MOBILE SECTOR LOSES FIGHT FOR COVETED SPECTRUM

The mobile wireless industry did its best to put on a happy face after receiving a devastating setback in its quest for third-generation spectrum.

A new 3G assessment plan announced by the Commerce Department removes from consideration most of the precious spectrum the wireless industry wanted from the Department of Defense. Instead, the Commerce Department, the FCC, the DOD and other government branches will examine spectrum in the 1710 to 1770 MHz and 2110 to 2170 MHz bands, most of which was slated for auction previously.

Just 15 MHz of military spectrum will be considered for 3G, and it's doubtful the wireless industry will get any of it. Military spectrum is the most desirable for 3G because it allows better spectrum alignment with other countries. But the DOD opposes any move from the 1755 to 1850 MHz band, which is being used to launch guided missiles against Afghanistan, according to a department spokesman.

“This is only a viability assessment and in no way to be construed as an acceptance of the 3G application in the 1755 to 1770 MHz band,” John Stenbit, the DOD's chief information officer, said in a statement. But wireless players heralded the plan because it meets the industry's short-term goals of obtaining 60 to 90 MHz of spectrum by 2004. Government agencies should complete their studies of the bands by September 2002.

But that spectrum may not be a long-term option either, if the war against terrorism is as lengthy as government officials warn it could be. Not only will the spectrum be in use, but the military lacks the incentive to relocate.

Last year, wireless industry officials said proceeds from a 3G auction could help provide the DOD with the money to upgrade defense systems. But with the country at war and a pro-defense administration in office, military funding is not expected to be an issue.

In fact, carriers may find themselves competing with the DOD for more frequencies. The department said last week it is evaluating whether it needs additional spectrum to protect the U.S.

“There will obviously be requirements to better communicate between [DOD] elements and public-safety and law-enforcement agencies in the civilian sectors of the government,” Stenbit said.

The FCC likely will provide other measures of relief to carriers, including eliminating the 45 MHz spectrum cap in urban markets and reallocating spectrum from the mobile satellite band. Last month the FCC decided not to force fixed-wireless operators and educational broadcasters off the 2500 MHz band to make way for 3G services.