COMMERCE DEPARTMENT PLAN EASES 3G SPECTRUM CRUNCH

The federal government made its first move last week toward cleaning up a spectrum allocation system that was in shambles just a year ago and had some spectrum-starved wireless carriers fearing they wouldn't be able to compete in third-generation services. The move, however, is far from complete and leaves numerous details unsettled.

The U.S. Commerce Department released a plan that would give 90 MHz of spectrum to carriers for 3G services within the next six years by using Department of Defense spectrum and non-government spectrum in the 1710 to 1755 MHz and 2110 to 2170 MHz bands (see figure). While most of those bands were previously earmarked for commercial use, by pairing them up and designating them for 3G, the Commerce Department is helping move the U.S. closer to a better long-term spectrum management plan. Carriers have long complained about the government's tendency to auction random bands without considering how it complements global spectrum allocation.

The U.S. wireless industry's move into the 1710 to 1755 MHz band means it will be aligned with the rest of the world when it comes to 3G services. Two years ago, delegations from around the world identified three next-generation global bands — 860 to 960 MHz, 1710 to 1885 MHz and 2500 to 2690 MHz — during the World Radiocommunications 2000 conference in Istanbul.

Still, 90 MHz of spectrum is far less than the 200 MHz the industry has long sought for 3G. Wireless industry observers, though, characterized the plan as a good start.

“What can they do to get more? That's everyone's question right now,” said Ed Rerisi, senior wireless analyst with Allied Business Intelligence. “Everyone is trying to balance the economic needs of wireless operators and the overall needs for the government to maintain its services and homeland defense.”

The industry didn't get the spectrum it wanted most — 1755 to 1770 MHz — which is heavily encumbered with Department of Defense communications systems. The Commerce Department has indicated the band is off the table for now, said Cecily Cohen, Nokia's manager for government and industry affairs.

“We hope that band will continue to be considered because it is contiguous,” said Cohen. “We really want globally harmonized spectrum in larger chunks.”

Negotiations were difficult enough to convince the DOD to free up 45 MHz when its own spectrum needs are expanding and homeland defense is a top priority. But the department will receive updated equipment with the wireless industry's money.

“This is a tremendous first step,” said Jim Bugel, Cingular Wireless' executive director of external affairs. “In situations like this, it would have been easy for the DOD to say that it didn't want to talk about it.”

Freeing the 90 MHz of spectrum is an entirely different task. The FCC and the Commerce Department must figure out the details of the move by 2008. Auctions for the spectrum will likely begin in 2004. Some analysts fear the four-year span between auction and allocation is too long because spectrum values will radically change during that time.

“It's an awful long time, and a lot of bad, bad things can happen in four years,” said Roger Entner, program director with The Yankee Group.