MSS Spectrum Flexibility Needs Balanced Approach
By Ari Q. Fitzgerald and Angela E. Giancarlo
The FCC is considering whether to allow mobile satellite service (MSS) providers
such as New ICO Global Communications (Holdings) Ltd. and Motient Services,
Inc., to provide terrestrial wireless services over their satellite spectrum. The issue is
controversial, partly because it puts two elements of the Commission’s
spectrum-management policy on a collision course: flexible spectrum use and
auctions.
Under a 2000 law that codified the FCC’s practice of not auctioning licenses for
global satellite services, ICO and Motient obtained their spectrum at no cost. Now
they want to use it to offer terrestrial wireless services in competition with companies
that had to pay for their spectrum at auction.
Recent history suggests that the Commission may be inclined to allow MSS
providers some flexibility. The question is at what cost.
Background
In the MSS flexibility proceeding, which began in August 2001, the FCC is
considering whether to allow authorized MSS operators to reuse their satellite
frequencies to operate terrestrial base stations on an ancillary basis.
ICO, a 2 gigahertz band MSS operator, and Motient, an L-band MSS operator, say
they need such flexibility to extend their services to indoor and urban areas where a
satellite-based network can’t reach. They say the flexibility can be provided without
interfering with other MSS or adjacent-band operators.
ICO wants the Commission to allow terrestrial use only after an MSS provider has
begun operating a satellite constellation. ICC reasons that this policy would ensure
that terrestrial use would be merely ancillary. The company also argues that the
terrestrial component of its service would not compete directly with existing
terrestrial wireless providers in urban areas because it focuses on delivering global
and rural services.
Issues for Comment
Acknowledging the value of MSS in serving rural and geographically isolated areas,
the Commission set forth a detailed set of related issues for comment. First, it sought
general comment on two proposals that would allow terrestrial use of the 2 GHz and
L-bands.
One proposal, based on the ICO and Motient requests, would allow terrestrial use
only by licensed MSS operators, and only after MSS operators demonstrated that
satellite coverage had been provided over the entire U.S. An alternative proposal
would permit the provision of terrestrial services in certain segments of the 2 GHz
and L-bands by anyone, including terrestrial wireless providers with no connection to
MSS, and would assign the rights to provide such services by auction.
Second, the Commission asked for comments on issues raised by the proposal to
allow only licensed MSS operators to provide terrestrial services, including
(1) Possible conditions on the use of terrestrial components,
(2) Additional licensing requirements,
(3) Intraband and adjacent-band interference and the frequencies that should be
used for ancillary terrestrial services, and
(4) The potential effect of the proposal on existing relocation and reimbursement
rules.
Third, the FCC ask for comments on whether it should give “Big LEO” (low
Earth-orbit) MSS licensees such as Iridium Satellite LLC and Globalstar L.P. the
opportunity to incorporate terrestrial operations into their MSS networks.
A decision in the proceeding is expected during the second or third quarter.
Summary of Filings
Predictably, the comments submitted were largely divided along industry lines. The
Cellular Telecommunications & Internet Association led the charge on behalf of the
terrestrial wireless carriers, suggesting that it would be unfair for the FCC to allow
MSS operators to offer terrestrial services without paying for their spectrum.
CTIA urged the FCC to reallocate the 2 GHz MSS spectrum for “3G”
(third-generation) wireless services and auction it to interested bidders.
ICO and most of its fellow MSS operators defended their piece of the spectrum on
universal service policy grounds.
The Progress & Freedom Foundation (PFF) urged the Commission to do the
following:
(1) Grant the flexibility requested by MSS providers,
(2) Require MSS providers to pay fees for using spectrum for this purpose,
(3) Adopt a liberal policy with respect to consolidations involving MSS providers,
(4) Immediately reallocate and auction 10–14 megahertz of spectrum from MSS to
alternative wireless use,
(5) Adopt a “zero-tolerance” policy for failure by MSS operators to meet milestone
requirements, and
(6) Reallocate abandoned MSS spectrum for advanced wireless services
expeditiously.
Conclusion
The FCC will not be writing on a blank slate when it issues a decision. In recent
years the Commission has modified the rules pertaining to several existing services,
including cellular, multipoint distribution service (MDS), and personal
communications service, in order to allow licensees the flexibility to respond better to
the needs of the marketplace.
Only a few months ago it allowed fixed MDS licensees to offer mobile services on
their spectrum. In addition, most of the FCC’s recent decisions involving new
commercial spectrum have allowed for flexible use.
Yet, with the notable exception of cellular service providers, most of the commercial
licensees that have benefited from these policies acquired their spectrum through an
auction in which the highest and best uses could be determined in the marketplace. It
thus seems appropriate for them to have maximum flexibility.
They will be more likely than those who receive their licenses at no cost to put the
spectrum to its most efficient use in an effort to recoup their license investment.
Of course, anytime the bundle of rights and obligations associated with a spectrum
license changes, the change requires a reassessment of the licensee in the
marketplace based on information that was not available when the licensee was
originally shopping its business plan.
The inefficiencies in this process are exacerbated, however, when the original
license- assignment mechanism was not market-based. Although flexibility is
extremely appealing, the FCC must be careful not to establish a precedent that
encourages regulatory arbitraging that could undermine its auction program and
provide a windfall to companies that might be incapable of putting spectrum to its
highest and best uses.
If it’s augmented by statutory lease fee authority, the PFF’s proposal is a good
starting point toward a decision that embraces flexibility while protecting the FCC’s
market-based approach to assigning spectrum.
(Ari Q. Fitzgerald is a partner in the Washington law firm of Hogan & Hartson
LLP. He previously was a legal adviser to former FCC Chairman William E.
Kennard and deputy chief of the FCC’s International Bureau. Angela E.
Giancarlo is an associate attorney at the firm and was previously a
director-federal regulatory affairs at the Personal Communications Industry
Association.)
Telecommunications Reports Wireless, January 25, 2002 |
