Girding for a Fight Over 3G Spectrum

Carriers anxious about having enough spectrum for 3G will have another opportunity May 10, when 36MHz in the 700MHz band, currently home to TV channels 60 to 69, goes on the auction block. Although the government has laid out its ground rules for 30MHz worth, it wants more time to consider a controversial plan to allocate the remaining 6MHz for private wireless. CTIA said it will sue if all 36MHz aren't allocated for commercial use.

Up for auction are 12 licenses, including one 20MHz license and one 10MHz license for each of six economic-area groupings (EAGs) nationwide. The suffix for the 20MHz licenses is D and corresponds with 752MHz to 762MHz and 782MHz to 792MHz. Suffix C is 10MHz licenses for 747MHz to 752MHz and 777MHz to 782MHz. The proceeds are due to the U.S. Treasury by Sept. 30.

The controversy stems primarily from a proposal to allow 6MHz guard bands, set aside to protect adjacent public-safety users, to be used for private wireless services. Some question whether 6MHz is needed to protect public-safety systems, while others are concerned about using spectrum earmarked for noncommercial applications for commercial uses. FreeSpace Communications, for example, said it has a 1Mb/s Internet-access solution that could operate in the band. Although PCIA and the International Telecommunications Association also have pushed for the idea, spawned from the FCC Office of Engineering and Technology, FreeSpace is up against Motorola, which has lobbied for private use.

"We've been fighting for the right to bid (on the 6MHz)," said Mike Farmwald, FreeSpace founder. "We're happy to let the private guy bid, but to mandate that they are the only possible winners is ridiculous and illegal. (Motorola) has a multibillion-a-year equipment business selling equipment to (retailers) and the police, but they are complaining to Congress that they have to be given free spectrum because they can't afford to bid. We're a tiny start-up. We've got 10 people."

FCC Commissioner Harold Furchtgott-Roth dissented on the guard-band proposal and argued that 4MHz should be sufficient to protect public safety. The federal statute doesn't appear to allow the 6MHz to be allocated for non-commercial use, Furchtgott-Roth said. He also said that the guard bands should be open to all bidders willing to accept FCC interference limits and that those issues will be addressed in a Second Order on the reallocation.

Some in Congress have suggested that as much as 12MHz be allocated for private wireless, while others say Congress mandated the spectrum be allocated only for commercial use. House Commerce Subcommittee chair Rep. Thomas Bliley (R-VA) wrote FCC Chairman William Kennard to seek an explanation for the FCC's actions.

Also at issue is the FCC's band plan for the remaining 30MHz. The FCC said that the spectrum would allow for both 3G and fixed-wireless applications but is neutral on technology. CTIA countered that because 10MHz isn't sufficient for 3G, there only will be one block, 20MHz, in each of the EAGs. CTIA had envisioned three blocks of 3G spectrum in each EAG. Couple that with FCC refusal to lift spectrum caps and revise cross-ownership rules, and the band plan stifles competition and stymies 3G-roll-out plans, CTIA said.

Several larger carriers hoping to roll out 3G services this decade deferred comment to CTIA on the matter. But few observers believe that CTIA will be able to dissuade FCC decision-makers from allocating the spectrum as it chooses, barring congressional intervention.

"The U.S. is certainly behind the curve because we are not allocating any specific spectrum for 3G," said Melinda Mullet, Arthur Andersen director of telecommunications regulatory analysis. "(The FCC) is just going to let the people who already hold the spectrum in those ranges attempt to use it for 3G applications, but with the45MHz cap, it makes it very difficult for operators to do much. But to the extent that the commission is going with a lower amount of spectrum, I don't think the FCC will have too much trouble." Mullet cautioned that should the 6MHz be allocated to private wireless, winners there had better make the most of the opportunity or risk the spectrum being re-farmed.

Others added that the battle is just a harbinger of future skirmishes between commercial and private users as carriers seek spectrum to roll out 3G.

"It engages the foes of old," said Rick Rubin, Greenburg & Trauig co-chair. "The commercial users, even predating CTIA, have locked horns every time a piece of UHF TV spectrum is lopped off and allocated for private use. In fact, this goes back to 1970, when the FCC started allocating spectrum for SMRs. The same is going to be true with other services in the future. The FCC is going to have to make decisions on where society places its value and move users around. That's not an easy process."

Although mobile e-commerce, or "m-commerce," currently trails wireline e-commerce, ARC Group projects that the number of m-commerce subscribers should take the lead around 2003.