Satellite Service Could Come Down to Earth

Wireless pioneer Craig McCaw soon may be back at the forefront of the industry. Last summer, New ICO (www.ico.com) and other mobile satellite service (MSS) providers asked the FCC (www.fcc.gov) for permission to operate terrestrial networks over their MSS spectrum, creating a combination satellite and terrestrial-based wireless communications service. MSS providers believe the pairing can serve rural and international customers better than traditional satellite-only or wireless-only networks. ICO believes the rule change would help bridge the digital divide. Profit would be a bonus.

Last year, McCaw led a group of investors who bought ICO's assets out of bankruptcy.

For all intents and purposes, MSS providers are asking to use their licenses to provide the same kind of service wireless carriers already provide. Consequently, CTIA and many wireless carriers have filed opposition to the proposal.

Travis Larson, CTIA spokesperson, said CTIA is not opposed to terrestrial use of the spectrum. But given the scarcity of spectrum, MSS providers should acquire the right to use terrestrial means to provide wireless service through auction.

“They would gain an unfair competitive advantage if they were allowed to use terrestrial means to deliver wireless calls, considering they were given their licenses for free,” he said. “No one should be allowed spectrum for free for terrestrial use, especially when history has shown that spectrum has enormous market value.”

Gerry Salemme, New ICO senior vice president for external affairs, sees CTIA's opposition in a different light.

“The initial filing CTIA made was to take the spectrum away from not just ICO, but from all the mobile satellite services, and reassign it to wireless,” he said. “What they're saying is that satellites don't have a role, and that they have the only technology that could work, even if it means people in rural areas don't have service.”

Nextel (www.nextel.com) is a notable exception to the industry's opposition. McCaw owns — through personal, family and corporate holdings — about 35% of Nextel stock, according to SEC filings. In late July, the McCaw family bought 10 million shares of Nextel common stock, worth $107.5 million at the time.

In addition, Bill Gates joined McCaw to buy ICO out of bankruptcy and remains an investor. Microsoft (www.microsoft.com) also owns 5% of Nextel stock. Team McCaw's Nextel stock with Microsoft's 5%, and you have one large block of the company, representing almost 40% of Nextel.

If the FCC grants the MSS providers' request, Nextel would be ICO's likely partner to provide an established terrestrial network.

Nextel CEO Tim Donahue said in an interview earlier this year that McCaw provides broad, visionary ideas for the company and does not get involved with daily decisions.

Asked if McCaw's role within Nextel has caused the carrier to act outside of its own interests, Salemme said, “I think that Nextel is aware of the fact, partly because of Craig's influence and association, that satellites do have an important role, that they don't necessarily have to be competitive. I think Nextel recognizes that there could be a positive role, that we could help get coverage in areas where they're never going to build out.”

Salemme added that MSS providers and wireless carriers won't be total competitors.

“The heart of my market is not (going) to compete with the traditional wireless PCS providers,” he said. “There are already six of those guys. The seventh isn't going to go any place. That's not my goal.”

ICO's request and CTIA's proposal — to reallocate 10MHz to 14MHz of the 2GHz band held by MSS providers — are opposing plans for the spectrum. Although CTIA is bullish that the spectrum will be reallocated and then auctioned, New ICO is bullish that its proposal will be approved by regulators.

Larson summed up the outlook: “That, in the end, will be a decision for the FCC.”

In Memoriam

Wireless Review expresses its deepest sympathy to the families, friends and associates of all who were lost in the tragic events of Sept. 11, 2001. The following individuals were related to the wireless industry:

Todd Beamer, 32, Oracle sales account manager

Mark Bingham, 31, Bingham Group president

Suzanne Calley, 42, Cisco strategic marketing executive

Jeff Coombs, 42, Compaq technology consultant, global services division

Edmund Glazer, 41, MRV vice president of finance and administration & CFO

Jeremy Glick, 31, Vividence sales manager

Peter Hanson, 32, TimeTrade vice president of sales

Steven D. “Jake” Jacoby, 43, Metrocall COO

Karen A. Kincaid, 40, Wiley Rein & Fielding attorney and a PCIA legal counsel

Christopher Mello, 25, Alta Communications analyst

Shawn Nassaney, 25, American Power Conversion sales team leader

Barbara K. Olson, 45, Balch and Bingham partner and a NextWave consultant

Jane Orth, 49, Lucent, retired

David Retik, Alta Communications general partner

Phil Rosenzweig, 47, Sun Microsystems software organization director

McCaw's Holdings

Craig McCaw, through personal, corporate and family stock holdings, owns more than 35% of Nextel, according to SEC documents.

Digital Radio	8.35%
Eagle River Investments	10.05%
Option Acquisition	.63%
Craig O. McCaw	10.96%
OneComm	.55%
Eagle River Holdings	.22%
Eagle River Investments Intl.	.12%
ICO-Teledesic Global Limited	.81%
*Additional holdings	5+%
Total	38+%
	(277,608,395 shares)

*The McCaw family in July bought 10 million additional shares of Nextel stock. McCaw and Bill Gates both are investors in ICO. Gates' Microsoft owns 5% of Nextel.

Note: Calculations based on 729,376,929 Nextel common stock shares outstanding as of June 14, 2001.

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