On Guard for Competition

In the wake of the FCC's controversial decision to reserve 6MHz of the 700MHz band for private wireless applications, one question remains: How might the private services compete with commercial providers?

Beginning June 14, the FCC will auction 104 "guard-band" licenses for 52 major economic areas. The winning licensees, called guard-band managers (GBMs), can use up to 49.9% of the spectrum for their own applications. The rest has to be leased to other users. To protect public-safety systems in nearby spectrum, services that use a cellular-like architecture are prohibited, although a cellular, PCS or SMR provider still could be a GBM if it uses a non-cellular approach. Several trade associations, including PCIA, also are considering bids to become GBMs. The least likely bidders are non-telecom companies that use wireless but aren't interested in running networks.

"They're in the business of building cars or transporting packages," said Laura Smith, Industrial Telecommunications Association executive director, government relations. "Becoming a GBM would involve taking on a business that isn't necessarily their core competency."

Some argue that private networks offer better reliability and availability guarantees, particularly in areas where public networks are heavily loaded.

"If you're an airline, and you need to get a plane out, you can't wait for frequencies to become available," Smith said. "If you don't have a private system, then you can't get your business done in a timely fashion. You can't afford that when you're talking about safety."

A fair criticism?

"The success of our company has been based on our being able to convince people that that statement isn't true," said Mike Rosenthal, director of regulatory affairs at Southern LINC, sister company of Southern Nuclear. "You're surveying nuclear facilities, and you have to be reliable."

Building or using private systems might be less attractive because the network's cost isn't shared among multiple users.

"We've been able to offer economies of scale because we have a system that's out there for other commercial users, and it's much more economical for them to go with us than it is to create their own system," Rosenthal said.

In the late 1980s, UPS considered building its own wireless network but gave up after FCC delays and instead used cellular for package tracking. Today, it uses the Ardis satellite network, and its satisfaction with commercial networks suggests that any hand-wringing over competition from newcomers might be unnecessary.

Guy Hamblen, UPS manager, wireless group, said he understands the commercial providers' concerns. "But the overall growth in the industry is going to be so astounding that any spectrum will be used to its fullest."