2Ghz for 3G? Where will the FCC Hang Its Hat?

Motient Services (www.motient.com) and New ICO Global Communications (www.ico.com) have requested authority from the FCC (www.fcc.gov) to operate terrestrial-based wireless facilities in conjunction with their proposed mobile satellite services (MSS). These proposals could result in MSS applicants becoming direct competitors to existing U.S. wireless carriers.

The two applicants have pursued different paths at the FCC. Motient has requested a waiver of the commission's rules in an amendment to its pending application to provide MSS service. New ICO has asked the commission to consider this issue in connection with its ongoing reconsideration of the order that established the MSS service rules. New ICO's request has yet to be released by the FCC for public comment; in March, the FCC released a public notice soliciting comments on Motient's request.

In 1997, nine parties filed proposals to build and operate MSS systems that contemplated the use of low-earth-orbit (LEO) satellites to provide wireless service. LEO satellite systems are designed to carry a signal directly from a user's handset up to the satellites and back down directly into the receiving handset.

Unfortunately, designers have been unable to devise an MSS system that can penetrate buildings or overcome line-of-sight obstructions. Without this ability, MSS companies such as Iridium (www.iridium.com) and Globalstar (www.globalstar.com) have been unable to remain financially viable.

New ICO is no stranger to these struggles. In 1999, despite having raised more than $3 billion, ICO was forced to file for voluntary bankruptcy protection. It was not until May 2000 when ICO, backed by new investors and with Craig McCaw at the helm, emerged phoenix-like as New ICO.

Perhaps it is no coincidence that both Motient and New ICO, in their pitches to the FCC, have requested authority to modify their systems by integrating terrestrial digital cellular components into their MSS systems. Both contend that the addition of a terrestrial-based component to future MSS service offerings would solve the signal-coverage problem, enable providers to extend MSS service offerings to urban and in-building subscribers, and make MSS systems financially viable.

Motient and New ICO state that the survival of MSS is in the public interest because without MSS, U.S. citizens in rural areas will be deprived of wireless and public-safety services. Also, improved coverage in buildings and in large cities through the use of terrestrial-based facilities will result in improved quality and lower prices for wireless services to rural and underserved areas.

Opposition Close to Home

Surprisingly, Motient's waiver generated objections from 2GHz-band licensee Aeronautical Radio (ARINC; www.arinc.com), L-band applicant KITComm Satellite Communications and fellow MSS applicant Inmarsat Ventures PLC (www.inmarsat.org). The Mobile Satellite Users Association (MSUA; www.msua.org) also expressed grave reservations, if not indignation, toward proposals to integrate a terrestrial component to MSS offerings.

ARINC said Motient's proposal would severely limit the use of the band for aeronautical safety services because the proposed land-based stations would overpower satellite signals operating on the same channel and, perhaps, adjacent channels. KITComm and Inmarsat noted that grant of the requested waiver would raise significant interference concerns. KITComm stated that authorizing use of terrestrial base stations with MSS would promote an anti-competitive environment because it could create a blanket of interference over the United States that would keep future 2GHz-band licensees from providing service. MSUA weighed in expressing “deep concerns” regarding Motient's proposed use of terrestrial facilities in the band.

2GHz for 3G?

Motient's proposal also has drawn the ire of the mobile wireless industry, including AT&T Wireless Services (www.attws.com), Sprint PCS (www.sprintpcs.com), Verizon Wireless (www.verizonwireless.com) and Cingular (www.cingular.com).

Their primary argument is that Motient's request essentially asks for the re-allocation of satellite spectrum for an entirely new cellular land mobile service. The commission's rules provide that spectrum only can be re-allocated through a rulemaking proceeding. The carriers argue that Motient is attempting to circumvent the requisite rulemaking procedure and, thus, its request for waiver should be denied as procedurally flawed.

AT&T, in its comments, noted that the Communications Act prohibits the flexibility Motient is requesting because, under the Act, the FCC must explicitly allocate spectrum for flexible use from the outset. Cingular and Verizon object to the waiver because they believe it would violate the section of the act that requires that spectrum be auctioned rather than given away. Sprint, in its comments, raises the specter of whether the commission could grant Motient's waiver request without providing identical relief to all MSS providers.

The four carriers agree that the FCC should re-allocate 2GHz for 3G services, which should be awarded via an auction where all interested parties would be provided an opportunity to compete for the spectrum.

CTIA (www.wow-com.com) has petitioned that the FCC institute a rulemaking to “re-allocate under-utilized mobile satellite services spectrum in the 2GHz band for more efficient uses such as the provision of terrestrial wireless services,” and to withhold granting 2GHz licenses to the existing MSS applicants while it considers the CTIA petition.

“CTIA filed its petition because it wanted the FCC to consider whether MSS is really the best use of the 2GHz band in light of concerns about MSS providers' economic viability, as highlighted so vividly in the New ICO filing,” said Diane Cornell, CTIA vice president for regulatory policy.

ICO Services, a subsidiary of New ICO, and MSUA have urged the commission to dismiss the petition and adhere to prior commitments to preserve the 2GHz band for MSS providers. They argue that the MSS industry will be efficient and successful if the commission will proceed with its previous commitments to the industry. ICO emphasized the importance of the FCC honoring U.S commitments to the international community to allocate the 2GHz band for MSS.

More Competition?

The FCC could view these proposals as an opportunity to save a moribund MSS industry and inject additional competition into the wireless marketplace. Further fuel for comes from the FCC's Digital Audio Radio Service (DARS) decision. In 1997, over the objection of broadcasters, the commission approved the use of terrestrial repeaters with DARS spectrum and awarded 8-year radio broadcast licenses to two companies, concluding that the use of terrestrial repeaters would not be inconsistent with the original allocation of the spectrum but simply “complementary to the DARS service (if used) only for retransmission of signals received from the satellites.”

If the commission finds that use of terrestrial-based facilities with MSS systems is not inconsistent with the original allocation of 2GHz spectrum, a similar result may follow.

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Sill (wsill@wbklaw.com) is a partner and Ornelas (cornelas@wbklaw.com) an associate at Wilkinson Barker Knauer LLP.