman of the task force, it is imperative for the government to start identifying and clearing new spectrum as quickly as possible. Even though the FCC has established a long timeline for the project, available mobile broadband capacity is already under pressure, she said. “Demand for mobile broadband spectrum is outstripping supply by orders of magnitude,” Milkman said today in a media briefing from Washington.

Specifically the task force is recommending extending permission to use satellite spectrum for terrestrial mobile and fixed broadband to the final chunk of MSS frequencies, the S-band licenses used by Craig McCaw’s ICO Global Communications (NASDAQ:ICOG) and TerreStar Networks (NASDAQ:TSTR). The FCC had already allowed some terrestrial service over MSS under the ancillary terrestrial component rules, which allowed a satellite operator to build ground-based networks over the spectrum to augment the larger satellite network. It, however, lifted the satellite requirement entirely from two other MSS bands, the L-band and band known as Big-LEO (low earth orbit), where satellite operators like SkyTerra and GlobalStar (NASDAQ:GSAT) operate. The FCC would still put in provisions that would allow satellite services to work side by side with terrestrial service, but by opening up the S-band most of the satellite broadband spectrum would basically open up for long-term evolution (LTE) and other mobile broadband deployments, like that proposed by SkyTerra’s owner Harbinger Capital Partners.

The second rule change the task force is proposing is an extension of the secondary-market leasing provisions in the terrestrial bands to the MSS bands. That means that satellite operators could lease out their spectrum in markets to terrestrial operators, allowing them to augment or build their own mobile broadband networks. Currently, the rules allow MSS-license holders to wholesale capacity on networks they build — the stated business model of SkyTerra and TerreStar, which Harbinger also owns a stake in — but the rule change would allow them to wholesale access to the spectrum itself and might even allow them to entirely turn over the deployment of the terrestrial network to a ground-based operator while they ran the satellite component.

T-Mobile (NYSE:DT), which has been linked to a possible partnership with Harbinger, might be particularly interested in such an arrangement because it has no dedicated 4G spectrum, but operators such as AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ, NYSE:VOD) could be just as tempted by the spectrum. Both own 700 MHz and advanced wireless service spectrum, which they could use for their LTE deployments, but once their limited supplies run out they might shop around the MSS operators for more.